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Weekly, biweekly, quarterly, or even monthly – no matter when you measure your eCommerce KPIs, measure you must.
That said, if there‘s one difference between experienced and non-experienced eCommerce entrepreneurs, it’s unquestionably the kind of metrics they prioritize.
Instead of keeping track of every available metric, you should focus on the right metrics – ones that have a significantly positive impact on the business when optimized.
For example, when you analyse collected data about previous customer behaviour, you can neither overstock or understock your product.
Read on as we discuss the nine most crucial eCommerce metrics that can help you understand how visitors interact with your brand.
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Formula: (Number of Sales / Number of Users) x 100%
Sales conversion rate indicates the total percentage of visitors who end up making a purchase from your website, which is also the ultimate goal of all businessmen.
You can indeed differentiate this into two categories: micro conversion and also macro conversion. While the former paves the path to the final sale, such as a person clicking on a product on the category page, the latter refers to the final purchase.
A good rule of thumb with these eCommerce KPIs is to have a conversion rate between 1 and 5 percent – at least according to Marketing Sherpa.
Formula: [(Number of Sessions from Current Year – Number of Sessions from Previous Year) / Number of Sessions from Previous Year] x 100%
It’s simple really – when you have more traffic, there‘s correspondingly a higher possibility of more sales. So if you drive your website traffic, you will increase conversions and also earn more revenue. This is why getting more traffic should always be on your priority list - and one of your main eCommerce KPIs as a result.
If you can get more organic visitors to your site without paying for them, it'll be even better. Given that the overwhelming majority of companies use organic traffic to gauge content marketing success, getting content out there to reel in traffic is consequently more important than ever.
Formula: Unlike the other eCommerce KPIs, there‘s no formula for this one. Instead, you need an analytics tool, such as TWIPLA, and to also set up eCommerce source tracking.
Overall, all website traffic isn’t equal. You might get more visitors from sources who eventually convert into customers as opposed to sources that send you visitors that only window shop.
Hence, you must spend money on only those sources that work and immediately also stop any expenditure on sources that don’t work well – or don’t even work at all. You can identify channels/sources that give you actual customers by measuring your revenue by traffic source.
Formula: (Number of Emails Opted In) / (Number of Users) x 100%
Considering you get $44 for every $1 invested, email marketing surely isn’t dead.
You can also advertise and sell your products repeatedly without incurring extra expense. This is precisely why marketers and business owners equally want to expand their mailing list – plus, having enough subscribers reduces dependency on other platforms like Facebook and Google to drive traffic.
The idea here is to keep adding more subscribers to your email list. It doesn’t matter if they don’t buy your product – it’s ultimately the interest that should be there. A good email opt-in rate should be between 1 to 5 percent.
Formula: Amount of Money Spent on Sales and Marketing / Number of Customers Acquired
Customer acquisition cost, also known as CAC, indicates the amount of money you’ll have to spend to "buy" a customer. For instance, if you spend $1000 on sales and marketing and get 50 new customers, you spend $20 to "acquire" every customer. Understandably, you want to keep this metric as low as possible.
Knowing your CAC will allow you to allocate your total marketing budget more effectively, while also helping you identify the number of customers you should acquire in a specific time period.
This makes it one of the top eCommerce KPIs if you're chiefly looking to really dig into your costs.
Formula: Total Revenue / Number of Orders Placed
Average order value refers to the average amount a customer spends while purchasing from your website.
Imagine there are two stores, Store X and Store Y. While the former gets 1000 visitors a day, the latter receives 100, and both have a sales conversion rate of 1 percent. So Store A makes 10 sales every day, and Store B makes 1.
The catch here is the average order value for both is very different.
The average order value for Store X and Store Y is $20 and $200, respectively. As a result, both have a total revenue of $200 despite Store B having lesser traffic. Therefore, you‘ll make more profit if your customer purchases more in every order.
As you may have realized, you get an accurate picture of your business by measuring this metric.
Formula: 1 – (Transactions Completed / Shopping Carts Initiated) x 100%
Every eCommerce business owner’s biggest peeve, cart abandonment rate indicates the rate of shoppers who add items to the shopping cart but leave the site before making a purchase.
It's certainly a frustration. Nearly 70% of shoppers end up abandoning their carts, which is way above the optimized rate of 20%.
But by considering these amoung your eCommerce KPIs, you will quickly find ways to lower this figure significantly.
Formula: Percentage of Promoters – Percentage of Detractors
This one feels markedly different from the other eCommerce KPIs.
The whole idea of calculating your net promoter score (NPS) is to determine customer loyalty and brand sentiment. You can measure your NPS by asking your users a simple question: “On a scale of 0 to 10, how likely are you to recommend our product to your friend or acquaintance?“
You can group your answers into three categories:
Think of the whole system as your customer loyalty spectrum.
Formula: (Number of Returning Customers) / (Total No. of Customers) x 100%
Getting new customers is obviously a priority, but this doesn’t mean we should neglect your existing customers. In fact, retaining customers and encouraging them to buy again (and again!) from the website is actually better and cheaper than acquiring new customers.
As such, this is one of the most important eCommerce metrics for you to follow.
Our advanced website intelligence solution will enable anyone to grow their website quickly - all while also staying data privacy compliant!
Measuring and optimizing specific eCommerce metrics will help you make reliable business decisions that drive sales. You can use TWIPLA to keep track of all your website analytics, while also being data privacy compliant. New eCommerce features will be launched within the app in the course of 2021, so you’ll be able to strategize effectively using the collected data and actionable insights, which, in turn, can also ensure long-term growth.
You‘ll instantly see the positive effects that understanding and also tracking metrics can have on your business’s bottom line – provided you do it right. After all, knowledge is power, and if you use the power correctly, it’s your business that will ultimately thrive.
This article is a guest post by RefferalCandy.
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04 September 2023 - by Simon Coulthard
