The right decision at the right time defines your eCommerce success. Every retailer needs statistical data to assess business performance. Is every data crucial to analyse your performance? Of course not, you need to segment goal-oriented data to assess how well your company is performing. Tracking your data points at every stage of your business expansion is crucial to harness informed decisions.
What is eCommerce Metrics?
A metric is a measure of a website's performance that can be tracked and calculated on a regular basis. Significant eCommerce metrics include conversion rate, average order values, cart abandonment rates, and traffic sources. These metrics allow you to keep track of everything you need to know about the performance of your shop. It doesn't mean you should track and optimize every measure available to you. Your key objective is to understand which metrics have the greatest impact on your eCommerce business.
How are eCommerce Metrics Different From KPIs?
Many businesses interchangeably use the words KPI (Key Performance Indicator) and eCommerce metrics. But, there is a significant distinction between KPI and a performance metric when it comes to developing and implementing your digital marketing plan for your eCommerce store.
Here are some basic distinctions between metrics and KPIs:
- Metrics are tactical, but KPIs are strategic.
- Metrics track the progress of a process, whereas KPIs track the results of such activities.
- Metrics are just a way of keeping track of the progress of a business operation. A KPI, on the other hand, tells you if you have met a predetermined business goal.
Top 7 eCommerce Metrics You Must know to Enhance Your Store Value
1. Conversion Rate - Know how successfully your online store visitors become paying consumers
Your conversion rate is the percentage of traffic that converts via your website or landing page. A "convert" can be virtually anything depending on your company goals, although there are a few basic types of conversions:
- Purchasing from your store
- Completing and submitting a form
- Getting in touch with your company
- Talking to the experts
- Subscribing to a paid or free service
- Signing up for the website
- Signing up for gated content
- Using an advanced function in your software or app, or just using your software or app for a set period of time
Measuring your conversion is rather simple. Divide the number of conversions you receive in a given time period by the total number of visitors that visit your site or landing page by 100 per cent.
Conversion rate = (total visits / conversions) * 100%
2. Average Order Value (AOV)- How much does your customer spend?
The average order value (AOV) is an eCommerce measure that determines the average total of all orders placed with a merchant over a given period of time. AOV is one of the most significant metrics for online retailers to understand since it influences crucial business choices including ad expenditure, shop layout, and product pricing.
__________ = Average Order Value
Number of orders
The AOV is calculated using sales per order rather than sales per customer. Regardless of how many times a customer returns to make a purchase, each order is tallied independently in the AOV. The average order value does not show gross profit, but it does reveal how such numbers are derived.
3. Customer Lifetime Value (CLV)- Identify underperforming repeat and retention activities.
Creating a long-term positive relationship with your consumers is what customer lifetime value is all about. Customer lifetime value is a measure that shows how much money a company may anticipate from a given customer account throughout the course of a business relationship.
Here are some reasons that explain why understanding your CLV is essential:
- Identifies the specific customers that contribute the most revenue to your business
- Increases customer loyalty and retention
- Helps you identify your target customers
- Reduces customer acquisition cost
4. Repeat Customer Rate - Track how many customers make repeat purchases with you
The Repeat Purchase Rate is the percentage of customers that have shopped with your company more than once. You can calculate the repeat purchase rate by dividing the total number of consumers who have purchased more than once by that of the total number of customers.
The metric focuses on your client retention efforts and is an excellent way to analyze long-term effectiveness by measuring loyalty. A good Repeat Purchase Rate indicates that you're offering increased value to your clients who have already purchased from you.
5. Inventory Metrics - Know your Stock Control Data
Continuously tracking your stock control data and metrics allow you to notice patterns and obtain insights that can help you make better inventory decisions. Here are some of the top inventory metrics you must know:
Gross Margin Return on Investment
It informs you how much money you earned back for every dollar you spent on inventory (i.e. ROI).
