It’s important to track key ecommerce metrics. This will help you plan your ecommerce marketing strategy, as well as monitor the financial health of your ecommerce store.
Ecommerce metrics give you vital information, from the click-through rate of your marketing campaigns to the average amount your customers spend for every order. Tracking ecommerce metrics will set your ecommerce business up for long-term success beyond the bottom line.
In this article, we’ll cover the most important ecommerce metrics and key performance indicators (KPIs) you should monitor.
What are ecommerce metrics?
Ecommerce metrics are data and other quantifiable measurements that allow you to estimate the health of your ecommerce site.
Sales conversion rate, customer acquisition cost (CAC), and customer lifetime value (CLV) are examples of ecommerce metrics.
There are many different types of ecommerce metrics. They come from a variety of sources, including your web pages, social media, and Google Analytics.
13 Top ecommerce metrics to track
Here are the most important metrics to better understand your online store’s performance and ecommerce sales.
1. Sales conversion rate
The sales conversion rate is probably the most important among all ecommerce metrics. This is how many website visitors convert into customers. Conversion rate is calculated by the this formula:
CR = (Total number of customers / Total unique visitors) * 100
The average sales conversion rate for the ecommerce industry is 3.4%. In general, a good conversion rate is around 2.5-3%.
Driving traffic to your site isn’t everything. Once people land there, they need a lot of persuading to place an order. The product and price, user experience, payment security, and return options should all feel right for the customer.
The process of improving this metric is called conversion rate optimization (CRO). Regularly check your sales funnel, visitor behavior on site, page views, and exit pages. The goal is to identify where the problem is and hopefully fix it.
Here are a few quick fixes that’ll help you improve your conversion rate:
- Attract more qualified traffic with Facebook ads to lookalike audiences based on your best customers.
- Test out every option in your checkout process yourself.
- Optimize mobile and tablet experience.
- Use remarketing (e.g. winback emails) to re-engage people who visited your site but left without buying.
- Do an SEO audit to see if you’re using the wrong wording on your product pages.
2. Customer acquisition cost (CAC)
The customer acquisition cost (CAC) measures how much it costs to acquire a new customer. It’s important to understand your CAC to plan your marketing budget.
The general formula to calculate CAC is as follows:
CAC = Total costs associated with acquisition (e.g. marketing and sales costs) / Total new customers
If you spent $5,000 on a marketing campaign that resulted in 1,000 new customers, your CAC would be $5. A general rule of thumb is to keep CAC under 30% of your customer lifetime value, or CLV (more on that later).
To optimize CAC, you want to minimize costs and maximize revenue. When you invest money in website traffic, not all of it leads to new customers and sales growth. Sometimes, less traffic with higher conversion rate is more profitable than huge traffic that barely converts.
Analyze all your acquisition channels (social media, ads, review sites, referrals, etc) to evaluate which ones have the greatest impact. Make sure you know the maximum CAC you can afford. Otherwise, you might lose money in the effort to bring in new customers.
3. Average order value (AOV)
Average order value (AOV) is what it sounds like: the average amount a customer spends on each order from your store.
AOV is one of the most important ecommerce KPIs. You can easily increase your total revenue by increasing the average order value, even with no new traffic.
Higher average order value means more profit. Some ways to increase AOV include:
- Offering bundles/ mix & match/ 3-month supply of products
- Selling add-ons or services
- Implementing loyalty programs
- Giving free shipping for orders above the AOV
- Checking which marketing channels bring you higher AOV and double-down on them
4. Average profit margin
The average profit margin is what you earn from each product after deducting what you paid for supplying it. It’s calculated as a percentage of the retail price and shows what portion of it your profit is.
Profit margin = [(Selling price – Cost of goods) / Selling price] * 100
The profit margin increases when the price goes up and the cost of goods sold goes down.
Here are a few ways to maximize your average profit margin:
- Create product bundles of one popular product and another that has a very good margin.
- Highlight your most profitable products in all campaigns, visuals, etc.
- When adding new products, go for high-margin ones.
- Do more referral campaigns instead of discounts so people don’t get used to reduced prices.
- Increase the price but include add-ons, accessories, maintenance, etc.
5. Shopping cart abandonment rate
Shopping cart abandonment is when customers add a product to their online shopping cart but don’t complete their purchase. You can calculate your shopping cart abandonment rate with the following formula:
Shopping cart abandonment rage = [Total number of completed purchases / Total number of shopping carts created] * 100
On average, 70% of people abandon their shopping cart online. This is a common problem for ecommerce businesses. Website visitors abandon their online carts for a number of reasons. It may be due to unexpected shipping costs. Or, perhaps they were simply browsing.
More resources Check out these articles for ideas on how to reduce your shopping cart abandonment rate:
6. Customer lifetime value (CLV)
Customer lifetime value (CLV) is one the most important ecommerce metrics. It measures how much any given customer spends with your online business throughout their customer lifecycle.
Here’s one way to calculate customer lifetime value.
CLV = Average order value x Number of orders (per year) x Average customer lifespan (in years)
Customer lifetime value is important because it shows customer loyalty. Driving CLV can save your marketing budget and make your ecommerce store more financially stable in the long run.
