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Ecommerce Metrics You Should Be Tracking

Last Updated: September 7, 2022

Ecommerce Metrics You Should Be Tracking

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To run a successful ecommerce business, you need to track key metrics that will help you measure your progress and performance.

By monitoring these metrics, you’ll be able to identify areas that need improvement and make changes that will improve your ecommerce business.

But what metrics for ecommerce should you be tracking in the first place? Is one metric more important than others?

We’ll answer that and more in this blog post.

CHAPTER one

What are Metrics and KPIs?

Before we dive into which ecommerce metrics you should be tracking, let’s first take a step back and define what metrics and KPIs are.

Metrics are simply a way of measuring something. In business, metrics are often used to measure progress or performance.

For example, a metric could be the number of sales made in a month.

KPIs (key performance indicators) are a metric that helps you understand whether you’re achieving your business goals.

A KPI could be the percentage of visitors to your website who make a purchase.

So, to put it simply, all KPIs are metrics, but not all metrics are KPIs.

Why Are They Important?

Now that we know metrics and KPIs, let’s talk about why they’re essential for ecommerce businesses.

  • First, metrics and KPIs help determine whether you’re on track to achieve your business goals. You can identify areas that need improvement by tracking the right metrics and making changes accordingly.
  • Second, metrics and KPIs can be used as goals in and of themselves. For example, if your goal is to increase sales by 10% this year, your metric could be the number of sales made or the revenue generated.
  • Third, for metrics and KPIs to be helpful, they need to be measurable. If a metric or KPI can’t be measured, then it’s not helping you track your progress.

Online stores, retailers, and other businesses use ecommerce metrics to gain helpful insights into their business performance.

These insights allow them to recalibrate their strategy and fix their process to improve the business.

CHAPTER two

Top Metrics To Track

So, you now know what ecommerce metrics are and how important they are to your business.

You want to dive deeper but don’t know where to start. Don’t worry.

Below are the following metrics you need to get started.

However, remember that some of these metrics may not be for your business.

Choose and measure the metrics that you think will help your business in the short and long term.

We’ll explain each of them in more detail below.

Sales Conversion Rate

Sales Conversion Rate

The sales conversion rate (CVR) is the number of people who bought something on your website out of everyone who visited your website.

So get your website traffic data ready to go to determine how well your ecommerce store is doing!

  • There are a few reasons why the sales conversion rate is essential:
  • To know if site visitors are making a purchase or visiting the site. If you have a low CVR, it could mean that something is wrong with your website, and that’s why people aren’t converting into customers.
  • Is your website doing you a service and getting you sales? A low CVR could indicate that something needs to be fixed on your website for it to be more effective in generating sales.
  • On the other hand, a high CVR could mean that your website is compelling and brings in a decent amount of sales.

In general, the higher your sales conversion rate, the better. However, there is no magic number that all ecommerce websites should aim for.

The important thing is to track your CVR over time and look for trends. If you see a sudden drop in your CVR, that could indicate that something on your website needs to be fixed.

Formula: CVR = # of purchases made / # of visitors

Customer Lifetime Value

Customer Lifetime Value

The customer lifetime value (CTV) is the total amount of money a customer will spend on your website throughout their lifetime.

  • There are a few reasons why CTV is important:
  • It helps you know how much each customer is worth to your business. This information can be used to make decisions about marketing and product development.
  • Knowing your customers’ CTV, you can calculate how much you can afford to spend on acquiring new customers. For example, suppose you know that the average customer pays $100 on your site over their lifetime. In that case, you can spend up to $100 on acquiring a new customer and still break even.

LTV can also help you predict future revenue.

If you know the LTV of your customers, you can estimate how much income you’ll generate in the future based on the number of current customers.

LTV is an essential metric for ecommerce businesses because it helps them understand how much each customer is worth and predict future revenue.

Formula: CTV = Average Value of a Purchase x # of Times the Customer Will Buy Each Year x Average Length of the Customer Relationship (in Years)

Average Order Value

Average Order Value

Average Order Value (AOV) is a key ecommerce metric that measures the average amount spent per order.

