Hello, fearless leaders! We all know that success is not only about sales in the eCommerce world. It’s also about comprehending the entire customer journey. From KPIs to conversion rates – there’s a mountain of eCommerce metrics to scale! But worry not; we’re here to guide you.
Let us map the metrics you must keep track of as a business leader.
It’s time to play smart and win big!
Metrics 101: What They Are and Why They Matter
Let’s start from ground zero, shall we? What are eCommerce metrics exactly? Well, think of them as vital signs of your business. Just as our blood pressure and heartbeat show off the signs of our health, they tell you everything about your eCommerce’s “health,” from marketing effectiveness to user behavior. They are just as important for your business as, for example, automation and integrations.
Now, if that’s not enough for you to care about them, then here’s more information:
- Metrics help you make informed decisions: They are like a compass that guides you in the right direction. Without metrics and KPIs, you’d be walking for miles and never reach your destination. But once you learn how to follow them, you will surely get to the desired objective in no time!
- They are essential for optimizing your eCommerce performance: Once you understand where you should focus your energy, it’s much easier to fix the mistakes and improve specific points of your business, which results in a better optimization score and ranking.
- They help you monitor customer behavior: Your most important asset – your customers. Without them, there would be no eCommerce. Wondering why they are leaving your website without making a purchase? Why your cart abandonment rate is high? The answer lies in the metrics. Customer satisfaction is crucial for a successful business!
- Spot trends and patterns: By monitoring your metrics over time, you will surely spot patterns – what do the clients like or dislike, what gives you most of the traffic, how did your latest campaign do, etc. Once you understand what’s going on behind the scenes, you can alter your future campaigns and strategies to suit the needs of your eCommerce website and propel your business to new heights!
eCommerce metrics allow you to pinpoint what marketing strategies are paying off the most or exactly where and why you’re losing customers! Exciting, isn’t it?
Metrics vs. KPIs: A Friendly Comparison
Hold up! Before we dissect and further explain metrics, let’s talk about the elephant in the room that keeps popping up – KPIs (Key Performance Indicators). Let’s keep it short and simple:
- Metrics are broad measures that track all sorts of aspects of your business. They keep an eye on everything; from the number of visitors to total sales.
- KPIs are specific, crucial metrics that align directly with your business goals. They help you evaluate the precise points that are essential to your eCommerce.
Basically, metrics provide you with a panoramic view, while KPIs maintain a laser-like vision of the elements that directly influence your business goals.
Now that that’s clear and understandable, let’s get to the heart of the metrics that can transform the way you do business.
Ready? Let’s dive right in!
Key eCommerce Metrics and KPIs You Should Be Tracking
With our foundations ready and set, it’s time to get to the point: explaining the key metrics and KPIs you should track at all times. Let’s set the radar on the right course and boost your eCommerce sales!
1. Traffic Sources
This metric tells you where your website visitors are coming from – the online pathways they took to land on your website.
Are they finding you via search engines (organic search), social media, or email marketing? Each source provides clues about your audience’s behavior and preferences.
By tracking your traffic sources, you can identify which marketing strategies are most effective and put your effort into strengthening those channels.
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To boost your traffic from various sources, you must tailor your content – it should match and resonate with the platform. The key is to tailor your SEO regularly but also to be active on social media and interact with the audience. Creative email marketing is always a plus, as well!
2. Conversion Rate
More than just a percentage, your conversion rate is the heartbeat of your eCommerce website.
This KPI tells you how effectively your site converts casual browsers into buyers.
For example, a low conversion rate might indicate that potential customers are not finding what they are looking for or your UX could use some improvement.
Working on boosting this rate can significantly increase your revenue without having to spend more on attracting visitors. Now, that’s a smart move!
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This metric is all about user experience, so it’s crucial to step your game up in that section! Of course, it’s much easier if you find out exactly what the problem is. For example, you’ll have to simplify the purchase process or make more engaging content.
Bonus tip: Purchases made on mobiles are on the rise, so make sure that your website is mobile-friendly!
