Metrics and key performance indicators (KPIs) are critical components of every e-commerce marketing plan. These measurements indicate the success of your website, and by analyzing them, you may determine the areas of improvement for your business.
E-commerce Metrics, a key indicator of the performance of any e-commerce business or website, play an important role in measuring success. Any quantitative, regularly specified measurement of website performance is referred to as a metric. Some e-commerce metrics include e-commerce conversion rate, Conversion rate (CR), Average order value (AOV), Customer Acquisition cost (CAC), Customer lifetime value (CLV) and there are many others.
In this post, we’ll go through the top e-commerce KPIs (Key Performance Indicators) and metrics to track and optimize as you expand your e-commerce business. But first, let’s define metrics and key performance indicators (KPIs).
Ecommerce metrics and KPIs are critical data and analytics that help in measuring the overall business success. How many customers do you have? How frequently do customers return? Are customers abandoning products in their online shopping carts?
All of this and more may be discovered by monitoring basic ecommerce KPIs. While each business may have a different priority list, there are 15 KPIs that every ecommerce brand should be aware of.
These analytics assist brands in determining popular products, how often specific products are purchased, whether there are any flaws in the checkout process that are keeping new customers from converting, and much more.
However, tracking e-commerce KPIs serves the following purposes:
- You are aware of what is going on. Figures represent your progress and are the result of your efforts.
- You can examine how changes (whether positive or negative) impact your company. It gives you more control over the situation, regardless of the reason for the adjustments.
- You identify flaws and holes in your website. If you see that your users leave your e-commerce store on a specific page more frequently than others, you know that this page has some difficulties and should be changed. In other words, data tells you where to seek hints.
- You can gain insights and identify areas for improvement. You may simply shift from “I believe that” to “Figures prove that” using clear data to make more educated business decisions.
To decide, ask these three questions.
How much of an impact will the metric have on my business?
The greater the (positive) shift, the better.
Will optimizing the metric have a big influence on the revenue of my company?
The ultimate purpose of e-commerce is to raise revenue, so track website analytics that helps you accomplish so.
Will focusing on this measure help me improve others?
Metrics are frequently interrelated, and changing one may enhance another. For example, if you improve the quality of your traffic, your conversions may rise.
Each e-commerce indicator necessitates a unique tracking frequency. Some metrics must be tracked weekly, while others can be tracked quarterly.
Here are four-time windows for tracking e-commerce metrics:
Weekly: These are the metrics that enable the smooth operation of your business, such as website traffic, social media engagement, purchases connected to limited-time promotional offers, etc.
Bi-weekly: If you have a measure with big sample sizes, such as average order value (AOV) or cost per acquisition, check it twice a month (CPA).
Monthly: Monthly metrics have some form of traffic pattern or are funnels that you developed. This includes things like your email open rate, shopping cart abandonment, and numerous automation.
Quarterly: These measures serve as standards for your company, and meeting these KPIs shows you’re on the right track. Customer lifetime value and subscription rates are examples of these measures.
1. Sales conversion rate
Sales conversion rates are calculated by dividing the total number of orders/sales by the total number of sessions to your store.
Understanding this figure is crucial for estimating how much traffic is needed to create your desired sales.
That being said, conversion rates, like sales data, require a more detailed understanding.
Here are some key methods for dissecting your conversion rate metric:
Set the conversion rate for each channel, such as AdWords, SEO, Facebook, and so on.
Set the conversion rate for each product category: Some categories may have higher conversion rates than others.
Set a conversion rate for each campaign, such as when dealing with affiliates or influencers.
2. Average order value
AOV is the average amount of money spent by a customer each time he or she orders something from your store. This might be for a single product or numerous things purchased in a single order.
Tracking AOV as an e-commerce measure allows you to create future standards and targets.
AOV is regarded by some marketers as one of the most important e-commerce indicators.
Increasing store traffic or optimizing your business for conversions will cost you money, but you may enhance AOV without paying a dime by encouraging customers to purchase more things in each order.
3. Customer acquisition costs
Your customer acquisition costs (CAC) indicate how much it costs to acquire a new customer on average. This is another measure you’ll have to calculate yourself based on the marketing budget you set up for customer acquisition.
The client acquisition cost formula is as follows:
CAC = Amount Spent on Marketing / # of New Customers
So, if you spent $1,000 on a monthly advertising campaign and gained 100 new customers, your CAC would be $10 per customer.
4. Website Traffic
Website traffic is an e-commerce KPI that represents the number of people who visit your online store. You can examine the overall statistics of the website or the metrics of the performance of individual pages.
To expand organically, you must create material on your website regularly. Your material, however, should not be restricted to product descriptions or sales messaging. Sharing helpful and unique information with your users is a smart method to start enhancing your e-store.
5. Shopping Cart Abandonment rate
Abandonment can be quantified in a variety of ways, which is useful for tracking site behavior.
Shopping cart abandonment is the number of people that add something to their cart but then depart your site without purchasing. This metric is critical for determining whether there are any issues with the site or the cart procedure before proceeding to the checkout process.