This metric is critical to track because it can give you insight into the health of your business and help you set realistic goals for revenue growth.

There are a few different ways to calculate AOV. The most common is simply to take your total revenue for a given period and divide it by the number of orders placed during that period.

For example, if your ecommerce store generated $100,000 in sales over a month and you had 10,000 orders during that same timeframe, your AOV would be $10.

While AOV is a reasonably straightforward metric, it can be advantageous in several ways.

Your AOV can give you an idea of how much each sale is worth to your company. This is vital information to have when setting goals for revenue growth.

While AOV is a reasonably simple metric, it can provide valuable insights into the health of your ecommerce business.

By tracking your AOV over time, you can identify customer spending trends and set realistic revenue growth goals.

Formula: AOV = Total Revenue / Total Number of Orders

Shopping Cart Abandonment Rate

Shopping Cart Abandonment Rate

This is the percentage of people who add items to their cart but don’t make a purchase.

Tracking this metric is essential because it can give you insights into why people are not completing purchases on your site.

There could be many reasons why this is happening, such as:

  • High shipping costs
  • Complicated checkout process
  • Lack of payment options

By understanding why people are abandoning their carts, you can make changes to your site that will encourage more people to complete their purchases.

To calculate your shopping cart abandonment rate, simply divide the number of abandoned carts by the total number of transactions.

For example, if you had 100 abandoned carts and 1,000 complete transactions, your shopping cart abandonment rate would be 10%.

While a high shopping cart abandonment rate can be frustrating, it’s important to remember that it’s not always bad.

Sometimes people add items to their cart but decide they don’t want them after all.

In these cases, the customer has saved themselves from making a purchase they would have regretted (and possibly returned) later.

Formula: Shopping Cart Abandonment Rate = (# of Completed Purchases / # of Shopping Carts Created) x 100

Bounce Rate

Bounce Rate

Bounce rate is the percentage of visitors to a website who leave the site after viewing only one page.

The bounce rate is one of the most significant eCommerce key metrics because it can indicate a navigation problem on your website.

A high bounce rate might mean that your website’s design is not attractive or user-friendly and that you might need to redesign your website.

Google Analytics is the best way to track your website’s bounce rate.

Google Analytics will show how many people visit your website and how long they stay on each page.

By looking at this data, you can see which pages have high bounce rates and take steps to improve them.

So, if you want to ensure your website is user-friendly and attractive, keep an eye on your bounce rate.

Christi Carnahan

It’s important to note that with the next generation of Google Analytics (GA4), metrics are focused more on events and actions than past versions. The new measurement for tracking will be the percentage of sessions that were not engaged rather than bounce rate.

Christi Carnahan, Digital Strategist

Click Through Rate

Click Through Rate

Click Through Rate (CTR) is one of the critical ecommerce metrics you should track.

CTR measures the number of clicks your website or ad receives divided by the number of times it is shown.

For example, if your website or ad is shown 1000 times and receives 10 clicks, your CTR would be 1%.

CTR is important because it allows you to see how effectively your website or ad generates interest and clicks from potential customers. A high CTR indicates that people are interested in what you’re offering.

In contrast, a low CTR may suggest that your website or ad needs improvement.

Improving your CTR can significantly impact your business, so it’s worth taking the time to track and improve this metric.

Formula: CTR = (# of Clicks / # of Views/Impressions) x 100

CHAPTER three

Use These Ecommerce Metrics To Succeed with an Ecommerce Business

While there are many different ecommerce metrics you can track, the ones we’ve outlined here are some of the most important for growing your business.

Remember that what matters to one company may not matter as much to another. Hence, it’s essential to tailor your metrics and KPIs accordingly.

But if you want to make sure you’re on the right track, these are great starting points.

Don’t forget to follow our blog for more tips like this!

Meet The Author

Jeff Gapinski is the President of Huemor where he helps plan the long-term strategic growth of the agency. Jeff is passionate about UI/UX, demand generation, and digital strategy.

Originally Published

September 2, 2022

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