The disparity between the quantity of stock you have on paper and the real stock you have in store is referred to as this. It's a drop in inventory that isn't the result of legitimate sales.
Sell Through Rate
Sell through rate is the percentage of units sold compared to the total number of units available to sell.
The number of times a stock is sold or utilized in a certain time period is known as the stock turn. In most circumstances, a greater stock turn is better for your shop since it implies you're selling a lot of products without having to stock a lot of inventory.
Tracking product performance on a regular basis can help you keep track of your best and worst-performing goods. Increase the competitiveness of your stock orders, merchandising, and sales, among other things, if you are completely aware of your product's success.
To halt the leak and increase sales in the future, you must first understand why sales are being lost. One of the most effective approaches to determine where sales strategy modifications are needed is to do a lost sales analysis. In order to properly analyze lost revenues, two metrics must be taken:
- The first metric helps you identify sales opportunities that have been missed. You may use Business Intelligence (BI) to look at your pre-determined product combinations and discover what your consumers are purchasing and not buying.
- The second metric keeps track of your clients' sales data so you can monitor customers who are losing interest soon. This metric allows you to observe whether consumers are reducing their purchase volume or frequency, or have stopped buying entirely.
6. Profit Margin - Understand how effectively you manage your expenses
Understanding the four key metrics of eCommerce profitability is crucial to track how effectively you are managing your expenses. They are:
Gross Profit Margin
The gross profit margin is important because it shows you how your present income is servicing the remainder of your business and whether it is doing so profitably or not.
Customer Acquisition Cost (CAC)
CAC is the average cash amount you pay to attract a new customer. CAC is computed by multiplying the costs of converting prospects into customers (marketing, advertising, salespeople, and other expenses) by the number of customers obtained.
ROI on Promotional Campaign
Measuring the efficiency of your promotional campaign & discount strategy is crucial to measure and track your success. The Return on Investment, or ROI, is the most commonly used statistic to track the efficiency of a promotional effort. This indicator will reveal the profitability of your campaign.
Suggested Reading: PROGRAMMATIC ADVERTISING: CRUCIAL CONCEPTS & STRATEGIES TO LEVERAGE ROI
7. Shopping Cart Abandonment Rate - Nurture Your Lost Customers
The percentage of customers who add things to a shopping cart but leave before checking out is known as the shopping cart abandonment rate. A high shopping cart abandonment rate indicates issues with your eCommerce strategy.
You can calculate the abandonment rate by dividing the number of completed transactions by the number of shopping carts established by consumers to get your eCommerce store's cart abandonment rate. To calculate the percentage, subtract this value from one and multiply by 100.
Plan Your Metrics Analysis to Drive the Best Results
1. Once a week
To ensure that your firm is in excellent form, several indicators should be checked on a weekly basis. Website traffic, social media engagement, and impressions are all examples.
2. Every two weeks.
Bi-weekly metrics are those that are most suited for bigger sample size, less impacted by any variances that may occur inside a particular week when zoomed out from your weekly metrics. Average order value (AOV), cost per acquisition (CPA), and shopping cart abandonment are examples of bi-weekly KPIs.
3. On a monthly basis
Because of traffic patterns or, more likely, your own marketing practices, monthly metrics necessitate a longer data frame. Email open rate, multichannel engagement, reach, and add-to-cart abandonment are examples of monthly KPIs.
4. Once every three months
In terms of time spans, quarterly metrics are the most strategic. These quarterly measurements will be long-term activities that indicate your firm’s growth, as your weekly and bi-weekly metrics have demonstrated that it is healthy and surviving. Email click-through rates, client lifetime values, and subscription rates are all examples of these metrics.
Measure Your Metrics to Optimize Your Success Rate
Every eCommerce retailer needs to prioritize key performance metrics to measure the effectiveness of their online store and improve conversion rates. At eComIntegrate, we help our clients optimize their stores to drive measurable success. To know more about digital marketing services and conversion rate optimization, drop a line below.