If you aren’t yet, you really should track at least the main eCommerce metrics. Make it your first 2023 business resolution. By tracking the following eCommerce metrics, you can boost your visibility, ROAS, and revenue.
1. Website Traffic
Website traffic refers to how many people are visiting your website through various channels. This traffic can come from search engine results pages, social media sites, referral links from blogs and other sites, paid advertising, etc. The effectiveness of strategies like video, for instance, informs how much traffic you receive and how much you maintain.
You can measure website traffic a few different ways. Sessions or visits shows you how many total visits you receive in a given timeframe. You can even specifically measure from which channels those visits are coming from. You can also use website traffic to inform you of your conversion rate or the rate of customers clicking on your website and purchasing your product or subscribing to a service you offer. This can also tell you how good your website is at encouraging the customer journey through clear conversion paths.
2. Customer Retention Rate
Customer retention refers to the ability of a business to maintain a customer relationship over time. This is one of the eCommerce metrics that informs other important aspects, such as customer satisfaction, loyalty, and purchasing behaviors. If you can keep customers purchasing from you, that means you spend less on trying to find new customers.
Customer retention rate is represented as a percentage value of the number of customers left over after a period. Calculating CRR involves knowing the size of your customer base at the beginning of a period and how many new customers you’ve acquired during that period. For example, say you had 200 customers purchasing from you at the beginning of the month. By the end of the month, you have 350 customers, but during that month there were 180 new purchases. This means that by this formula (CRR= (350-180)/200 x 100), you will see your retention rate is 85%
3. Sales Conversion Rate
The Sales Conversion Rate is a metric that is used to gauge how well your sales team is able to turn leads generated by your marketing team into new paying customers. Both your sales department and marketing department rely on this metric to discern which leads are more valuable and which ones are not as good. Naturally, these teams need to work closely together. The marketing team’s role is to come up with strategies, events, and other tactics to generate quality leads. Then, the responsibility is passed over to the sales team to turn those leads into customers.
The conversion rate is calculated simply by dividing the number of sales by the number of generated leads and multiplying it by 100. For example, say your marketing team generates 50 leads and sales converts 10 of them. That is a 20% conversion rate. Depending on your industry and past performance, that could be a really poor or really good rate.
4. Customer Acquisition Cost
Customer acquisition cost is the amount of money spent to acquire a customer. You can use various marketing and sales strategies and tools and resources to develop those strategies.
A simple CAC calculation would look like this. If your team has a daily marketing budget of $100 dollars, and you are able to convert 10 customers per day, then the CAC is $10 dollars per customer. You want to achieve the lowest CAC possible for a quality lead. Naturally, you wouldn’t want to spend more on a customer than they spend on your business.
CAC is closely related to CLV or customer lifetime value. We use it to determine the value of a customer over the course of their buying relationship.
5. Bounce Rate
Bounce rate refers to how many people (represented as a percentage) land on a page on your website and then leave without navigating to a second page, clicking a link, or converting.
Another eCommerce metric, exit rates, are very similar to bounce rates. People can often mix up the two. Exit rates are the percentage amount of people who exit from a particular page that wasn’t the initial page they landed on.
A high bounce rate could indicate that there’s a problem with your user experience, user interface, content, and other factors that could cause users to click off. Typically, a 40-50% bounce rate is average, and it depends on whether the traffic is mobile, desktop, from social media sites, etc.
6. Email Marketing Metrics
The following eCommerce metrics can tell you a lot about the effectiveness of your email campaigns.
Conversion Rate – tells you how many people actually complete a desired action after clicking the links in your emails
Clickthrough Rate – shows you how many people on your email list are actually clicking on the links in your emails
Email Sharing / Forwarding Rate – this is basically the percentage of people on your list who share this email to a friend or post it on media sites
List Growth Rate – the rate at which you are able to get more people subscribing to your email marketing
Open Rate – how many on your email list actually click to open your email and read it
Bounce Rate – this bounce rate refers to whether or not the email is received. Soft bounces are temporary issues blocking the email and hard bounces involve issues that prevent the email from ever being sent.
Unsubscribe Rate – the rate at which you lose subscribers from your email list
Overall ROI – the total revenue minus the expenses of your email marketing campaign
7. Net Promoter Score
Net Promoter Score (NPS) is a metric used to determine how happy customers are with their experience with a business. This is one of the eCommerce metrics we use to gauge their general satisfaction and customer loyalty. We usually do this by asking customers to rate their likelihood of recommending us as a company or one of our products to someone they know. We then collect these scores and evaluate their general rating.
NPS gives companies an idea of the current state of their customer relationships. They can ask follow-up questions to determine the reasoning behind the given scores and adjust their strategies, support, and services moving forward.
NPS is calculated by taking the percentage of all 6 and below ratings and deducting it from the percentage of 9-10 ratings.
8. Customer Lifetime Value
Customer Lifetime Value or CLV is one of the eCommerce metrics that businesses use to measure the estimated value of a customer relationship. This gauges how much you might gain to earn from them spending on your business in a given time frame.
This metric is closely related to customer retention and customer acquisition costs. If the CLV of a customer is high, you want to invest in keeping that person with your business as long as possible. If you find that the lifetime value of your customers is low, you might spend more money on better acquisition strategies to find the most ideal customers for your business.
CLV can be calculated simply by multiplying the average order value of each purchase by the number of times you estimate a customer will purchase within a given time frame. Then multiply it by the number of months or years you expect them to stay with your business. There are also the historical and predictive approaches that rely on past buyer data and forecasting for more accurate CLV estimates.
9. Shopping Cart Abandon Rates
The Shopping Cart Abandonment Rate is the percentage of shoppers who add items to their online cart but do not complete the order and checkout. This rate compares the number of carts abandoned against the total number of shopping carts created.
An unintuitive or unhelpful UI can cause a bad user experience that in part causes abandoned shopping carts. Sometimes, people just forget about it as they go through their busy life. A solution to this could be emails informing shoppers about their abandoned items ready for checkout. This can reduce lost sales and the rate of cart abandonment.
10. Average Order Value
Average order value is a metric that is calculated by taking the average spent on each purchase order per customer. The formula is simple, you just divide your total income by your number of orders and that’s your average order value.
This is one of the important eCommerce metrics because it tells you about how customers purchase from you. This is important in CLV calculations also as it can help you understand how valuable certain individual customers are, help develop marketing strategies, and see how well they work.
11. Gross Profit Margin
Gross Profit Margin refers to the amount you have after you deduct the cost of goods from your net product sales. You often also see this as a percentage of your net sales. The formula to get the percentage value is Your revenue – Net sales / revenue x 100. Note that GPM does not account for returns, discounts, or allowances.
A GPM that isn’t stable could mean that the company isn’t providing consistent quality products or there is a management issue. However, if the business is making changes to the way they operate, wavering GPM does not mean bad eCommerce metrics.
Final Thoughts on Ecommerce Metrics
We know of many other important eCommerce metrics that are not on this list. However, we recommend that you keep an on these crucial 11. They are foundational to a successful eCommerce business.