The last decade has been full of interesting trends in ecommerce. The most successful are those who consistently track and optimize their ecommerce performance metrics.
Visual Website Optimizer’s eCommerce survey 2014 reveals that metrics tracking could prove to be very effective in boosting sales. It’s probably the most efficient way to determine how close you are to achieving your goals.
It helps you evaluate and use only strategies that work and filter out those that don’t.
Ecommerce performance metrics enable you to analyze the performance of your business in-depth and help in framing strategies for better ecommerce customer experience.
This does not mean that you need to track and streamline every ecommerce metric for your business. A solid understanding of key ecommerce metrics that have a significant impact on your business is all you need.
What are the most significant metrics to track? Here is a list of top seven metrics that are you shouldn’t miss:
Stay on Top of Online Marketing: 7 Ecommerce Metrics to Track
1. Website Traffic
Higher the traffic, the more conversions you can get.
Analysing your web traffic consistently will give you an overview of your overall progress. It will tell you which products drive the most traffic, so you know what products and categories you should focus on.
Some of the important ecommerce metrics that can be tracked by Google Analytics or a similar tool are:
- Pageviews per visit
- Traffic source
- User time on site
- New vs. Returning visitors
- Bounce rate
Once tracked and optimized, you’ll notice a rise in the number of people visiting your ecommerce website.
This is not always the case as ecommerce businesses often face a massive influx of bad traffic. The traffic doesn’t belong to their target audience and does not help with conversions.
2. Customer Acquisition Cost (CAC)
Based on your marketing budget, the customer acquisition cost is the amount spent to acquire a new customer.
This is necessary so that you can analyze whether your marketing budget is paying off. As a business owner, always know where you spend your money as your expenditure is an investment.
You need to be very specific and precise about your target group of buyers.
For example, when you spend an average of $100 on every customer, but your average order value is only $60, it indicates that your business still runs at a loss. To bring down your customer acquisition cost, you should:
- Scale up your conversion rate
- Grow the number of subscribers to your newsletter
- Strategize your advertising, learn skills of spending less
- Practice organic marketing through social media and blogs
- Engage in referral marketing to bring in new customers
3. Sales Conversion Rate (CR)
Even a noticeable amount of traffic won’t be of any benefit if it doesn’t translate into sales.
You need to learn how many visitors actually buy, and when they don’t, why?
You need to track how many visitors add items to the carts.
How many go to the checkout page, and how many actually make a purchase. It’s going to help you understand how to improve customer experience in ecommerce. Try these steps to boost the sales conversion rate of your website:
- Easy form filling with less number of fields
- Add features like return policy to build trust
- Gain positive reviews and testimonials
- Optimize all your product pages
- Use high-quality images of your products
Your eCommerce should already be tracking sales conversion rates on its website, but it is important to highlight its importance.
CloudSponge, an email book app, had an outdated website, and they decided to upgrade it. The existing one was generic, less informative and unappealing to the customers. They identified and simply fixed these problems with an improved user-friendly interface. The change led them to a massive 33% rise in the sales conversion rate!
4. Shopping Cart Abandonment Rate
It hurts a bit to see customers add products to the cart, and then end up leaving before the transaction is completed. Shopping cart abandonment rate defines the number of shoppers who add items to their cart yet do not shop.
They exit the website without finishing the transaction. These are window shoppers who are planning to buy but haven’t made up their minds yet.
There are several reasons for this, a few of them being:
- High shipping costs
- No guest checkout
- Multi-page checkout process
- Payment security concerns
- Overall poor user experience
This is a vital metric for ecommerce business owners to track. It takes you to bigger issues that are actually happening on your website.
To calculate the cart abandonment rate, divide the number of successful cart checkouts by the total number of carts filled during the same period, and then multiply the outcome by 100.
5. Customer Retention Rate (CRR)
If you’re not able to retain customers, you know there’s a problem with your products or plan. Loyal customers are the backbone of ecommerce businesses as they cost much less to retain than bringing new ones in.
Customer retention rate is determined by your ability to retain customers once you gain them.
To find your customer retention rate, simply subtract the number of new customers added from the total number of customers at the end of that period. Divide the outcome by the number of total customers at the beginning of the period, then multiply by 100.
6. Average Order Value (AOV)
Ecommerce owners want their customers to spend higher on their online stores. Your average order value allows you to set performance measures and figure out how to multiply the order amount for each purchase made.
Here are a few ways to make the most out of this ecommerce metric:
- Upsell your customers, try including a primary purchase
- Sell products as a package with small discounts
- Free shipping for orders above a particular amount
To calculate yours, simply divide the total amount of all transactions by the number of carts. If you are selling $10,000 of products a day through 50 orders placed, then your average order value is $10,000/50 or $200 per order.
7. Customer Lifetime Value (CLV)
One of the biggest mistakes you can make is to see your target customers through a single sales perspective. The customer lifetime value metric lets you refine your approach. It calculates the total amount you earn from the average buyer. For example, if a customer makes five purchases, each worth $50, the customer lifetime value would simply be $250.
This serves as a guideline on how much you can spend on acquiring customers and what you can do to retain them. It helps you to see customers through the prism of how much revenue they can produce for your business. There are multiple software available for sales and client management as well. We recommend using help desk ticketing software as it helps you manage sales, customer queries, billings and so much more. The software ensures every customer query is addressed by sending timely responses.
The list of e-commerce performance metrics above is not very detailed but essential for most businesses. If you own a smaller ecommerce business, you can start with primary metrics such as average order value, and conversion rate. When your business expands and gets more customers, your metrics will also increase in numbers.
It will enable you to track more data, evaluate, and adopt changes. At the end of the day, tracking ecommerce metrics will only help you in making the right choices for your ecommerce business.
Jared Cornell is a customer support head, a part-time writer at Assign your writer UK, a marketing evangelist and a book lover, associated with ProProfs Help Desk. Jared is passionate about customer support and loves to solve customers’ queries. He is always keen to develop new strategies to help customers seeking Help Desk assistance for a delightful experience.