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The 4 Metrics Your Ecommerce Business Actually Needs to Track


4 metrics every ecommerce business should track

Let’s be honest. There are A LOT of metrics you could be tracking for your ecommerce business. There’s conversion rate, cart abandonment rate, customer lifetime value, gross margin, cost per acquisition – before you know it, your head is spinning and you’re completely overwhelmed, I get it. 

A lot of the information out there includes anywhere from 10-67 metrics you should be looking at. 67?! I’m sorry, but if you’re tracking that many, you’ve lost focus entirely. How can you even tell what’s important at that point? Not to mention, where do you find the time for this? You’re trying to work on your product, fulfill orders, send out emails, answer questions. There’s just no way.

That’s why we asked Shopify expert Kurt Elster where he would start if he was working with you to grow your business and track your progress. What metrics would he ask you to report to him on a weekly basis? Turns out there are 4. Not that the others don’t matter, but you have to start somewhere. 

It’s kind of a popularly contest

Daily average traffic is the foundation for everything else. If you’re starting at 0, when you get to 150 visitors a day on average that’s going to tell you you’re getting traction in the market. Once you get there, it’s just a matter of scaling. So if you can get to 150, you can get to 500. If you get to 500, you can get to 1500 and so on. 

1500 average visitors a day for a lot of brands is a really great place to be, but that’s where you’re getting into scaling issues and have to really think about systems and processes.

But let’s not get too far ahead of ourselves. Assuming you’re starting in the lower range, your focus should just be to grow traffic consistently. The more people on your site, the more sales you’re going to make. 

Then you can dig into where traffic is coming from and figure out where you should be spending more of your precious time and money (for example: Facebook, Instagram, SEO). Whatever you do, just don’t expect people to be showing up to your site without putting any effort into it. 

Are your customers coming back?

Your return customer rate is amazing to show customer satisfaction and their post-purchase experience, but also loyalty to your brand. Are people going to keep coming back to you? 

Return customer rate

Multiply that by 100 and you get your final number. Let’s say I sell blankets and I want to know what my repeat customer rate was for all of last year. I had 7 repeat customers over 12 months and 125 total customers. 

Return Customer Rate = (7/125) x100 = 5.6%

You can do the same calculation for weekly and monthly purchases too, depending on the timeframe you care about and what you’re selling.

For Kurt, a return customer rate under 20% means there might be a customer service issue or you’re not doing enough to keep in touch with your customers. 

But it’s worth noting that this one is definitely category-specific. Take coffee vs. furniture. You’re likely drinking coffee every day, so your repeat purchase rate is going to be much higher than something like furniture that you’re hoping to keep for years.

Kurt explains that highest end would be around 50%, but that’s for something consumable like the coffee from the previous example. But if you can get 25% good, 30% great, 35–40% amazing. 

Bottom line? Think about why your customers aren’t coming back. What can you be doing differently? It might be something as simple as emailing them more frequently.

Do you want fries with that?

The goal with average order value is to get your customers to buy more. Just like the old, “Do you want fries with that?” approach.

Average order value is exactly what you expect. It’s the average price your customers pay when they place an order. This is another one that’s totally dependent on the business you’re in, but the formula is the same no matter what.

AOVLet’s use the blanket example from before. Say my total revenue for the year was $9375 and I had 125 orders. 

Average Order Value = $9375/125 = $75

To increase your average order value, you want to give the people that spend less than $75 motivation to spend more with you.

You know those stores that have A TON of options around as you’re in line to check out? Think about places like Sephora. They’re trying to increase the amount you’re spending at their store. You’ve probably seen the same thing online. “Here are other frequently purchased items based on what you’re currently looking for.”

You’ve probably also seen the sites that tell you “If you spend $10 more, you qualify for free shipping!” I don’t know about you, but I’m SUCH a sucker for these. You’re telling me I could spend $10 on another product and get free shipping or pay $8.00 for shipping? 10 out of 10 times I’m going to spend the extra $10. It’s worth mentioning that often, the catch here is that the products to get you over that free shipping threshold cost more than $10. There’s definitely a method to the madness here.

If every other metric stays exactly the same but you get a 10% bump in average order value, you’re also getting a 10% bump in total revenue. If everything else is solid and you want to scale quickly, getting that average order value up could be the way to do it.

Don’t make it hard for people – help your customers help you

Add-to-cart rate is an indicator of quality of traffic and how easy you make it for people to find a product on your site. It’s the percentage of sessions where a product is added to a shopper’s cart. So the sooner you can get people to start shopping, the better.

If you can get them to jump in immediately, they become significantly more likely to purchase and add-to-cart rate can be an indicator of that.

Add-to-cart RateLet’s say of the 4,500 total sessions my blanket store had last year, 400 people added an item to their cart. 

Add-to-Cart Rate = 400/4500 = 8.9%

Ideally you want to be around 10% for this. Like anything, when you reduce the time to value, you’re going to get better results. “Wow – I can get to the exact thing I came for in two clicks?” That stuff matters. Think about how you can reduce friction for your customers. And make sure your experience on mobile is just as good (if not better) than what your customers see on a desktop.

Not just metrics. Growth levers.

Start somewhere. When you’re looking at these stats for your business, you should also be looking for the growth lever. What’s the one metric you could focus on for a month that’s going to really move the needle for the business over the rest of the year?

When you narrow your focus and think that way, you stop thinking about the 67 other metrics you thought you were supposed to be tracking. You go from thinking, “OMG I don’t know where to start!” to “OK, what should I be doing now to help this one specific thing?”

And that’s where you’ll really start to see growth.

This article was originally published by our friends at Privy.

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