It’s a bird, it’s a plane, it’s… oh, numbers and data. For some, keeping track of metrics may as well be music to their ears. For others, it sounds more like a cacophony of confusion and anxiety, akin to being cornered by a flock of loud seagulls in a grimy New York alleyway. But, no matter which camp you’re in, the importance of validating your metrics cannot be understated.
Like taming a fantastical beast, it’s your responsibility to exert control over your business, and the devil’s always in the details. If taking stabs in the dark has worked for you before, we won’t stop ya. However, if you’re a big fan of working smarter, not harder, we have your back (and your protractor).
Take a few deep breaths, and join us for a crash course on eCommerce metrics: what they are, why you need them, and how they can help you “Stress Less, Grow More.” Wait — that’s our line!
But First, What Are eCommerce Metrics?
Your online store is set up. Your inventory is ready to roll, and you even have some interested clicks from your target audience. But, whether you’ve made zero, one hundred, or one thousand sales, it’s hard to check the health of your business without a tangible way to monitor your different processes and progresses.
In other words, we’re examining eCommerce metrics, which are simply measurements of performance. From these measurements, you’ll be able to make executive decisions on what is and is not working, which, among other factors, will optimize your success by broadening your reach and fattening your pockets.
What’s the Difference Between eCommerce Metrics and KPIs?
If you’ve been around the block long enough, you’ve likely heard about KPIs, or Key Performance Indicators. With the word “performance” thrown in there, it makes sense to think that KPIs are connected to metrics in some way, which is totally right! KPIs are metrics, but not all metrics are KPIs… allow us to explain.
Basically, metrics show the status of something, kind of like a cut-and-dried snapshot of a critical piece of information. KPIs, on the other hand, already have specific goals and objectives incorporated into them, which also means they can vary by company, since not every company will want (or need) to focus on the same things.
Got it? Great! By the end of this article, you should have a better foundation to create personalized KPIs. Let’s continue!
10 eCommerce Metrics You Need to Know & Track (+2 Bonuses!)
#1. Sales Conversion Rate
Sales conversions are like the VIPs of the eCommerce world — without them, it’d be pretty impossible to make any sort of profit. Aside from being hugely essential, conversion rates are a decently reliable touchpoint for business owners. To calculate, simply divide the number of sales by the total number of site visitors.
For further reading, check out “Simple Steps to Improve eCommerce Conversion Rates.”
#2. Cart Abandonment Rate
Think of cart abandonment as the opposite of a sales conversion. With cart abandonment, prospective shoppers stay in the prospective stage by leaving their shopping cart all by its lonesome — no bueno! To calculate, divide the number of completed purchases by the number of created shopping carts.
For further reading, check out “Top 10 Ways to Lower Shopping Cart Abandonment Rates and Increase Sales Conversions.”
#3. Average Order Value
Average order value, also known as AOV, measures the average transaction total of orders placed over a given period of time. To calculate, just divide your order revenue by the total number of orders.
#4. Number of Transactions
The number of transactions pairs nicely with the average order value, as both metrics are able to show two sides of the same coin. High-ticket items, for example, can have a low number of transactions but a high average order value, and the opposite is often true for inexpensive products.
#5. Top Performing Products
You may have an all-star team, but it never hurts to know who your standout players are. Keep a close eye on your best sellers, and supply what the people demand, even if the people want cake.
#6. Customer Acquisition Cost
Finding paying clientele takes time, effort, and… money. The customer acquisition cost, or CAC, lets you know exactly how much you’re spending on “winning” your newly-minted shoppers. To calculate, add the cost of sales with the cost of marketing, and then divide that by the number of acquired customers.
#7. Customer Retention Rate
Now, when it comes to acquiring customers, the ideal scenario is long-term commitment, as existing customers generally give you more bang for your buck than new ones. This is one metric that, aside from being useful, can also provide a genuinely insightful look into your business strategies. To calculate the CRR, divide the number of repeat customers by the total number of customers at the start of a given time period, and then multiply that by 100.
For further reading, check out “Customer Retention vs. Acquisition: What You Should Know.”
#8. Customer Lifetime Value
Customer lifetime value, or CLV, determines a customer’s “worth” by calculating how much profit they’ll bring throughout the entirety of their relationship with your brand. To calculate the CLV, multiply the average order volume by the number of purchases made in a year, and then multiply that by the average length (in years) of the customer relationship.
#9. Total Revenue
It’s a no-brainer that you should know how much cheese you’re bringing to the cheesemonger. To calculate your total revenue, just determine a time period and see how much your business has raked in from day A to day Z.
#10. Profit Margin
You could be rolling in dough, but, unless you’re a baker, that won’t matter much if you have to give most of that dough away. Finding your profit margin will help you know how much money you’ve actually made after a sale. To calculate, subtract your costs from your total revenue, and then divide that by your total revenue.
🚨 Bonus Round: 2 More Metrics You Should Know & Track 🚨
#11. Top Organic Keywords
What are people searching for when they stumble upon your gadgets and gizmos? This is an especially useful metric for marketing and search engine optimization, as you’ll be able to hone in on what you’re best known for and dominate your corner of the digital market.
For further reading, check out “SEO for Beginners.”
Beep, beep! Hold on, wrong kind of traffic. In this case, we’re talking about the visitors and hits your online store is so graciously receiving. Aside from volume, it’s also good to know where this traffic is coming from — Google, mobile devices, spaceships from the year 3000? The more you know, the better you can cater to your customers, their wallets, and curious extraterrestrials.
And… that’s it! Well, not really — there are tons of other metrics to be tracked, but we’ve kept it sales and marketing-focused for the sake of time and simplicity.
Now that you’re armed with the basics, you have our blessing to take on the world, one datapoint at a time.
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