3. Cart Abandonment Rate
Ever filled up an online shopping cart only to leave it at that? Don’t worry, you’re not alone. This eCommerce KPI shows you how many users leave their carts without making a purchase.
This is your alarm bell that potential sales are slipping away.
A high cart abandonment rate could indicate a variety of issues, from a complicated checkout process to unexpected shipping costs.
You must identify and resolve these hiccups so you can recapture lost sales and improve the shopping experience. This crucial step keeps your business alive, so make every cart count!
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Luckily, this one is pretty simple – improve your checkout process! You can offer multiple payment methods, reduce some extra costs, or make a welcoming discount for new customers. Providing a guest checkout option is also a great way to increase sales!
Play around, see what works best for your clients.
4. Bounce Rate
Now, this one may sting a bit – this metric shows the percentage of visitors who leave your website after viewing only one page.
A high bounce rate might indicate that your site didn’t make such a good first impression, or maybe users can’t find what they’re looking for.
This could be due to various factors, such as slow load times, poor design, or not-so-engaging content – signaling a need for website optimization.
But worry not! Once you address these issues, you’ll keep visitors interested and engaged with your site longer. Plus, once you take all the other metrics in addition to this one, you’ll automatically increase your traffic and lower the bounce rate.
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Catch their attention and make people curious about your brand! That’s the best way to lower your bounce rate. Improve your site’s loading speed, offer some interesting content, and (maybe the most important), make your store easy to navigate.
5. Customer Retention Rate (CRR)
Think of CRR as a loyalty meter! It measures the percentage of customers who keep coming back to your website.
A high CRR is actually a good thing, indicating you’re doing a great job at keeping your customers happy!
Let’s be honest, it’s easier (and a bit cheaper) to keep existing customers than to acquire new ones. So, tracking CRR can help you focus on creating a great experience for your current customers.
After all, loyal customers are your best brand ambassadors!
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You can enhance your CRR by investing in customer service, which will increase satisfaction. The best way to boost it is by interacting with your clients – consider making feedback surveys, and make sure you’re addressing complaints promptly and respectfully.
6. Customer Lifetime Value (CLV)
CLV is your crystal ball for looking into future earnings. This metric estimates the total revenue you can expect from a single customer over the relationship’s lifetime.
Knowing your CLV is crucial! It helps you understand how much you should invest in retaining customers versus acquiring new ones. It helps with your marketing and customer service strategies in the long run.
We know it sounds a bit scary, looking so far into the future like that. However, it’s been shown that nurturing long-term customer relationships often leads to repeat purchases and higher profits.
How to improve this metric
The key to improving your CLV is focusing on customer retention. Loyalty programs, top-notch customer service, and personalized experiences can go a long way – make your existing clients feel appreciated! This is crucial if you want to keep your customers.
7. Average Order Value (AOV)
Oh boy, this one’s a gem! The AOV tells you how much money customers are spending on each order. It’s one of the most important KPIs for your eCommerce business.
It’s determined by dividing your total revenue by the number of orders (no worries, this is all automated – no need for math).
Knowing this can help you strategize ways to encourage customers to spend more each time they shop. Now, there are countless ways to increase AOV; just figure out which one works the best for you!
As simple as it gets, higher AOV means more revenue for each transaction. Sweet, right?
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As mentioned above, there are countless ways to improve your AOV, such as bundling products, or offering free shipping on orders over a certain amount. It’s wise to make sales and other kinds of promotional campaigns from time to time – give your customers a chance to spend more.
8. Customer Acquisition Cost (CAC)
Think of CAC as the price tag that attracts new customers to your business. It sums up the total cost of acquiring a new customer, including all marketing and sales expenses.
Simply put, understanding your CAC helps you see if your investments are paying off.
We’re sorry to be the ones to break it to you, but If you’re spending more to acquire a customer than they’re spending on your products – well, it’s time for a new game plan.
The good news is, once you dissect this metric, you can adjust your finances and strategies accordingly and drive more sales with fewer expenses! Always look at the bright side – that’s how you make your way to the top!
