Whether you have an established, successful ecommerce store, or are just getting started, it is vital you learn how to track key metrics. Metrics are numbers that give you important insights into what is working and what may need some improvement. Plus, as you collect data over time, you can assess company growth.
Tracking key metrics are key if you want to optimize and grow your ecommerce business.
There’s an added benefit: As Ty Kiisel, director of content for dash.fi is fond of saying, “What gets measured, gets attention.” The metrics you track are the ones you’re most likely to pay attention to and want to improve.
What are Ecommerce Metrics?
Ecommerce metrics are measurements that provide insights into specific aspects of your business. Everything from the average profit margin on your products, to how much it costs you to acquire a customer, is a metric. They can be tracked across the entire business, or for specific marketing campaigns.
These metrics, along with several others mentioned later in the article, help you understand what’s happening in your online business.
KPIs, or key performance indicators, allow you to track performance toward specific goals. KPIs are typically a subset of all the metrics you track in your business.
Common ecommerce KPIs include:
Email marketing metrics
Email open rate
Email list unsubscribe rate
Email click through rate
Website and content marketing metrics:
Website traffic/page views
Digital marketing metrics:
Cost per click
Cost per conversion
Social media engagement
Repeat purchase rate
User experience metrics
Net promoter score (NPS)
Customer satisfaction rate
8 Most Important Metrics To Track In Ecommerce
There are many ecommerce metrics you can track, and you’ll have to choose which ones are important to your business at a given time. Keep in mind it can change.
Here are some of the most popular metrics ecommerce businesses track::
Average profit margin. APM = (Selling price- Cost of goods)/ Selling price
Average order value. AOV = Total revenue/Total number of orders
Customer acquisition costs. CAC = Average marketing costs/ Number of new customers
Customer lifetime value. CLV = Length of average customer relationship average purchase in dollars number of purchases a customer makes a year.
Returning customer rate and/or customer retention rate
RCR = Number of returning customers/ Total number of customers
CRR = Number of customers with 2 or more orders/ Total number of customers
Return rate of goods
RR = Units returned/ Total units sold
Sales conversion rate or conversion rate
CVR = Number of people that made purchases/ Total number of people that visited your website
CR = Total number of customers/ Total unique visitors
Shopping cart abandonment rate. SCAR = Number of completed purchases/ Number of shopping carts created.
Just a reminder when doing the math on these formulas, you’ll need to multiply the results by 100 to get the rate as a whole number.
If you have an ecommerce website, there are some metrics you’ll want to track that aren’t directly related to sales:
Bounce rate. The bounce rate measures how many visitors leave your website without taking performing an action
Locations. Shows you where your customers are located
Number of visitors. The total number of visitors that come to your website
Page rankings. Where your pages appear in search engine results
Session duration. Measures the total amount of time visitors interact with and use the website
Types of devices. The types of devices that people are using to access the website, such as a phone, tablet, or desktop
The good news is that as long as you have your website connected to Google Analytics it will be easy to measure these key website metrics and more.
There may be other metrics that are important to you. For example, if you are trying to create a customer referral program, you’ll want to track your referral rate. (Referral rate. RR = Number of referred purchases/ Total number of purchases.)
One trap to keep an eye out for is vanity metrics. These are metrics that sound great but don’t ultimately result in financial success. For example, you can have a social media account with lots of followers and likes, but if those fans never enter your sales funnel, they may not contribute to your bottom line.
Why Ecommerce Metrics are Important
Ecommerce sales are great, and repeat customers are even better. But sales and repeat customers are always enough to achieve ecommerce success.
Without tracking do you know how much profit you are actually making on your goods? How do you know when (and where) to invest more time and effort, and when to stop?
If you aren’t tracking specific metrics it is hard to know the answer to these questions, let alone your store’s performance overall.
Think about this scenario: You find out that about 20% of the people that visit your site make a purchase. That’s great, but maybe a pop-up offering a coupon for those that make a purchase in the next fifteen minutes would result in 30% of visitors making a purchase.
But wait. Do you have a high enough profit margin to offer a coupon?
Luckily, with the insights from your data you can make the right decision.
How to Track Performance Metrics in Ecommerce
Ecommerce is a fast-paced business. You may be spending thousands of dollars in online advertising and you need to know as quickly as possible what’s working.
That means tracking metrics in real time, as well as over time to identify trends. The good news is that there are a lot of tools that will help you collect and measure data. The less-than-good news is that you may need a few tools to keep track of all the different metrics your business wants to follow.
Some popular tracking tools include:
The price of these ranges from free to hundreds of dollars a month depending on which plan you choose. It’s not uncommon for businesses to start out with a free tool like Google Analytics (which alone can be quite robust) and then add on additional tools.
Ways To Improve Ecommerce Metrics
Improving ecommerce metrics is an ongoing process that takes work. Each metric may require different kinds of attention to create improvement. In general, ecommerce metrics will be improved with:
A well designed website optimized for SEO
Clear, enticing product pages
Fast loading times
Simple checkout process
Responsive customer support
These are basic things customers are looking for when it comes to online shopping.
Beyond that, improving specific metrics such as increasing sales or improving profit margins isn’t easy. For some online stores, coupons or dynamic pricing may work. A company struggling with lots of returns may want to investigate what is causing the high return rate so changes to the product or process can be made.
Overall, though, most businesses find that it’s easier to sell to existing customers than it is to find and sell to new potential customers. Improving your ecommerce marketing efforts to focus on developing customer returning customers may give you the most bang for your buck.
Look for ways to improve customer loyalty and regularly engage with fans through social media, email campaigns and other touchpoints. If you can get existing customers to come back and buy again, you’ll build a stronger ecommerce business.
The Bottom Line
Tracking key metrics is key to a successful business, online or offline. Learn to identify the metrics that matter to your ecommerce business and follow them closely. Build on your successes and cut your losses in order to create a successful business for the long run.