Ecommerce metrics are more than just quantitative data. It can help businesses measure their progress towards specific goals and objectives, and provide a way to assess the effectiveness of their business strategies.
By tracking Ecommerce metrics, you can identify areas where your business is performing well and areas where you need to improve so you can make informed decisions about how to allocate resources and make changes to better meet your business goals.
Are you tracking the right metrics for your Ecommerce business? In this blog article, we listed down the best Ecommerce metrics you should prioritize to accurately measure the success of your Ecommerce brand.
What are Ecommerce metrics?
Ecommerce metrics are measurements that businesses use to assess the performance and effectiveness of their online stores. These metrics can help businesses understand how well their ecommerce platforms are performing, identify areas for improvement, and make data-driven decisions about their online sales and marketing efforts.
Why is it important to track Ecommerce metrics?
Tracking Ecommerce metrics is important for several reasons:
1. To measure the performance of your online store and identify areas for improvement. This can include metrics such as revenue, average order value, conversion rate, and customer retention rate.
2. To understand your customers and their behavior. This can include metrics such as the products they purchase, how often they make purchases, and their lifetime value as a customer.
3. To optimize your marketing efforts and allocate resources effectively. This can include metrics such as cost per acquisition, return on ad spend, and the effectiveness of different marketing channels.
4. To make data-driven business decisions. Tracking Ecommerce metrics can provide you with the insights you need to make informed decisions about your business, such as whether to invest in a new product line or expand to a new market.
5. To benchmark your performance against competitors. By tracking ecommerce metrics, you can see how you stack up against other companies in your industry and identify areas where you have a competitive advantage.
List of Important Ecommerce Metrics to Measure the Success of Your Ecommerce Brand
We've put together a list of common Ecommerce metrics that many online retailers track to measure their success. These metrics can provide valuable insights into the performance of your Ecommerce brand.
It's important to consider your own business goals as you review this list and identify which Ecommerce metrics are most relevant to your company. By tracking the right metrics, you can gain a better understanding of your business's performance and identify areas for improvement.
1. Conversion rate
Conversion rate is an Ecommerce metric that measures the percentage of visitors to your online store who complete a desired action, such as making a purchase or filling out a form. It is a key indicator of the effectiveness of your online store and is important for optimizing your website and marketing efforts.
To calculate your conversion rate, divide the number of conversions (such as purchases or form submissions) by the number of website visitors and multiply the result by 100. For example, if you had 100 visitors to your website and 10 of them made a purchase, your conversion rate would be 10%.
To improve your conversion rate, you can try optimizing your website design, improving the user experience, and testing different marketing strategies. It's also important to track your conversion rate over time to see if your efforts are having a positive impact.
2. Average order value
Average order value (AOV) is an Ecommerce metric that measures the average amount of money spent by customers in a single transaction on your online store. It is an important metric for Ecommerce businesses because it can help you understand your customers' purchasing habits and identify opportunities to increase sales.
Divide the total revenue made by your online store by the number of orders placed to calculate your average order value. For instance, if your online store earned $50,000 from 1,000 orders, the average order value would be $50.
You can try giving package discounts, upselling and cross-selling products, and boosting the value of your products or services to increase your average order value. It is also critical to track your average order value over time to determine whether your efforts are having an effect on customer purchasing habits.
3. Customer lifetime value (CLV)
Customer lifetime value (CLV) is an Ecommerce metric that represents the total amount of money a customer is likely to spend on your online store during their lifetime as a customer. It is a critical indicator for Ecommerce businesses since it allows you to assess the worth of your customer base and find chances to improve customer retention and loyalty.
To calculate your customer lifetime value, determine first the average amount of money a customer spends on your online store in a single purchase (also known as the average order value). Then you must estimate the average number of purchases made by a customer during a specific time period (such as a year). Finally, multiply the average order value by the number of purchases per year and the number of years a customer is expected to purchase from your store.
For example, if your online store's average order value is $50 and a customer is predicted to make two purchases per year for the next five years, the customer lifetime value is $50 x 2 x 5 = $500.
You can attempt improving the customer experience, establishing loyalty programs, and targeting customers with tailored marketing efforts to boost your customer lifetime value. It is also necessary to track your customer lifetime value over time to determine whether your initiatives are having a positive impact on customer retention and loyalty.
4. Net profit
Net profit is a key Ecommerce metric that describes the overall amount of money made by a business after all expenses and taxes are deducted. It is a significant indicator for Ecommerce businesses since it represents overall profitability and aids in understanding the return on investment.
To compute your net profit, subtract your total expenses from your total revenue. Cost of goods sold (COGS), marketing and advertising charges, and general and administrative expenses are all part of your total expenses.
For example, if your online store generated $100,000 in revenue and had $60,000 in expenses, your net profit would be $100,000 - $60,000 = $40,000.