A global report on ecommerce brands found an average CLV of $168. However, it’s hard to set a CLV benchmark as it varies greatly across categories, currencies, and markets.
To increase CLV, you need to increase the average order value, increase repeat purchases, or increase the customer lifecycle. Or, better yet, do all three.
Identify your high-value customers and examine their customer journey. Then, try to replicate it for other potential customers.
Prioritize your highest-CLV customers. First, because you want to keep them. And second, because they can be brand ambassadors and bring you more loyal clients.
7. Customer retention rate (CRR)
Customer retention rate is the share of repeat customers (with more than one order) out of all your shoppers. A simple formula for calculating it is:
CRR = (Number of customers with more than 1 order / Total Customers ) * 100
Returning customers are far more profitable than acquiring new ones. The acquisition isn’t cheap. However, returning customers will pay off their acquisition cost several times over.
There are many ways to improve your CRR. For example, you can send post-purchase emails or reactivation emails to one-time shoppers. Consider offering discounts on their next order. Or, improve the overall customer experience.
8. Refund and return rate
The refund or return rate is the percentage of orders refunded or returned compared to the total number of orders.
Sometimes problems happen and products need to be returned. Not surprisingly, the return rate is highest in fashion ecommerce.
While accepting returns is a must, a high return rate means problems with product quality, customer satisfaction, or lead quality.
There are a few things you can do to lower your return rate. Make sure customers see what they’re buying in advance. Or, change shipping carriers if you find they deliver your products in poor condition.
9. Click-through rate (CTR)
The click-through rate (CTR) is the percentage of visitors who click on your email marketing campaign, social media ad, or link.
You can calculate your click-through rate with the following formula:
CTR = (Total number of clicks / Total number of impressions) x 100
According to an email marketing benchmark, a good CTR for email campaigns is around 3.98%.
10. Bounce rate
For ecommerce websites, the bounce rate refers to the percentage of website visitors who leave after visiting a single page. That means they didn’t browse other product pages, fill out a form, or take any other action.
The average bounce rate for ecommerce websites is 38.7%. A lower bounce rate usually means your website is performing well.
To reduce the bounce rate, create a seamless customer experience. Make content easy to read, with clear headlines and well-formatted text. And be sure to optimize your ecommerce website for different devices, including mobile.
11. Net promoter score (NPS)
The net promoter score (NPS) measures how likely your customers are to recommend your ecommerce business to other people.
Simply ask customers: On a scale of 0 to 10, how likely are you to recommend our business to a friend or colleague?
Customers will fall into one of three categories:
- Promoters: Customers who responded 9-10.
- Passives: Customers who responded 7-8.
- Detractors: Customers who responded 0-6.
To calculate NPS, subtract the percentage of detractors from the percentage of promoters.
NPS = Percentage of promoters - Percentage of detractors
The NPS can range from -100 to 100. For ecommerce businesses, the average NPS is 62.
12. Churn rate
The churn rate is the percentage of customers who stop buying from your ecommerce store within a given time period. You can calculate churn with the following formula:
Churn rate = (Lost customers / Total number of customers at the start of the time period) * 100
Churn rates vary widely across the industry. For subscription-based services, a successful churn rate is around 5%. For other types of ecommerce businesses, a churn rate of 10% is a good metric.
13. Best performing products
It’s also important to track your best performing products in terms of revenue and quantity sold. See which products drive repeat purchases, have the best reviews, or are often ordered together. Look for opportunities to optimize your inventory.
For instance, some products sell more per view, but maybe they aren’t visible on your homepage. This means they don’t get enough exposure and sales as a result.
Brevo’s ecommerce solution, featuring revenue data and most popular products
How often should you monitor your ecommerce metrics?
Now you know the most important ecommerce metrics. But how often should you track them? This will depend on a number of factors.
Here are a few general guidelines to know what to track and how often.
- Weekly: Keep close tabs on things like website traffic, sales conversion rates, and customer acquisition cost (CAC). Identify smaller trends and adjust your budget accordingly.
- Monthly: Look at customer lifetime value (CLV), best performing products, and return rates. This will help you see how your ecommerce is performing over a longer time period.
- Quarterly: Take a look at your numbers on a macro-level. Analyze how your ecommerce business is doing with regard to competitors and the larger ecommerce trends.
Why should you track ecommerce metrics?
Tracking ecommerce metrics is crucial for any business that wants to achieve sustainable growth. Here are a few reasons you should track your ecommerce metrics.
Better understand your ecommerce sales
Ecommerce metrics allow you to understand how your business is performing at a deeper level. This means looking at more than looking at your revenue.
You should also know where the sales are coming from. That includes understanding customer buying trends and most effective acquisition strategies.
Analyzing revenue in Brevo’s ecommerce dashboard
Data-driven decisions
Ecommerce metrics help you make data-based decisions. This will allow you to better plan your inventory as well as budget your marketing efforts. Understanding ecommerce KPIs can also lead to more accurate sales forecasting.
Improved customer experience
Having a good grasp on your ecommerce metrics can help you create a seamless customer experience. You can test different landing pages, product descriptions, and website navigation to see what works best for your customers.
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