Picking the right metrics is one of the most important things to get right for a successful eCommerce website. By no means is it easy, especially with all of the different types of metrics you could be tracking (and there’s a lot more than you think). There are also no hard and fast rules on which ones you should choose to track. The most important thing is that these numbers give you an insight into how you can improve your business.
Without metrics, success is impossible to measure. The metrics we choose determine what and how we measure our eCommerce performance. This post explores the Key eCommerce metrics you need to track to take your store to the next level.
How to Determine Key Ecommerce Metrics for Your Company
Monitoring hundreds of indicators has little to no value if they do not have a significant influence on the long-term performance of your eCommerce shop. Here’s what we recommend: identify the key performance indicators (KPIs) that regularly have the biggest influence on your overall company objectives from the larger list of metrics you now measure.
To differentiate the two terms,, metrics track the success of every business activity, whereas KPIs indicate how effective you are at accomplishing specific goals. For example, while traffic produced through paid search is a standard small company statistic for digital businesses to analyze, a KPI would focus on the number of qualified leads created from paid search.
If you’re still struggling to figure out which metrics are most essential for your company to monitor, here are three questions to ask yourself to help narrow it down:
- How much of an impact would a change in this metric have on my business?
- Is this a metric that will enhance other metrics?
- Will boosting this measure help us achieve our strategic objectives?
Key eCommerce Metrics
1) Customer CLV (Lifetime Value)
Customer lifetime value (CLV) is a commonly used metric in ecommerce. It is an absolute number that tells you how much money can be expected to be generated by the average customer over their life as a customer. A company’s CLV is one of the most advanced and sophisticated metrics as it incorporates all aspects of ecommerce.
One of the most common marketing mistakes is seeing your client base through the prism of a single transaction. The CLV metric looks at the larger picture. It evaluates clients based on how much income they will generate for your business throughout your relationship with them.
CLV = Av. Order Value * Av. Purchase Frecuency * Av. Customer Lifespan
2) Average Order Value (AOV)
Average Order Value (AOV), in ecommerce, is basically the total sum of all the sales that you get from a particular order. You calculate it by adding up the value of each item included in an order, and then dividing that by the number of orders. AOV is a crucial metric to consider for ecommerce businesses, as it can tell you how well you’re doing.
AOV = Total Sales/ Total Orders
3) Customer Acquisition Cost (CAC)
CAC is a metric that company use to determine the amount of money it costs to acquire a customer using paid advertising.
This is an essential metric in determining whether your company will be profitable in the future and should be considered when determining how much to spend on paid advertising campaigns, as well as other marketing tactics.
CAC = Sales & Marketing Expenses/New Customer Acquired
4) Customer Retention Rate (CRR)
If you’re losing consumers almost as fast as you’re gaining them, something is wrong with your products or customer engagement approach. Recurring customers are the foundation of eCommerce companies since it is far less expensive to keep happy clients than to acquire new ones.
CRR= (# Customer at the end of a period – # New Customers Gained in a period / # Customers when the measures period begin ) * 100
5) Shopping Cart Abandonment Rate (CAR)
You are looking to increase your online sales. One of the first and most effective places to start is implemented with a Shopping Cart Abandonment Rate Calculator. Many shoppers will abandon their cart during an online purchase without any notice or warning. If you have a high shopping cart abandonment rate, then you may lose some potential sales
These are the reasons Car Abandonment may happen:
- Payment security problems.
- Long checkout process that goes beyond a single page.
- Unexpected fees or excessive shipping charges.
- There is no option for guests to check out.
- Bad User Experience within the site (slow web)
CAR = 1− (shopping carts created/transactions completed) ∗100
6) Activity Metrics on-site
Keep a careful eye on what visitors do after visiting your website. If they leave soon, look for issues with website load speed, page usability, or a mismatch between what visitors want and what you deliver (make sure your ads are congruent with their landing pages, for instance). How many pages are viewed by visitors? How long are they on those pages? What happens after they leave? By analyzing visitor behavior, you may learn where they’re leaving you and start working on resolving the issues that are causing them to leave your site without completing an order.
7) Bounce Rate
What is the web bounce rate? When a visitor comes to your website and leaves right away, it’s called a web bounce. A high bounce rate is considered a bad metric because it shows that users aren’t getting what they need. If you have too many invisible pages like sitemaps, privacy policies, and terms of service pages – this can cause your bounce rate to be too high.
Bounce Rate = The total number of one-page visits/ total number of website entries
8) Net Promoter Score (NPS)
The Net Promoter Score is a number that measures how likely your customers are to recommend you. If a customer is a promoter, they’re happy and loyal. If not, then they’re neutral or even detractors.
Customers who answer with a 9 or 10 are classified as promoters; those who respond with a 7 or 8 are classified as neutral; and anything less than a 7 is classified as a detractor.
NPS = %Promoters – % Detractors
9) Email Marketing Metrics
Email marketing metrics is a perfect way to measure the performance of your email campaign. A good understanding of various email marketing metrics can help you boost open rates, lower unsuscribe rates and increase click rates.
10) Conversion Rate
Your ecommerce company is most likely already tracking some type of conversion rate on its website, but it’s crucial to emphasize the importance of tracking Conversion Rate and how it eventually ties to the other metrics on this list. Conversion rate is calculated by dividing the number of conversions by the total number of visitors who were given the option to take the action.
Track your Key eCommerce Metrics with Radix
If you don’t know where to start and what Key eCommerce metrics to track, it’s time for you to try Radix. This universal solution can help you get full control of all important aspects of your eCommerce business.
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