Unlocking the Secrets to High Conversions" - Take your email marketing to the next level with this ebook, which covers advanced tactics such as segmenting your email list, optimizing your email design, and personalizing your messaging.
What makes an eCommerce venture successful? Is it the right product, marketing strategy, or just dumb luck? Well, all these contribute their parts, but the actual thing that matters the most is having a clear understanding of the factors that play a great role in driving your day-to-day online business.
These factors are nothing but eCommerce metrics and KPIs (key performance indicators), and they are the reasons we have come up with this article.
eCommerce metrics and KPIs are the benchmarks that are taken into account while evaluating the performance of a commercial website. They can help you find out whether your online business is going on the right path and how effectively it is achieving its set goals & objectives.
eCommerce metrics & KPIs are crucial, and the reason is they enable you to track the performance of your day-to-day business operations and identify the areas which need improvement so that you can strategize your next steps accordingly.
Tracking them over a period of time gives you a better understanding of your customers, which can help you increase your brand engagement and revenue.
Now that you know what eCommerce metrics are and how beneficial to track them is, it’s time we take you through some of the most important eCommerce metrics and KPIs that can come in handy in determining the success of your online business. So, without wasting any time, let’s start.
When it comes to eCommerce, a conversion is when a visitor to your website makes a purchase and becomes your customer. And to measure at what rate your website’s visitors are doing this, you can calculate the conversion rate.
How? You simply take the number of conversions, divide it by the number of total visitors, and then multiply the result by 100.
Conversion rate is a vital KPI, and you should keep close track of it. The reason is it helps you track the performance of your ad campaigns and make the next marketing plans accordingly.
Average order value (AOV) is an important metric for an eCommerce business to monitor. Also known as average basket value, it talks about the average amount for every order placed with your business during a particular time period. To calculate it, you need to divide your total revenue by the total number of orders.
The significance of AOV is it gives you an understanding of your customers’ spending behavior, which can help you plan products’ pricing and marketing campaigns to raise the amount value of each order.
Abandoned shopping carts are a major headache for eCommerce businesses all around the world. An annual loss of $18 billion in sales happens because shoppers leave their virtual carts before completing the checkout process. The reasons behind this can be many, like high additional costs, mandatory account creation, security concerns, etc.
To calculate the cart abandonment rate, you need to take the total number of completed purchases and divide it by the total number of shopping carts created. After that, subtract the result from one and then multiply it by 100.
The amount of traffic your website drives determines how your sales are going to be, and that’s why monitoring it on a frequent basis is crucial for you. This can help you devise strategies to attract more people to visit your eCommerce site and convert them into leads for good business growth.
Average visit duration is a metric that measures the average amount of time a visitor spends on your webpage. This is the way you find out whether your website is engaging enough.
Are the visitors leaving right away, or are they spending time exploring it? What kind of content have they sought after? Answers to these questions can help you make your website more customer-friendly. To calculate the average visit duration, divide the total visit duration by the total number of visits.
Pages-per-visit (PPV) allows you to calculate the average number of web pages a shopper views during a visit. It helps you analyze shoppers’ activity on your website and how good & easy to navigate your content is. A higher PPV indicates that shoppers find your web pages relevant to them and interesting enough to explore.
Another great eCommerce metric is the Exit rate, which monitors how many visitors leave your website from a specific page. This helps you identify and rectify the weak points of your website that can make visitors lose interest in exploring further.
For instance, if you find visitors leaving your website from the checkout page, you may like to find out what’s wrong there and fix it. To calculate the Exit rate, divide the total exits from a page by the total number of visits to that particular page.
Referral Traffic gives you the ability to see how much of your website’s traffic is coming through different referral sources. It helps you determine which referral source is working best in your favor. Is it online reviews, social media channels, or email marketing?
At the same time, you get to know which marketing campaigns aren’t yielding the expected results so that you can give more focus to them.
Bounce rate is an important KPI, which calculates the percentage of visitors who exit your website immediately after landing on its single page. It directly tells you about the first impression your website has on its visitors.
A high bounce rate suggests the content your website is offering is either confusing or irrelevant to the visitors’ needs. Whereas a low one indicates, the website content is good and engaging.
Finding the bounce rate requires you to divide the total number of single-page visits by the total number of visits.
No matter how old email is, it still dominates all other marketing mediums, and this is why every eCommerce brand seeks to add as many subscribers to its email list. Email list growth rate is a metric that helps you see how fast your email list is growing.
To calculate the email list growth rate, you need to first subtract the number of new subscribers from the number of un-subscribers and then divide the result by the total number of total subscribers. Keeping a close watch on this metric is crucial because your email marketing solely depends on it.
Email bounce rate is a KPI that refers to the percentage of emails that fail to reach the recipient’s mailbox and get redirected back to you. Email bounces can be divided into two categories – soft bounces and hard bounces.
Soft bounces usually happen because of temporary reasons, like an unavailable recipient’s server or full inbox. At the same time, the reasons behind hard bounces are of permanent nature, like invalid email addresses. This KPI helps you check the quality of your email list and can tell you whether you need to update it.
Email open rate is an eCommerce metric that measures the percentage of emails opened out of the total emails delivered. It helps you quantify the achievement of your email marketing campaigns and identify the areas that can be improved.
There are a number of factors that can increase email open rate, such as interesting subject lines, personalization, good content, active subscribers, etc.
