Important eCommerce Metrics To Consider For Your StoreMay 19, 2018 - Ben Froedge
Metrics can display the health of your business, as well as track the effectiveness of your efforts. They are a solid way to quantify the things that your customers do when they land on your website and how much money you are making.
It’s easy to open up your dashboard or website analytics and lose your mind as you try to keep track of every single number you see. It won’t help you or your business if you keep tracking everything. It will just stress you out.
You may be asking what should you do instead? I suggest finding the metrics that actually matter. Start with 2-4 metrics. Track them, make informed changes, which will hopefully lead to increased sales.
This guide will take you through the important eCommerce metrics for your store and what you can do to improve them.
1. Conversion rate
Conversion rate is the percentage of visitors that do what you want them to once they are on your site. For eCommerce retailers, that means making purchases.
You can find this number on your eCommerce dashboard, or your analytics panel if you have everything configured. If not, the formula looks like this:
(# of sales) / (# of site visitors) x 100 = conversion rate
The average conversion rate for an eCommerce store is about 2%. Of course, every industry is different but it is good to keep this in mind.
If you have a high conversion rate, it means you are doing something (or a lot of things) right. You are successfully conveying value on your product pages and making it easy for customers to make a purchase.
A low conversion rate is not so good but should be taken into context. If you are selling high-cost, high-margin products, you may not need a large number of conversions to do well. Some products, price points, and industries just never see the conversion rates that others do.
What you can do to improve your conversion rate
Conversion Rate Optimization is an entire topic and industry of its own. Knowing your conversion rate is the first step in finding out what you could be doing better to grow your business.
There are so many things that affect conversion rates. Everything is very much dependent on your customers and what they need from you to feel comfortable buying.
Think about the design and user experience, the messaging that conveys your value proposition and building trust. After all, your customer doesn’t have a chance to talk to you as they would in a physical retail store.
2. Cart abandonment rate
The cart abandonment rate is everyone who adds something to their cart but left without completing a purchase.
As a store owner, it leaves you shaking your head in frustration, wondering where you went wrong. At least, it’s not a supermarket with customers leaving bottles of milk in the dry goods when they change their minds.
Still, you want to cut this out as much as possible. The first step is to find out just how often it’s happening and quantify your losses. To find out how many abandoned carts you’re losing, you can check your eCommerce platform dashboard, your analytics install, or if your old school, grab a calculator and use the formula below.
(# of completed orders) / (# of created carts) / 100 = Abandoned cart rate
There are two common reasons that people leave without checking out.
A lot of people just aren’t going to buy, at least right now. They may be adding to a cart to find out what the price will be with tax and shipping, or they may just be browsing and comparison shopping. Either way, there’s not a ton to be done about this segment.
Some buyers initially want to buy, but in the process discover a problem or bug, or something like an unexpected cost that they hadn’t previously thought about or maybe they truly intended to buy, but the kids were hungry, or they had to go back to work from break, or some other thing got in the way, so they shut the browser and forgot.
What you can do to decrease your cart abandonment rate
Similar to conversion rate optimization, you want to make the user experience so simple that customers will buy from you without hesitation.
Show your visitors all the costs as soon as possible. If you can offer free shipping, great. If you can show shipping costs and taxes in the cart instead of later on, do it. A product suddenly being $37.50 instead of the $30 they saw on the product page might just be a dealbreaker.
Establish trust with well-known trust icons and payment platforms like ApplePay, Amazon Checkout, PayPal, or Shopify Pay. These icons not only boost trust, it can also add to the convenience factor.
Interrupt the user with an exit intent popup to catch the attention of them closing their browser. If you have their email, abandoned cart email sequences are very effective at getting visitors back on site to complete a purchase. You can also read about them in our essential email templates guide.
3. Average order value
Average Order Value (or AOV) is a measure of what an individual order is usually worth to your business. If you make 10 sales a day and 5 are worth $50, with the other 5 at $100, your AOV is $75.
(Total revenue) / (# of sales) = AOV
This is one of the most important metrics when it comes to increasing your total revenue and growing your business. Even if your traffic numbers and conversion rate don’t change, a higher dollar amount in the cart when buyers finish their purchase leads to more money for you.
What you can do to increase your average order value
Upselling is to get your customer to add something to their order and increase the total. Remember when McDonald’s asks if you ‘would like fries with that’? This is upselling to increase the cart size.
You can bundle groups of products that go together and present them for a single price. Amazon is the master of bundle offers. If you look for a digital camera, you will see a bundle offer for a case, memory card, tripod, battery and charger, and probably some other accessories as well.
If you run a shoe store, you sell socks and shoe care accessories. Why? Because it makes sense. People buy these things together. Your customers are going to give someone the money for those things. Why not you?
Some people put ranch dressing on their pizza, and even though those people are clearly monsters, we don’t shame them publicly. In the same vein, buyers sometimes purchase multiple items together that you just wouldn’t expect but this is data you can capture.
