Most of the successful eCommerce stores make decisions based on data or metrics.
They always know the state of their store’s performance at all times and know which levers to pull at what time.
There is a countless number of eCommerce metrics you can track, but only a few directly represent the state of your business and can be used as actionable insights that’ll help you grow.
Let’s talk about the most important eCommerce metrics.
The 7 most important eCommerce metrics
These are the 7 most important metrics that every eCommerce store marketer should track.
1. Sales Conversion Rate
Your conversion rate is the percentage of visitors who make a purchase. This is the metric you’ll worry about the most—that’s why it’s No.1 on this list.
According to Marketing Sherpa, a good conversion rate for eCommerce stores is between 1% and 5%.
Most of the eCommerce analytics tools will tell you the conversion rate, however, you can also find it manually by dividing the number of people who bought a product by the total number of visitors.
Technically, there are little micro-conversions all over your site that lead to a macro-conversion (the purchase). For instance, a shopper clicking on a product on a category page is a micro-conversion because it’s the path to a sale.
Improving your eCommerce conversion rate is a big topic. Check out this guide from ConversionXL for more information: The Ultimate Guide to Increasing eCommerce Conversion Rates.
2. Email Opt-ins
Email marketing is one of the most powerful tools eCommerce stores have to generate repeat purchases. It can deliver a 4,400 percent ROI. That’s $44 for every $1 spent. Plus, your mailing list doesn’t make you dependent on another platform (like Facebook or Google) to drive traffic.
Ideally, you want to get as many people on your email list as possible, even if they don’t buy your products. So it’s important to track your total opt-ins and your opt-ins by source. That is, you want to know the individual opt-in rates of every form on your website.
3. Customer Lifetime Value
Your customer lifetime value is a metric of the total you earn from a typical customer over the course of their life. For Instance, If you earn $25 over six transactions from a typical customer throughout their life, your CLV is $150.
Knowing your customer lifetime value tells you how much you can spend to acquire a customer and how far you should go to retain them.
There are lots of ways to increase your customer lifetime value, but they boil down to increasing your average order value (more on this in a minute) and building long-term relationships with your customers so they become repeat buyers.
4. Customer Acquisition Cost
Naturally, it costs something to acquire a new customer. This value is called your customer acquisition cost.
In order to make money, your customer acquisition cost needs to be less than your customer lifetime value. Ideally, your acquisition cost should be less than your average order value so you make money off every new customer.
Some businesses can afford to lose money on the first sale and make it up off that customer later, but eCommerce businesses don’t usually have margins to support that.
You can calculate your CAC by dividing your total marketing spend by your number of customers. That’s an overall figure, however. It’s also useful to calculate your CAC by source. You want to know your CAC for each traffic channel.
How do you lower your customer acquisition cost?
- Improve your site for conversions.
- Optimize your paid ads so you spend less for the same results.
- Invest in nearly-free marketing channels that you control, like email marketing, social media, online communities, or content marketing.
- Create a referral program so your customers refer you to new customers. This usually costs something, but it’s a fixed price you only pay when you make a sale.
5. Revenue by Traffic Source
Some traffic sources send visitors who are more likely to become customers. It’s important to stop spending cash on sources that don’t work well or don’t work at all, and invest that money in sources that do work.
How do you identify which ones work? By calculating your revenue by traffic source – a metric that shows you which channels send you actual customers, as opposed to visitors who never buy. How you raise your traffic by source depends on the source.
6. Average Order Value
Your average order value is, quite simply, the average value of each purchase. To discover yours, divide the total value of all sales by the numbers of carts.
Naturally, you want customers to spend as much as possible so you earn as much as possible. You need to know your average order value so you can find ways to raise it.
How do you drive this metric up?
- Bundle products together so the customer gets a slight discount on the products as opposed to buying them separately.
- Upsell your customers additional features or premium versions of your products.
- Recommend products that complement their purchases.
- Offer free shipping for higher total purchases. (E.g., If your AOV is $54, offer free shipping at $60 to tempt your customers to spend more.)
You can see more strategies for increasing average order value here as well.
7. Shopping Cart Abandonment Rate
This metric is the percentage of shoppers who add items to their shopping cart, but then leave your store without making a purchase. Nearly 70 percent of shoppers abandon their carts, but some of that revenue is recoverable, so it’s important to lower your abandonment rate as much as possible.
How do you reduce your cart abandonment rate?
- Simplify your checkout process so the customer can order smoothly.
- Use remarketing to bring would-be customers back to your store.
- Send cart abandonment emails. These prompt the shopper to return and complete their purchase.
Using important eCommerce Metrics
Any store, small or large, should be paying attention to these eCommerce metrics. As we noted initially, statistical significance plays a part in whether you can accurately measure changes in these eCommerce metrics. Stores with smaller data sets should focus on improving non-rate metrics to start, like AOV, lifetime value, and customer acquisition costs. As your store grows to process a higher volume of orders and therefore has more data points, you’ll be able to more accurately track and influence change on other eCommerce metrics, like conversion rate, to make the best decisions for your store.