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The best way to lower your CAC is by optimizing your marketing strategies. Pay attention to what brings you the most traffic – perform A/B testing from time to time to determine which channels to invest in. It’s easier to boost existing channels than to create new ones.
9. Return On Advertising Spend (ROAS)
ROAS acts as your financial magnifying glass, revealing the effectiveness of every dollar spent on advertising.
As the name itself shows, this metric helps you determine which ads are working and which ones aren’t – simply by showing how much revenue you earn for each dollar spent on advertising.
So, a high ROAS indicates a more successful advertising campaign. Easy and useful, right?
Now, why is regularly tracking your ROAS so important? Well, if you make the right moves, it can help you optimize your ad spend and maximize profits.
Spend less to earn more – a perfect formula for success, don’t you think?
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Two words: target audience. Define who your target audience is, and use that data for your marketing campaigns. Of course, use free advertising options as much as possible.
10. Revenue On Investment (ROI)
The ROI metric is kinda like your business’s report card – it measures the return on different investments made in your eCommerce business.
This includes all kinds of investments, from a new marketing campaign or a website redesign to a new customer loyalty program.
To keep it simple, ROI helps you understand if your investments are paying off.
That’s why understanding this metric is crucial for making informed business decisions and ensuring profitability, making every penny count.
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Make it a habit to review and optimize your investments. Sometimes, an investment you thought would be a hit can, once implemented, become a big miss. And that’s okay, it happens!
That’s why it’s crucial to check everything from time to time, cut out things that don’t work, and focus on the ones that bring you profit.
These are just some of the most important eCommerce metrics that every business should track. Now, it’s important to show you how to actually track these metrics! Ready?
Keeping Score: Best Tools and Practices for eCommerce Metric Tracking
Let’s equip you with the right tools! Tracking the right eCommerce metrics is not a hard task, but it is time-consuming. Lucky for you, there are plenty of tools available to make your work easier!
- Google Analytics: this free and comprehensive tool helps you track a wide range of eCommerce metrics: traffic sources, bounce rate, conversion rate, and many more. It’s a must-have for all e-commerce businesses.
- Facebook Pixel: If you’re using Facebook Advertising, then Facebook Pixel is your new best friend! It helps track conversions from Facebook ads, but it also allows you to optimize them and remarket to your audience.
- Customer Relationship Management (CRM) Software: CRM platforms, such as Hubspot, can give you valuable insights into customer behavior. They can be used to track metrics like CLV and CAC, so make sure to check them out!
- eCommerce Platform Analytics: Most of these platforms, like Shopify, Magento, and BigCommerce, offer built-in analytics to track a variety of metrics related to sales, customers, and marketing. No wonder they are number one when it comes to analytics!
Now that you’re armed with the tools, here are some of the best practices, that you can do right now, to make the most out of your metric tracking:
- Set Clear Goals: First and foremost, you must know what you’re aiming for! It’s a crucial step for anything in life, preventing you from wandering around clueless. Define what success looks like for each metric, and then you can start tracking.
- Be Consistent In Tracking: As mentioned before, make it a habit! Regularly monitor your metrics if you want to spot trends and potential opportunities. It’s not a one-time task, it’s a process.
- First Analyze, Then Act: Just tracking your metrics is not enough. Plain information brings you nothing if not acted upon! Analyze the data, and use that knowledge when making decisions. First strategy not working? Try a new one! Remember, when a door closes – a window opens.
- Prioritize: Remember, not all metrics are equal. Use your business goal as a mark on a map, and prioritize based on that information. You’ll get there faster if you align closely with your objectives.
Metrics Matter: A Map To eCommerce Success
The bottom line? Your eCommerce KPIs and metrics matter. They are your roadmap to success. Prioritize them to always align with your objectives, and never stop optimizing. With these eCommerce metrics in your arsenal, you’re not just surviving the eCommerce wave – you’re riding it. Stay curious, stay informed, and stay ahead! Good luck!