To increase your net profit, you can try reducing your expenses, increasing your prices, or finding ways to increase your revenue. It's also important to track your net profit over time to see if your efforts are having an impact on the profitability of your business.
5. Customer acquisition cost
Customer acquisition cost (CAC) measures the cost of acquiring a new customer through marketing and sales efforts. It is an important metric for ecommerce businesses because it helps in understanding the effectiveness of their marketing and sales strategies and identify opportunities to reduce costs and improve efficiency.
To calculate your CAC, you need to divide the total amount you spend on marketing and sales efforts by the number of new customers acquired. For example, if you spent $10,000 on marketing and sales and acquired 100 new customers, CAC would be $10,000 / 100 = $100.
Reducing CAC is crucial for online retailers because it can improve the profitability of their business. By spending less money on marketing and sales efforts, you can increase the overall margin of your business and generate more revenue. To reduce your CAC, you can try optimizing your marketing and sales strategies, finding more cost-effective ways to reach potential customers, and improving the efficiency of your sales process.
6. Shopping cart abandonment rate
Shopping cart abandonment rate is a metric that measures the percentage of visitors to your online store who add items to their shopping cart but do not complete the purchase. Tracking this metric can provide you with insights into the reasons why customers are not completing their purchases. This can help you identify and address issues with your website or checkout process that may be causing customers to abandon their shopping carts.
Divide the number of abandoned shopping carts by the total number of shopping carts and multiply the result by 100 to calculate your shopping cart abandonment rate. If you have 100 shopping carts and 50 of them are abandoned, your shopping cart abandonment rate is 50%.
You might try streamlining your checkout process, giving a range of payment methods, providing clear shipping and return policies, and providing live chat support during the checkout process to lower your shopping cart abandonment rate.
7. Customer churn rate
Customer churn rate measures the percentage of customers who stop doing business with your company over a given period of time. Measuring churn rate helps you understand the health of your customer base and identify opportunities to improve customer retention. High churn rates can be a sign that customers are not satisfied with your products or services, or that there are issues with your customer experience or business model.
To calculate your churn rate, divide the number of customers who stopped doing business with you by the total number of customers at the beginning of the period and multiply the result by 100. For example, if you had 100 customers at the beginning of the month and 10 of them stopped doing business with you, your churn rate for the month would be 10%.
There are multiple ways to reduce your customer churn rate. One way is to respond to their feedback by conducting customer surveys. This can help you identify and address any issues that may be causing dissatisfaction and improve the overall customer experience.
8. Customer return rate
Customer return rate is a metric that measures the percentage of customers who return items they have purchased from your online store. A high customer return rate can be an indication of several things like inaccurate product descriptions. Customers may be returning items because the product did not match the description provided on the website.
To calculate your customer return rate, divide the number of returned items by the total number of items sold and multiply the result by 100. For example, if you sold 1,000 items and received 100 returns, your customer return rate would be 10%.
To reduce your customer return rate, you can try improving the quality of your products, offering clear and accurate product descriptions, and providing phone support to troubleshoot customer issues.
9. Net promoter score
Net promoter score (NPS) is among top Ecommerce metrics that measures customer loyalty and satisfaction. It is calculated by asking customers to rate their likelihood of recommending a company's products or services on a scale of 0 to 10.
Customers who rate the company a 9 or 10 are considered "promoters," while those who rate the company a 0 to 6 are considered "detractors," and those who rate the company a 7 or 8 are considered "passives."
To calculate your NPS, you need to subtract the percentage of detractors from the percentage of promoters. For example, if you have 50% promoters, 40% passives, and 10% detractors, your NPS would be 50% - 10% = 40%.
Overall, tracking net promoter score is an important part of running a successful ecommerce business and can help you understand and improve the customer experience, build customer loyalty, and remain competitive in your market.
10. Revenue per visitor
Revenue per visitor (RPV) is a metric that measures the average amount of money generated from each visitor to your online store. This metric gives you ideas on the effectiveness of your website and marketing efforts and identifies opportunities to increase sales.
A low RPV can be an indication that your online store is not effectively converting visitors into customers. There could be several reasons for this such as poor customer service and customer experience.
To calculate your revenue per visitor, divide the total revenue generated by your online store by the number of visitors to the website. For example, if your online store generated $100,000 in revenue from 10,000 visitors, your revenue per visitor would be $100,000 / 10,000 = $10.
Optimizing your website can improve your RPV. That means making your website well-designed, easy to navigate, and appealing for visitors. Consider A/B testing different versions of your website to see which performs best or hire a professional web designer.
Hire the Best Ecommerce Experts in the Philippines
Running your online store while tracking and improving your Ecommerce metrics is not an easy feat. You need an extra helping hand to increase the right KPIs and see faster ROI on your sales and marketing efforts. Partner with a reliable service provider and work with top experts skilled at scaling up Ecommerce businesses.
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