Ecommerce metrics are a set of measurements that help businesses measure their online store’s performance. These metrics provide insights into customer behavior, website performance, and marketing effectiveness.
For example, an ecommerce business owner would want to know how many website visitors purchase products or the average total value of customer orders. Understanding these metrics will help businesses make informed decisions on improving their ecommerce conversion tactics and maximizing their profits.
Business owners should know these crucial ecommerce metrics to understand how their business is doing correctly. Now that companies are going digital, tracking the figures that can help with essential business decisions is more manageable.
Some of the most important ecommerce metrics to look out for include the following:
- Website Traffic
- Sales Conversion Rate
- Email Opt-In Rate
- Average Order Value
- Shopping Cart Abandonment Rate
- Customer Acquisition Cost
It’s your responsibility to identify these important ecommerce metrics, so we’ve curated this list that will discuss them, what to look for in each metric, and how to use them to boost your business.
Crucial Ecommerce Metrics Businesses Should Track
Ecommerce Conversion Rate
Your ecommerce store’s conversion rate shows whether your site visitors become your customers. You calculate the ecommerce conversion rate by dividing the number of conversions (e.g., orders or purchases) by the total number of unique website visits.
Knowing the conversion rates is important because it measures your website and app’s overall performance. From there, you will understand what drives your business in an upward trend and areas that need improvement. Keeping track of your conversion rates will help you know whether your conversion strategy is effective or whether you need to optimize.
To improve your ecommerce conversion rates, consider these crucial factors:
- Product-Customer Compatibility: Identify your target market and understand their needs. Improve your products and make them more attractive to your audience.
- Order and Payment Process: Simplify your order and payment forms by enabling automation and removing unnecessary elements. Ensure secure payment gateways and provide transparency with your customers.
Average Order Value in Ecommerce
Average Order Value (AOV) monitors the average amount spent each time a customer places an order through a mobile app or website. To get the AOV, just divide the total revenue by the total number of orders.
AOV is also a way to increase revenue and profits. As such, consider improving your store’s average order value or AOV. You can try offering something enticing in exchange for a minimum purchase order. Other strategies include product bundling or integrating a customer loyalty program to help establish relationships with your customers and encourage them to make repeat purchases.
Customer Lifetime Value
The Customer Lifetime Value (CLV) measures how a business can plan to earn from its customers for the long term. It is a way to estimate a customer’s profitability and a business’ potential long-term growth.
Understanding CLV will help owners determine which strategy works and what doesn’t. Without knowing your CLV, you can’t improve forecasting and maximizing profitability. The benefits of knowing your CLV include encouraging repeat and high-value sales and improving profitability and customer retention.
To improve CLV, consider implementing loyalty programs, enhancing the customer experience, investing in technology, and using upselling or cross-selling strategies to encourage customers to purchase more expensive products.
Traffic Sources
A website traffic source is another vital ecommerce metric determining which sources drive visitors to your site. It could be direct, search, or referral. Some traffic may also come from paid search or banner ads.
Direct traffic is when visitors directly enter your URL into their browser, referral traffic is when visitors click a link to your site from another website, and organic search traffic is when visitors find your site through search engines. Consider using analytics tools such as Google Analytics to analyze your website traffic sources. Once you have identified your traffic sources, you can improve your SEO, create more backlinks, and optimize your website for a better user experience.
To understand your website’s performance, know the difference between visits, page views, and unique visitors. Pageviews help identify popular pages to improve your business, while visits and unique visits show your website’s total and new visits.
Check your bounce rate to determine which parts of your website need improvement. Increase time spent on your website by analyzing where visitors spend the least time and improving those areas to keep them engaged longer.
Bounce Rate
Bounce rate is the number of visitors that leave your website for some reason without doing your intended action.
Understanding your website’s bounce rate is crucial so you can find ways to prevent visitors from leaving your site and encourage them to do your intended call to action. Bounce rates can also affect your site’s search engine ranking. A high bounce rate means a need to improve your content, copywriting, page layout, and overall user experience.
Some tips to improve your website’s bounce rate are the following:
- Add videos on your page
- Make your content reader-friendly.
- Break down your content into more digestible text blocks
- Add images in between paragraphs.
- Pay attention to your site’s loading speed.
- Consider investing in a fast-hosting provider, and remove unused scripts and plugins
Shopping Cart Abandonment Rate
The Shopping Cart Abandonment Rate occurs when a potential customer is about to check out an online order but discontinues the action for some reason. It is a crucial ecommerce metric because it determines the abandonment rate and signals some issues, such as a broken sales funnel or unpleasant user experience.
Reducing the shopping cart abandonment rate will lead to more sales. That is why ecommerce store owners should find ways to optimize the checkout flow and ensure an overall pleasant customer experience.
Here are tips to reduce or get rid of shopping cart abandonment:
- Identify the reasons for cart abandonment via drop off points, analytics, or user research.
- Implement cart recovery strategies like sending reminders or offering discounts
- Retarget customers through ad pixels on checkout pages
- Address common reasons for cart abandonment like high shipping costs, lack of payment options, low buying intent, or complex buying processes
- Offer solutions like free shipping, popular payment methods, limited-time promotions, and simplified checkout procedures
Repeat Purchase Rate
A Repeat Purchase Rate is an ecommerce metric that determines the ratio of returning clients against the total number of customers. It is the percentage of your total returning customers that buy from you.
Understanding how this metric is important because it helps business owners save time and money from customer acquisition and retention. It also offers excellent returns on investment. Here are effective ways to boost your repeat purchase rates:
- Improve your customer experience and post-sales service
- Have a multi-channel presence that will help nurture your customers regardless of the platform they prefer to reach you (social media, website, email)
- Provide incentives or loyalty programs so that customers will keep shopping in your store
Product Performance Metrics
Also known as key performance indicators, product performance metrics refer to data companies monitor and analyze to measure a product or brand’s success. This can include the abovementioned metrics, which all lead back to product strategy.
These metrics are crucial to help businesses decide on areas to improve and make good-selling products even better. It also allows owners avoid potential losses, stay on the right track, and ensure long-term success.
Aside from the abovementioned metrics, other product metrics that you should monitor are the following:
- User adoption
- Average revenue per customer
- Average revenue per product
- Number of active users
- Time spent on the website per user
The best product performance strategy should take advantage of collected data and use them to optimize the overall customer journey and experience. Regular assessments are also essential to check if current methods are working and whether they need further enhancement.
Track Your Business Results
As business owners, you should not only focus on earning profit and getting many customers but keeping them long-term and ensure their overall satisfaction.
Keep track of their key performance indicators (KPIs) as mentioned above. By understanding these metrics and taking action based on them, ecommerce businesses can ensure they are making the most out of their online presence. Likewise, working on these metrics will help identify areas for improvement and drive your business to success.