6. Bounce Rate
Bounce rate is a number that everybody with any type of website, not just e-commerce companies, should be aware of. Your bounce rate is the number of individuals who came to your website and then departed without taking any action, such as clicking to another page, filling out a form, purchasing a product, etc.
The usual bounce rate for an e-commerce website is between 20% and 45 percent, so attempt to stay inside that range (or even lower if you can). To lower bounce rate, make sure your website is easy to use and has an appealing design, and that customers can tell what you sell as soon as they land on your site.
7. Click-through rate
Your click-through rate (CTR) is the percentage of people who visit your website after clicking on an email campaign, ad, or social media post.
Use the following formula to compute the click-through rate: CTR = (number of clicks/number of views/impressions) multiplied by 100.
This should be available in your analytics or reporting dashboard for your email marketing platform or ad platform, making it simple to assess the overall success of your digital marketing initiatives.
The e-commerce industry typically sees a CTR of 1.66 percent for search advertising and 0.45 percent for display ads when using Google ads. However, for email campaigns, the CTR is closer to 2.01%. (In addition, e-commerce email open rates hover at 15.68 percent.)
8. Customer Lifetime Value
Customer lifetime value (CLV) is the total revenue earned by an e-commerce business from a single customer over time, taking into account all of their orders. It is a good indicator for assessing average consumer satisfaction, loyalty, and the viability of a business.
The CLV statistic depicts the company’s long-term financial viability. A high CLV shows product-market fit, brand loyalty, and recurring revenue from repeat customers. If e-commerce firms want to expand steadily, they should analyze and optimize client lifetime value.
9. Returning Customer Rate
Your returning customer rate, also known as repeat customer rate, is the percentage of customers who have made multiple purchases from your store.
The average ecommerce store probably has a return customer percentage of between 20% and 30%. Anything above that indicates that you should invest resources in extending your customer base, and anything below indicates that you should attempt some retargeting ads to entice past customers to return.
Because it might cost up to five times more to acquire new customers than it does to retain existing ones, you should work just as hard to get them back in the (figurative) door as you do to acquire new ones.
Returning Customer Rate = (# of Return Customers / Total # of Customers) x 100
10. Store Sessions by traffic source
Your online store sessions by traffic source report display the number of visitors to your website and how they reached there.
The following are the most typical traffic sources:
Website visitors that arrived to your site by clicking on a search result
Direct: Website visitors who arrived to your site by typing it directly into their browser’s URL bar.
Social: Website visitors who arrived at your site via a social networking channel.
Email: Website visitors who arrived at your site after opening an email newsletter.
11. Store sessions by device type
This section of your metrics, like the one above, shows your store visits based on the device they’re using to access your website. The devices are usually displayed as mobile, desktop, or tablet.
If a large number of people access your website via mobile, you should pay close attention to how well your mobile responsiveness functions. Having an easily accessible mobile site will help you raise your mobile sales significantly.
12. Store sessions by location
This number is also displayed on your Shopify analytics dashboard. This displays the top customer locations, allowing you to adapt your marketing and product offerings based on where your top customers are situated.
13. Top products by units sold
Top products based on unit sales are also displayed on your Shopify analytics dashboard. This indicator informs you which of your products are the most popular, allowing you to plan ahead and prepare for inventory or the creation of new products.
14. Month-end inventory snapshot
The month-end inventory snapshot displays the number of each product variant in stock at the conclusion of each month. This can be used to calculate the overall valuation of your Shopify inventory.
15. Average inventory sold per day
The average inventory sold per day is another unique ecommerce measure in your Shopify dashboard that displays the number of products sold each day per product variant.
PROS is an award-winning digital marketing services company. Our professionals have an experience of 20+ years in internet marketing, development and design, SEO, Shopify support and maintenance, Analytics, social media marketing, and e-commerce.
With PROS, track the analytics and KPIs of your business to better understand your market and improvise. Our experts offer a high-performance development plan to help you build a powerful user by using the e-commerce metrics and KPIs.
10. Store Sessions by traffic source
Developing a successful e-commerce store demands your attention in a variety of ways, from establishing your store to developing your brand to creating your goods to providing excellent customer support.
Knowledge of the e-commerce metrics stated above will assist you in determining how well you’re executing those activities and highlighting areas where you can fine-tune your plans and tactics to boost your store’s performance and bottom line.
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Deepak Wadhwani has over 20 years experience in software/wireless technologies. He has worked with Fortune 500 companies including Intuit, ESRI, Qualcomm, Sprint, Verizon, Vodafone, Nortel, Microsoft and Oracle in over 60 countries. Deepak has worked on Internet marketing projects in San Diego, Los Angeles, Orange Country, Denver, Nashville, Kansas City, New York, San Francisco and Huntsville. Deepak has been a founder of technology Startups for one of the first Cityguides, yellow pages online and web based enterprise solutions. He is an internet marketing and technology expert & co-founder for a San Diego Internet marketing company.