For many store owners and retailers, Ecommerce is still relatively new. They may have been aware of Ecommerce for quite a while by this point, but it’s only in the past few years that they’ve taken the leap and embraced this channel for their own businesses.
If that’s the case for you, then you’re inevitably going to have questions. One of the most important to ask: Which metrics and key performance indicators should you track? After all, there’s no such thing as a universal, foolproof Ecommerce strategy, but by gathering and leveraging the right data, you’ll be able to systematically analyze and improve your efforts.
With that in mind, keep reading to learn about the five Ecommerce metrics you need to track to grow sales.
1. Site traffic
Site traffic has the potential to be a vanity metric (a metric that looks good on paper, but doesn’t provide real insight into the health of your business), so it’s important to view it in the context of some of the other metrics we cover below. In other words, you should be asking yourself, “How does the quality and quantity of my traffic influence other metrics?”
To get at its underlying value, it’s important not to view traffic in the aggregate and leave it at that. You want to slice and dice your traffic into different segments to see if you can uncover any insights that can help your business increase revenue.
Here are a few examples of how to segment your traffic for analysis:
- Compare traffic from different sources like pay-per-click (PPC) traffic vs. organic social media traffic. Which has a higher likelihood of converting into a customer?
- Dig into the geography and demographics of your traffic. Maybe you are receiving a large amount of international traffic and you didn’t realize it. Perhaps it then makes sense to introduce a multi-language and multi-currency site.
Going further, it’s important for Ecommerce leaders to use site traffic to evaluate the success of various promotional campaigns. Did your last email featuring a 10% off coupon lead to a bump in site visitors? What about a recent PPC campaign?
When answering these questions, don’t stop at traffic. You need to dig further and look at conversions. A promotion that drives traffic to your site but doesn’t result in purchases tells you that you need to modify some parts of your site to better convert visitors into customers.
Finally, tracking site traffic gives you insight into how outside factors like seasonality influence your business. For example, perhaps you figure out that Summer is a particularly slow time for your business. You can then come up with marketing campaigns or other sales tactics to help you drive extra traffic to your site to boost sales during this traditionally slow time.
2. Conversion rate
This is another obvious and important option. Conversion rate is simply the percentage of site visitors who actually make a purchase. If you don’t know your online store’s conversion rate, then you don’t really know how your site’s performing and what, if anything, needs to change to gain more customers.
For example, if your site traffic is high but your conversion rate is low, that could mean one of several things. You might need to reconsider your website design, your pricing or perhaps try to bring in more targeted traffic. Before you can resolve this problem, though, you need to recognize it in the first place.
Another good practice is to compare your conversation rate over set periods of time. Depending on your traffic, weekly, biweekly, or monthly can all work (oftentimes these segments are referred to as cohorts). This allows you to attribute a higher or lower conversion rate to marketing activities that occur just before or during your various cohorts. For example, perhaps updating your product page design dramatically improved your conversion rate, while poor-quality traffic from a new marketing tactic had a negative effect on your conversion rate.
It’s important to know what marketing activities and aspects of your site are actually influencing your conversion rate so you can take the appropriate steps to improve it going forward.
3. Average order value (AOV)
This metric is a little more advanced but it offers useful insight into the overall success of your business as well as the value of your customers. AOV is basically exactly what it sounds like. It tells you the average value per order across all the orders placed on your site within a given timeframe. To calculate it you divide your total revenue by the number of orders received. So if last week you generated $10,000 in revenue across 20 orders, your average order value is $500.
Like your conversion rate it’s smart to compare your AOV across specific periods of time, as well as across different traffic sources. This allows you to tie increase increases or decreases in your average order value back to specific marketing campaigns or updates to your site.
4. Shopping cart abandonment rate
As this blog has covered in the past, shopping cart abandonments are both unavoidable and incredibly frustrating. To determine whether an online store is experiencing an unusual or problematic number of these abandonments, store owners need to pay attention to the abandonment rate.
If the rate is high, it means your website is doing a good job of encouraging your customers to purchase, but something goes wrong late in the shopping experience. In this instance, high shipping rates could be the problem, as could a confusing checkout process. Again, the problem only becomes visible when you pay attention to this metric.
Sending automated, abandoned cart recovery emails is an excellent way to convert some of these abandoned carts into customers. Just be sure to sweeten the pot with a discount or promotion of some kind.
5. Cost of acquiring customers (CAC)
Your CAC costs are a critical metric to track as your online store grows. This metric essentially tells you on average how much money you’re spending to acquire new customers. Your overall goals for tracking this metric are to: ensure you’re spending less to acquire a customer than they’re worth to your business and to understand how different marketing channels produce a different CAC so you can optimize your efforts.
Naturally, this is a complicated metric to determine. According to Neil Patel, a number of factors go into calculating your CAC, including marketing campaign expenses (not just the actual ad placement but creation/production/etc.), the cost of sales and marketing on your team, and so on.
There are many more metrics an online store owner could track, which we’ll be covering in future posts. But by spending time monitoring these foundational metrics and making changes based on them, you’ll be off to a great start!
Tracking Ecommerce Metrics
These are just a few examples of ways you can track the health of your business, but aren’t the only way you can help your business thrive. An Ecommerce solution optimized for success can help you achieve better conversion rates and a higher AOV.
Contact Zoey to learn how we’ve built a platform optimized for B2B Ecommerce, and the larger order sizes that come from such customers. We can show you how it can take your business to the next level:
