More than 2 billion people all over the world have become digital buyers. There is no escaping it. And not a lot of people want to – it is the opposite. Online shopping is quicker, easier, more comfortable, and cheaper.
However, to stay relevant and successful, your business has everything it needs to satisfy your e-buyers. That is where ecommerce analytics metrics come in.
Metrics allow you to track your business performance and improve it when necessary. But it is important to invest time and money in the right metrics, so you do not waste resources.
In this article, you can read all about 9 of the best ecommerce metrics to track to make your business grow.
The Value of Ecommerce Metrics
“I am an online business owner – should I care about ecommerce analytics metrics?”
Key performance indicators (KPIs) and metrics are valuable to your business as they provide comprehensive data on customer behavior, sales trends, marketing effectiveness, and operational efficiency. Accessing and analyzing this data allows you to make informed decisions.
However, implementing and managing ecommerce analytics can be challenging for numerous reasons, namely the large amount of data generated. Metrics can help you focus on the most relevant data.
However, choosing the right metrics can be difficult as – again – there is a lot of data to process. The relevancy of metrics depends essentially on your type of business and data, but some metrics and KPIs are relevant regardless of the business type.
Let’s take a look at 9 key ecommerce metrics to track at all times if you want to increase your sales.
What Metrics to Track
There are several metrics and key performance indicators to measure the performance and success of your website, but we bring you 9 that are among the top metrics to track.
They analyze comprehensive data about key points in ecommerce analytics and performance, which you can use to make your business more successful.
Learn more about these 9 critical metrics to track below.
Measuring traffic sources is analyzing the origin of the visitors to a website. Visitors can reach your platform by, for example, typing the URL into a browser (direct traffic), coming from other websites (referral traffic), or finding you on search engines (organic traffic). Additionally, visitors can come from social media or paid advertising.
The analysis of traffic sources is important for your business because:
- It helps you understand the customer journey and gives valuable insights into customer preferences.
- As you get deeper information about your customer’s likes and dislikes, you can optimize your marketing campaigns
- You can measure the return on investment (ROI) by analyzing which campaigns are generating more profitable outcomes
Conversion rate is undoubtedly one of the most important ecommerce metrics to track. It refers to the percentage of visitors to a website who take action by making a purchase, filling out a form, etc.
A positive customer conversion rate depends on the success of other metrics as it is the end goal of your marketing and operational efforts: to gain customers and make your business profitable. That is why it is so important: the better your conversion rate is, the more successful your business is.
Some other relevant reasons that make conversion rate essential are:
- It helps you measure the effectiveness of your sales and marketing strategies.
- As you go through the conversion funnels to analyze each stage of the buyer journey, you can identify blockages compromising your user experience and sales.
- Customer conversion means more buyers, more revenue, and thus more profit.
Average Order Value
Besides gathering data on who is buying and what they are buying, how much customers are paying you is the type of information you should track. AOV, or average order value, allows you to do so. It refers to the money your customers spend on your products on average.
AOV is one of the areas that can bring the most revenue when optimized – even a slight increase of 1% or 2% results in a significant rise in profit.
There are additional ways in which AOV can help you improve your business across different areas, such as:
- Tracking your average order value allows you to learn your customers’ average purchasing power and thus understand your customer base value.
- Allows you to collect relevant data about customers that place orders of higher value, which you can use to build ROI-optimized campaigns.
- Identify opportunities for upselling, promotions, offerings, and other marketing strategies.
Shopping Cart Abandonment Rate
The Shopping Cart Abandonment Rate is the percentage of visitors who add items to their virtual cart but never complete the purchase. Because this metric is directly related to lost revenue, it is critical to monitor it.
Paying attention to this rate helps detect the issues stopping visitors from converting to customers. Sometimes, the problem lies in the most obvious aspects: long checkout process, mandatory account creation, etc. Once you start fixing the hitches in the checkout, you will see a decrease in shopping cart abandonment.