Email click-through rate (CTR) calculates how many subscribers clicked on a hyperlink, CTA, or image given in your email message. A high email CTR indicates that your email content is relevant enough to make its readers take action. Whereas a poor one suggests, you should go through the email content and ensure the link or CTA is at the right place.
Social media engagement rate shows how actively people are paying attention to your company’s content on social media platforms, like Meta, Twitter, Instagram, etc. It is measured as total engagement (likes, comments, shares, etc.) divided by the total followers of your company’s account.
Pay-per-click (PPC) refers to the average amount of money you spend each time a person clicks on your paid advertisements. Also known as cost-per-click, it is a common eCommerce metric that helps you assess the performance of your marketing campaigns on search engines and social media platforms.
Repeat customer rate refers to the proportion of customers who revisit your website to make another purchase. Tracking this KPI is crucial because the customers who trust in your brand help you achieve long-term growth. In fact, it is observed that repeat customers are likely to spend more and try your new products.
Net profit rate, also known as net margin rate, measures how much profit you make as a proportion of your total sales over a certain period of time. It can be found by dividing the net income (sales minus all company’s expenses) by total sales.
This metric tells you about the financial performance of your business and whether it is on the right path or not. The best practice for raising the net profit rate is to eliminate unnecessary operational costs and increase sales.
Customer Lifetime Value (CLV) is a metric that indicates the total amount of income you, as an eCommerce entity, expect to earn from a customer over time.
For steady business growth, it is advised that you should monitor and optimize CLV as much as possible because a high CLV suggests that your brand satisfies the market’s demands and that customers perceive it in a good way.
Customer Acquisition Cost (CAC) refers to the cost (marketing expense) you spend to convince a person to buy your product or service. In simple terms, this KPI tells you about the cost of acquiring a new customer.
To measure it, you can take your marketing expenditure and break it down as per the number of newly acquired customers. Ideally, your CAC should be low because this can get you high-profit margins.
Churn rate, also called attrition rate, measures the speed at which your customers stop dealing with your brand over a period of time. It also applies when your customers fail to renew or cancel their subscription to your brand. Your aim should be to keep it as low as possible because a high churn rate can really harm your business’s credibility and sales.
Another crucial eCommerce metric is the customer retention rate, which marks the number of customers you’re able to retain by the end of a specific duration. It tells how able you are to keep your customers with you over time.
A high customer retention rate is crucial for your online business because it drives brand loyalty, word-of-mouth marketing, and orders of high value.
Orders-per-customer shows how many orders each customer makes on average over a given timeframe. It is an indicator that tells how active your customers are and whether your eCommerce content is interesting enough to make them buy from you on a frequent basis.
Hit rate refers to the number of sales of a given product divided by the number of people who visit your website to check it. This KPI measures the success rate of your business’s sales efforts.
Customer satisfaction score (CSAT) is an excellent eCommerce metric that measures how satisfied your customers are with your products/services. Finding it requires you to create a customer satisfaction survey, which contains questions that will help you know what your customers think about your brand.
Similar to the previous metric, the net promoter score measures the loyalty of your customers toward your brand. It gives you a way to analyze the customers’ sentiments and predict whether they would be interested in repurchasing or recommending your products/services. It is based on a single survey question and ranges from -100 to +100.
Customer service email count refers to the total number of emails that your customer service email support team receives. Tracking this metric gives you a better understanding of how many of your customers have concerns and seek your help.
Average resolution time indicates the average amount of time your customer support takes to fix a customer’s issue. Your goal should be to keep it low because the less time you take to resolve customers’ concerns, the better buying experience they get.
To save yourself from unnecessary hard work, the least you can do is improve your product copies and add more information to the FAQ sections.
Refund rate refers to the proportion of transactions that you refund during a given timeframe. Analyzing it is pretty crucial for your eCommerce business because a high refund rate indicates your inability to meet the customers’ expectations, and this can put a heavy burden on your profit margins.
Cycle time refers to the amount of time you (the production time) work on manufacturing a product. This time includes all the production processes from first to last, be it value-added or non-value-added. Monitoring cycle time for a while can help you get valuable insights to optimize your production efficiency.
Overall labor effectiveness describes the efficiency and productivity of your team that is operating all the manufacturing equipment.
Another relevant and easy-to-track eCommerce metric for manufacturing is yield. It measures the number of products you manufacture over a period of time.
The first time through (FTT) refers to the proportion of products that are scrap, unable to meet standards, demand fix, or are not sellable under the defective label. This KPI lets you measure your production efficiency and identify changes in the production process.
It’s vital that you keep a close watch on the above-mentioned eCommerce metrics and KPIs for your online business. The data and insight you get from this can not only help you optimize your regular operational activities but also take your business to new heights.
NotifyVisitors‘ marketing automation tools can help you keep up with your metrics and help you build new strategies. To learn more about our tools, schedule a free demo.
Key performance indicators, commonly known as KPIs, are metrics that describe how well you’re performing against your strategic business targets. They tell you what your success and failures are as an eCommerce business owner.
Measuring and monitoring eCommerce metrics over a period of time is crucial for an eCommerce business because it gives you a very close idea of your customer’s purchasing patterns, like how they interact with your website, which products they like the most, and many other things.
The followings are the three most common attributes of eCommerce metrics:
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