To take advantage of the opportunity to increase your average order value, you can create a product feed that selects products that are often bought together, even if the combination doesn’t make sense to you.
Do you sell something that customers refill or reorder? Does it make sense for them to buy more at once? If so, offer a small discount for buying more than one. You lock in a higher order value and turn a possible future sale into a definite sale right now.
Upgrades are a great way to increase the average order value at checkout. If you offer multiple versions of a product or service, you can offer the next step up as an upsell. Mobile phones are a terrific example of this. They will gladly sell you a base model, but you can upgrade to the S or X or Ultra model for another $150.
You can also offer any number of service add-ons to products to up the total sales value. Extended warranties, service plans, and priority service are a few ways you can add to an order.
4. Percentage of repeat customers
Since it costs up to 5x more to acquire a new customer than to bring an existing customer back for another purchase, knowing how many repeat buyers you have is a metric worth tracking.
(# of repeating buyers) / (# of total buyers) x 100 = percent of repeat buyers
It’s very much worth spending some time figuring out how to keep your customers around. Not only does it cost less to get them to come back, but repeat purchases also offset the initial cost of acquisition. Repeat customers are likely to spend more on each order, and more likely to become brand ambassadors and tell their friends.
What you can do to increase your repeat customers
Post-purchase email sequences are the perfect opportunity to build an ongoing relationship with your customer. Make sure to express your gratitude for them being a customer, and even more so when they become a repeat buyer.
Customer loyalty programs can directly reward your buyers for repeatedly buying from you. Giving discounts, freebies, and rewards points will give them plenty of incentive to keep coming back.
Content marketing works especially well for any kind of hobby or lifestyle brands. If your buyers find themselves repeatedly coming to your site and consuming content that they love and find useful, you no longer have any viable competition for their business.
Super high-quality service provides a great buying experience for your customers. Toss in a small freebie or thank you with their shipment. It will make a big difference in their overall experience, and they’ll think of you as someone who went above and beyond for them.
5. Customer lifetime value
How much is each customer worth? Your Customer Lifetime Value (or CLV) is the amount of revenue that a customer will bring to your business. This is a much harder metric to pin down an exact value for, as it has a lot of moving parts. For that reason, we’ll direct you here to learn more about calculating CLV.
What you can do to increase your customer lifetime value
To increase your customer lifetime value you want to grow your average order value, get your previous customers to come back by following some of the tips listed under point 4, and offer a great product that makes users want to buy again.
Subscriptions are a great way to increase the lifetime value of your customer as they will essentially receive your product on-going.
It is also important to evolve with your customer. Nothing stays still or the same forever. If you can evolve with your customer as time goes on, you can have a customer for a lifetime.
6. Bounce rate
A bounce is when someone lands on a page of your site and then leaves without doing anything else. They don’t sign up for anything and they don’t read anything, they just disappear like a vampire on a sunny day.
Bounce rate is a well-known metric, but on its own, just knowing your bounce rate doesn’t do anything except make you want a drink if it’s really high. If you have a mindset that any problem is just an opportunity for improvement, it indicates a good place to start your optimization work.
(Total bounces) / (# of entrances) x 100 = Bounce rate %
What you can do to decrease your bounce rate
There are three major things that are likely culprits for a high bounce rate, and they are great things to work on no matter what.
Traffic quality is something you want to take a look at. If the traffic or potential customers that are coming to your site in the first place aren’t your target customer, then they are most likely to bounce. This is not a big deal if it is a small portion of your total traffic or if it’s just incidental organic traffic.
It’s a much bigger issue if you are paying for traffic and it is bouncing all your precious money down the drain, or if your content marketing and SEO efforts are continuously resulting in traffic with a high bounce rate. That could indicate that you need to be studying your audience more closely and possibly making some changes.
Your site design can be another possible cause of bounces is that your website confuses or doesn’t speak to your audience. If they get to a page and don’t know what to do, the back button is really easy to find. If your images, headlines, or copy don’t speak to them, they will likely assume that they just aren’t your target customer and will drift away to the competition.
Long page load times kill conversions at every step and will drive your bounce rate sky-high. Twice as high on mobile.
7. Revenue from specific traffic sources
If you’re trying to drive profitable traffic, it’s a great idea to know which traffic source is actually profitable. If you have your analytics setup to correctly track goals and conversions, you can find out what traffic sources are bringing in money.
What you can do to increase revenue from certain channels
You can track conversions by source, and you can track specific campaigns. So while you may not be able to find a path from one specific blog post to a specific purchase, (unless you have a super system) you can find out how many of your conversions came from organic traffic. You can also see what your Facebook ads are worth, whether your social efforts are paying off, and whether or not email subscribers end up buying.
Once you see the numbers about where your traffic comes from and which sources convert well, you can make informed decisions about your marketing efforts and the return on investment.
The most important thing is that you remember that all of these are indicators. They are clues to what is going on. If you find a problem, that’s good news. It means that you now know about the problem, and knowing is better than not knowing.
Take these metrics, and use them as a guide for building a stronger business.