Sometimes, you simply need a good, targeted marketing strategy to convert the “almost buyers”.
If it is not yet clear why you should keep an attentive eye on this metric, here are a few reasons:
- It gives vital insights to develop effective marketing strategies that reduce abandonment and increase customer conversion.
- It helps gain a deeper understanding of buyer behavior.
- It can help identify issues with user experience on your website.
Customer Retention Rate
Customer retention refers to the percentage of customers you maintain as customers over some time. A high customer retention rate means that you are successfully managing every aspect of your online business.
On the other hand, a low retention rate is a striking warning sign.
The motives behind a low rate can go from poor user experience to high prices and shipping costs. That is the part that requires some investigation on your part.
- You see your online business from the client’s perspective, in the sense that you can understand if your website is working well, if your products are okay, etc.
- When you track and improve customer retention, you achieve long-term profitability.
It is important to remember that new customers cannot be part of this formula. Therefore, when calculating, leave out the number corresponding to new customers.
Cost Per Acquisition
Everyone loves to talk about profit, but business owners have to consider their expenditures at all times. That being said, Cost per Acquisition (CPA) is a metric that you should care about, as it represents the cost of acquiring first-time customers.
Businesses can never work on the premise of bringing in new clients no matter what. That can easily result in revenue loss. For example, if you are spending $100 on advertising that is only converting $75 worth of sales, you are losing. To determine whether your acquisition balance is positive or negative, you must factor in customer conversion and, most importantly, the average order value.
CPA takes into account the cost of every aspect of customer acquisition: marketing, production, labor, operations, and more.
A balanced customer acquisition cost always benefits your business greatly:
- It improves your conversion rate and allows you to save resources on optimized advertisements.
- It gives you useful insight into the resources necessary to gain a customer.
Customer Lifetime Value
Customer Lifetime Value (CLV) represents the estimated value a customer will bring to a business throughout their lifespan as a client. It considers information on the amount they spend, how often they make purchases, how long they remain as clients, etc.
One of the most important things this metric can do for you is to help you understand how much you should invest in client acquisition and what is worth doing to retain them.
Some other ways in which CLV is helpful are:
- By collecting comprehensive data on loyal customers, you get information to both gain more clients and retain them effectively.
- Customer loyalty means long-term profitability, so it is beneficial to find out how to increase CLV.
- It helps you make informed decisions about different aspects of your business, such as marketing, sales, and customer service – which can maximize the size and loyalty of your customer base.
Time on Site/Page
Time spent on site/page is a metric used in ecommerce analytics to measure the amount of time a visitor spends on a website. Analyzing the time a visitor spends on your site is important because it reveals if visitors find your content useful and engaging and if these same visitors have a good experience from the user’s perspective.
Here is what this metric can do for your business:
- It helps optimize your website and content for better engagement, user experience, and conversion rates.
- It allows you to pinpoint areas of particular interest on the website.
- It helps detect bottlenecks that decrease the quality of the user experience.
Website performance refers to speed, responsiveness, and overall user experience.
Always pay attention to this metric, as low-quality website performance drives visitors away super fast. Would you spend more than 5 seconds on a website that takes ages to load?
Low website performance quickly transforms into high bounce rates, low conversion rates, and low customer satisfaction and loyalty.
By tracking essential aspects, such as page load, server response time, and page size, you get valuable insights to improve your online platform.
Besides that, other advantages of tracking website performance are:
- It improves customer conversion and retention
- It helps you find areas that need improvement on your website
Ecommerce analytics uses a lot of metrics and key performance indicators to analyze business performance.
You can improve your online shop by tracking just a few key metrics: tracking traffic sources, conversion rate, average order value, shopping cart abandonment rate, customer retention rate, cost per acquisition, customer lifetime value, time on site/page, and website performance.
They give you a lot of comprehensive data about your customers, your marketing and sales strategies, and overall site performance.