Metrics are important for understanding your marketing strategy, overall business, and customers. The most successful eCommerce businesses base their decisions on the statistics they have available to them. eCommerce business owners need to know how their store is performing at all times and how to use this information to scale their business.
Most Important eCommerce Metrics to Track
When it comes to eCommerce, there are thousands of metrics that you can track, but it’s important to determine which ones are most worth your time so that you can efficiently grow your business with the right insights. Here are the most important metrics you should be tracking.
- Sales Conversion Rate
The purpose of your eCommerce business is to sell products, which means that your website needs to convert. Your eCommerce conversion rate tells you the percentage of visitors who make a purchase. This metric directly impacts your revenue, which means it should be on the top of your list of metrics to track. Take a look at your current conversion rate so that you understand your baseline. You can also set goals for yourself. Depending on your industry, your conversion rate can be as little as one percent or lower.
Almost all analytics tools can tell you your conversion rate, but you can find it yourself by dividing the number of people who make a purchase from your website by the number of people who visited your website.
There are other types of conversion rates you might want to pay attention to that don’t have anything to do with the purchase of a product, such as signing up for a newsletter. It’s important that you determine which conversions mean the most to you.
Improving your conversion rate isn’t always easy, but it is possible depending on a number of factors. Make sure that you’re always testing out new ways to improve your conversion rate so that you can find the right one.
- Customer Lifetime Value
Customer Lifetime Value (CLV) is the total that you earn from a customer over their life. For example, if your online store sells body pillows and you earn $10 over ten transactions from a typical customer, your CLV is $100. Knowing your CLV lets you know how much you can spend to acquire new customers and how much you should spend to retain them.
To increase your CLV, it’s important to increase your average order value and build long-term relationships with your customers to prompt repeat orders.
- Revenue by Traffic Source
All traffic to your website isn’t equal. Some sources send visitors who are more likely to be customers, which means that some traffic sources will be better for your business than others. For example, if you spend the time and money on optimizing your website for search engines, social media advertising, Google advertising, and email marketing, you may be interested to know which one of these sources helps you make the most sales.
Let’s say that you pay an SEO agency $2,500/month to optimize your website to rank on the first page of Google, $5,000/month on Google ads, and $5,000/month on influencer marketing. When you determine your revenue by traffic, you may find that organic traffic from Google brings in 80% of your sales, while influencer marketing brings in 10% and Google ads bring in 10%. From this example, you’d be able to see that the investment in SEO was worth it, but you may want to change your influencer marketing strategy.
Hot Tip: Save money on influencer marketing by only working with influencers with a high engagement rate that shows that their followers are real people.
- Email Subscription Sign-Ups
Also known as a micro-conversion, email opt-ins are another metric that can help you determine the success of your eCommerce website. Email marketing is a necessity in the digital age, which means that you need to keep in contact with consumers who sign up to receive emails. Remember, these customers typically sign up in change for a percentage off of their initial purchase. They also expect that some, if not all, of the emails you send them will be about sales and new products.
The good thing about email marketing is that you do not depend on another platform like Facebook. Instead, the people who want to hear from you opt-in to do so. It’s important to get as many prospective customers as possible to sign up for your emails, even if they don’t buy your products. Those who sign up are interested in your products but not ready to make a purchase, which means that you can put them in a funnel that ultimately leads them down the path to making a purchasing decision.
When using email marketing, make sure to track your total opt-ins and where they came from. You might be collecting emails through social media as well as your website.
You can track email opt-ins in multiple ways, including using the built-in analytics in your email marketing platform or setting up a conversion goal in Google Analytics.
- Customer Acquisition Cost
Your customer acquisition cost (CAC) is how much it costs you to acquire a new customer. Your customer acquisition cost must be lower than your CLV in order for your business to make money. To calculate your CAC, divide your total marketing spend by your total number of customers. You can also calculate your CAC by traffic channel from Google Ads to organic social media.
- Shopping Cart Abandonment Rate
If you ever wonder how many people add items to their cart and then exit your website, your cart abandonment rate will tell you. Some of the revenue lost by abandoned carts is recoverable by setting up email automation that reminds customers that they abandoned their carts, making them more likely to pick up where they left off. Lowering your cart abandonment rate should be a huge priority since you can target customers who were already interested in your products.
The Bottom Line
As a business, it’s important to track metrics to measure the overall growth of your company and to ensure you’re investing in the right resources. Not measuring metrics can cause you to spend money on tools and services that aren’t doing your business any good. Use the six metrics above to help you.
Matt Casadona
Matt Casadona has a Bachelor of Science in Business Administration, with a concentration in Marketing and a minor in Psychology. Matt is passionate about marketing and business strategy and enjoys San Diego life, traveling, and music.
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