In today's business world, ecommerce is a vital part of many companies' operations, but with technology being what it is, keeping track of a multifaceted business can be challenging.
Luckily, modern tech is excellent at producing insightful metrics and quality analytics can literally be gold.
In this blog, we’ll discuss ecommerce metrics, giving you a round-up of which to focus on.
We’ll also be discussing tools along the way that make metric tracking, and your ecommerce strategy at large, easier to handle.
What Are Metrics?
Simply put, metrics are a way of analyzing the performance of your company's online sales and marketing efforts.
By tracking key metric data, you can gain valuable insights into your customers' behavior and the performance of your sales platforms.
Why You Should Track Metrics
So why are ecommerce performance analytics so important?
In short, they provide a valuable roadmap for success.
By tracking the right data points and using that data to inform your decision-making, you can ensure that your business is on the right track and moving in the right direction.
By understanding the performance of each area, you can fine-tune your approach, and save resources by only putting attention where it’s most needed.
Metrics
There are a variety of different metrics that businesses can track, but some of the most important include:
- Website traffic
- Conversion rates
- Cart abandonment rates
- Customer satisfaction levels.
Website Traffic
This is among the most basic ecommerce metrics to track.
It’s purely the number of visits you get to your website. This is an important metric to measure for a variety of reasons.
First, it can give you a sense of how popular your website is.
If you're seeing a lot of website traffic, it's likely that people are finding your site useful and are coming back to it again and again.
Additionally, website traffic can also give you insights into what kind of content is resonating with your audience and where they're coming from.
But most importantly, you’ll need this number to figure out your conversion rate.
Make sure to pay attention to the split between desktop and mobile traffic, when checking your ecommerce performance analytics. For ecommerce, you want mobile traffic to be at least as high as desktop.
Bounce Rate
Bounce rate is the percentage of visitors to your who click away in the first couple of seconds.
While a high bounce rate may simply be the result of poor website design, it can also be indicative of problems with the content or overall user experience.
As such, it's important for you to keep an eye on your bounce rate and work to identify and fix any potential issues.
It’ll impact the rest of your important ecommerce metrics.
Website speed is often one of the leading causes of a high bounce rate, and so every effort must be made to improve speed.
Conversion Rate
A conversion rate is a statistic that measures the percentage of visitors to your site who answer a call-to-action, such as making a purchase or signing up for a newsletter.
The formula for calculating the conversion rate is simple: divide the number of conversions by the total number of visitors, and then multiply it by 100.
Conversion rates are useful for ecommerce insight into the effectiveness of a website or particular campaign.
If your conversion rate is low, it’ll be worth performing some conversion rate optimization.
Average Order Value
Average Order Value (AOV) is a metric that measures the average amount of money spent per order on a website or in a store.
This metric is valuable as it lets you know how much you’re generating per transaction.
By understanding how average order value impacts your business, you can make sure you’re making decisions that will lead to long-term success.
It must be weighed against the next metric to help figure out the profit you’re making.
Customer Acquisition Cost
The next of the top ecommerce metrics is "customer acquisition cost" (CAC) refers to the amount of money that a company spends in order to acquire new customers.
While acquiring new customers is essential for businesses to grow, it is important to keep track of how much each customer costs to acquire.
This will help you make smart choices about your strategies, and make sure that you’re not overspending.
Your CAC can be per campaign (i.e. email, landing page, social media, etc), or you can add them all up and divide to get an average CAC across your whole marketing toolset.
In ecommerce tracking, you want your CAC to be lower than your AOV. If it isn’t, this will likely lead to a loss, unless the next metric is high.
Customer Lifetime Value
Lifetime value (LTV) is a metric that measures the complete value you’ll get out of a customer relationship, from initial purchase to repeat business.
By understanding LTV, you can make more informed decisions about marketing initiatives, product development, and other investments.
Additionally, LTV can help businesses to identify and market to high-value customers.
Your average CAC must be lower than your average LTV, or you are running at a loss.
Refund and Return Rate
This is vital for order metrics.
Returns and refunds are normal in business.
However, if they’re too common, they will damage your profits. (If it’s workable, you could consider a returnless refund model, depending on your business.)
That's why you have to keep an eye on them.
Of course, if you have a high refund and return rate, you’re either doing something wrong or perhaps a particular item is a problem.
When it comes to your email marketing, there are three key ecommerce metrics that you should pay attention to:
- Opt-in rate
- Open rate
- Clickthrough rate
The opt-in rate measures the number of people who subscribe to your list.
The open rate measures the number of people who read the emails or at least open them.
The clickthrough rate measures the number of people who click on links in your emails.
Those metrics are in order, so if one is low, those following it will be even lower.
Luckily good email autoresponders have built-in analytics, and A/B testing to help fine-tune performance and boost these rates.
Shopping Cart Abandonment Rate
This is the final of the most important ecommerce metrics we’ll cover.
Shopping cart abandonment rate is the percentage of online shoppers who add items to their cart but do actually buy them.
This rate can be influenced by a number of factors, including shipping cost, product availability, and website design.
Monitoring shopping cart abandonment rate can give you insight into where you’re losing customers.
Quality shopping cart software can get you accurate numbers, and send handy reminders to try and nudge buyers to return and complete a purchase.
Handy Tools for Metric Measurements
Now you have an idea of some of the most important ecommerce metrics.
We’ve already mentioned a couple of tools that can be useful too, but we’ll discuss a few more here.
Sales Funnels
Sales funnels are excellent tools to track your metrics.
A sales funnel is basically a process that takes potential customers through a series of steps in order to make a purchase.
By using a sales funnel, you can track how many people are entering at each stage of the funnel, and where they are dropping off.
eCommerce funnel metrics are superb because they provide exact information on what to focus on, as sales funnels can incorporate every aspect of your ecommerce strategy.
Landing Pages
Landing pages are single pages apart from your site that can be used for a number of things.
You can use them as a controlled environment to test aspects of your strategy.
Plus, landing page builders offer analytics and split testing to add even more granular information and additional data points.
Conclusion
Having an accurate grasp of your ecommerce metrics is essential to running a successful ecommerce business.
By understanding and tracking key metrics, you can make better marketing choices, improve product development, and other split investments wisely.
This will help you save time, money and effort, maximize your performance, and therefore, your profit.
Garan is a writer interested in how tech reshapes the environment, and how the environment reshapes tech. You'll usually find him inoculating against future shock and arguing with bots.
