If everything is important, then nothing is. That's why you need to determine the best ecommerce success metrics to measure for your business.
To make sure your ecommerce business is as successful as possible, you need to understand which metrics to measure and why. Then you make all of your business-related decisions based on data, not just instincts or casual observations.
Keep reading to learn the top ecommerce metrics.
What are Ecommerce Success Metrics?
Ecommerce success metrics are data you track to determine the performance of your online business. These numbers tell you whether your business is doing well or not. You then use this data to make marketing, promotional, and other business decisions.
Why are Ecommerce Success Metrics Important?
Without the data, you don't know what's working, what needs adjustment, or where you should redistribute resources. To grow your eCommerce business, you need to:
- Set measurable goals (known as key performance indicators).
- Understand how to measure those KPIs.
- Monitor KPIs, making adjustments as necessary.
The 10 Most Important Ecommerce Success Metrics
There is a lot of business-related data you can measure. While you may determine that additional ecommerce success metrics are essential to monitor for your business, here are the metrics you should watch closely.
1. Sales Conversion Rate
The most important metric to monitor, sales conversion rate tells you what percentage of your site's visitors make a purchase. Most analytics tools provide the conversion rate. You also can manually calculate it by dividing the number of customers who purchase a product by the total number of site visitors. A good conversion rate is 1-5%.
2. Email Subscriptions
Email marketing is an amazing tool for eCommerce stores because it allows you to stay in contact with customers who already purchased or showed interest in your products. You're able to contact them with future promotions and encourage purchases. Marketers who use segmented campaigns see a 760% increase in revenue. The easiest way to track your email subscription rates is with the analytics built into your email marketing tool.
How to Grow Your Email Distribution List >>
3. Customer Lifetime Value
This is a measure of how much you earn from a typical customer during their life. This number tells you how much you can spend to acquire a customer and to retain them. To determine this number, add up the revenue earned from a customer (annual revenue multiplied by the average customer lifespan) and subtract the cost of acquiring them.
4. Customer Acquisition Cost
A measure of how much it costs on average to acquire a new customer. You want your acquisition costs to be less than your average order amount, so you make money off each new customer. Calculate this metric by dividing your total marketing expenditures by your number of active customers.
5. Repeat Purchase Ratio
You want to retain your existing customers. The repeat purchase ratio measures how many times a customer comes back to your store to make another purchase. To determine this number, divide the number of repeat customers by the total number of customers.
6. Revenue By Traffic Source
Some traffic sources convert more visitors than others, which is where you want to spend your money. Track sales from each medium and determine how many sales you get per 1,000 clicks from each source.
7. Average Order Value
This metric is the average value of each purchase. To determine it, divide your overall sales number by the number of carts. The goal is to increase the amount each customer spends.
8. Product Return Rate
It's only helpful to make a sale if it's permanent. The product return rate tells you how many units are sold vs. returned. You can measure the product return rate for overall sales and individual products. These measures help you understand which products are more successful and which ones you may want to remove from your offerings.
9. Loyal Customer Rate
Your loyal customers are your most valuable customers. They're the ones who love your products, will return for more purchases, and will recommend your products to their friends. Your loyal customer rate tells you how well you're engaging and motivating customers to return. To determine this rate, divide the number of repeat customers by the total number of customers.
How Do I Increase Sales and Loyalty with eCommerce Lifecycle Emails? >>
10. Shopping Cart Abandonment Rate
A measure of how many shoppers add items to their online carts but never make a purchase. You can track this number with Google analytics. You want to reduce the percentage of people who leave items in their carts as much as possible.
Sell your products online, worry-free
Officially recommended by WooCommerce, our hosting is made for online businesses like yours
How to Choose the Right eCommerce Metrics to Monitor Your Business
While you could measure many things related to your business, it's important instead to consider which metrics are important to the business outcomes you desire.
You could monitor the metrics above, determine which areas you want to increase or decrease (depending on which means improvement), then set KPIs in those areas. Then you would continue to review and monitor those metrics at least monthly, adjusting your goals as necessary.
If you’re still trying to figure out which metrics are the most important for your business to track, consider:
- Impact — If the metric changed, how big of an impact would it make on your company's bottom line? If improving the metric isn't worthwhile, neither is monitoring it.
- Goals — You should have strategic goals for your company. Focus on changing the metrics that support those goals.
- Scale — Some metrics are interconnected, which means improving one will automatically improve others too. If you can improve multiple metrics through small actions, it's probably worth doing.
How to Use Ecommerce Success Metrics to Manage Your Business
Once you measure your metrics and determine where you want to make changes, you need to know how to make those changes happen. Here's how to improve each metric listed above:
1. Sales Conversion Rate
You want 1-5% of the customers who visit your site to make a purchase. Of course, the higher the percentage, the better. To increase this percentage, use content marketing to make more people aware of your company and its products, build an email marketing list, or use promotional pop-ups to make shoppers offers when they visit your store.
2. Email Subscriptions
To grow your email list, promote joining the list via pop-ups on your site and social media accounts. Offer a promotion (like 10%) if a shopper signs up to receive future emails.
5 Successful Email Marketing Campaigns and Why They Worked >>
3. Customer Lifetime Value
You can improve how much your customers spend with you during their lifetime by building relationships with them, asking for their feedback, and eliminating concerns or pain points for them.
4. Customer Acquisition Cost
You can reduce the amount it costs to acquire new customers by focusing marketing on those people most likely to become customers. Personalize the customer experience for your target market. And, of course, the more customers you retain, the fewer you have to acquire.
The Cost of Customer Acquisition vs. Customer Retention >>
5. Repeat Purchase Ratio
You can encourage repeat customers by getting them to sign up for your email list, messaging them about recent purchases and future promotions, and encouraging loyalty program membership.
6. Revenue By Traffic Source
Don't spend all of your time trying to build an audience. Instead, go to where your prospects already are. Monitor where you get the most traffic from and spend your resources there.
7. Average Order Value
Increase order value by offering free shipping at a specific price point, giving product discounts for a minimum spend, suggesting other products, encouraging savings with bulk orders, and promoting a loyalty program.
8. Product Return Rate
For fewer returns, make sure your products are quality and are accurately represented on your site, encourage customer feedback about products, and be transparent about shipping times.
9. Loyal Customer Rate
Customers are more likely to stay loyal if you offer them quality products at an acceptable price while building relationships with them and rewarding them for their loyalty.
10. Shopping Cart Abandonment Rate
Reduce shopping cart abandonment by being upfront about pricing and costs, allowing customers to edit and save carts, and making sure your site runs well, and your checkout process is simple.
Measuring What Matters
The correct ecommerce success metrics are the ones that move your business forward according to your goals. The mix of metrics will be slightly different, depending on your business and its needs. It’s also typical for your KPIs to fluctuate, depending on where you’re focusing your resources and what’s happening with your business at any given time.
For example, you may see more cart abandonment during the holidays, but you also likely have many more visitors making purchases. So, both of those statistics would increase, but one makes up for the negative of the other.
The most important thing is to start measuring and adjusting KPIs to accomplish your business goals.
Start With a Site Optimized to Sell
KPIs may tell the story, but a successful online store also requires the right foundation — a site that’s optimized for selling.
To get your store online quickly without coding, and using one of the strongest ecommerce platforms available — check out Managed WooCommerce by Nexcess today.
