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When it comes to monitoring eCommerce websites, there are so many tools you can use. For someone relatively new to eCommerce, it can be pretty overwhelming, with so many numbers and statistics to analyze and understand. And while all of these metrics bear some importance, not all of them will be important to you with every campaign. Some will be more crucial to measure than others based on your goals, making it important to cut through the noise and focus only on those metrics that matter most.
To help you succeed with your eCommerce efforts, let's take a close look at what eCommerce website metrics are all about and go into some of the specific metrics worth tracking.
What is a metric?
A metric is a quantifiable measure that helps track and assess the performance of a particular aspect of a business. Metrics are used to measure and evaluate different elements of a business, such as sales, revenue, website traffic, customer satisfaction, and employee productivity.
By using metrics, businesses can identify areas that need improvement and track progress towards their goals. Examples of common business metrics include customer retention rate, average revenue per customer, conversion rate, and net promoter score.
Metrics play a crucial role in helping businesses make data-driven decisions and optimize their operations for improved performance.
What is KPI?
KPI stands for Key Performance Indicator, It is a quantifiable metric used to measure and evaluate the success of an organization in achieving its objectives. KPIs help businesses track progress towards their goals, identify areas that need improvement, and make data-driven decisions.
KPIs can be used to measure various aspects of a business, such as sales, marketing, customer satisfaction, employee performance, and financial performance. Examples of common KPIs include revenue growth, customer acquisition rate, customer lifetime value, return on investment, and website traffic.
Importance of tracking metrics for eCommerce success
Tracking the metrics is crucial for the success of any eCommerce business. Metrics provide valuable insights into the performance of the business and enable informed decision-making. Without tracking metrics, businesses may miss out on important opportunities to improve their performance, optimize their operations, and increase revenue.
According to renowned management consultant Peter Drucker, "You can't manage what you can't measure." What he meant by that is you can't track the success of, well, anything unless you can measure its progress. How do you know if your efforts are working if you have nothing to measure your progress? This philosophy applies to eCommerce as much as anything else.
Here are some reasons why tracking metrics is essential for eCommerce success:
Measure performance: Metrics help to measure the performance of the business in various areas such as sales, customer acquisition, and retention. This helps to identify areas of strengths and weaknesses, and make data-driven decisions to improve overall performance.
Identify trends: Metrics help to identify trends and patterns in customer behavior, sales performance, and marketing efforts. This allows businesses to make informed decisions about how to allocate resources and adjust strategies to stay ahead of the competition.
Optimize operations: Metrics help to identify areas of the business that are underperforming or inefficient, and make improvements to streamline operations and reduce costs.
Monitor customer satisfaction: Metrics help to monitor customer satisfaction and identify areas where customers may be experiencing issues or concerns. This enables businesses to address these concerns proactively and improve customer satisfaction.
Track ROI: Metrics help to track the return on investment (ROI) of marketing and advertising campaigns, and enable businesses to optimize their spending and maximize their revenue.
How to choose Critical Metrics to track
While all the eCommerce website metrics above might be worth measuring at some point, some will take a higher priority than others based on your specific needs. Here are some questions to ask when deciding which North Star Metrics to measure.
What are your strategic goals? Which metrics would help you assess success in these goals?
If you don't have an actionable plan in place, none of these metrics will help. Make sure you map all key performance indicators (KPIs) and metrics to strategic goals, enabling you to track and improve upon them. This will ensure their impact goes toward the greater good.
Are there interconnected metrics that will improve other metrics?
Certain metrics may relate either directly or indirectly to others. For instance, a high cart abandonment rate may correspond with a lower conversion rate. The average order value will also have a direct impact on revenue, but other metrics can also impact revenue. You'll need to uncover the relationship between the various metrics to determine which to lump together and track.
Is it worth the effort to monitor that metric?
As mentioned, there are so many metrics you can track, including those which impact revenue. At the same time, you can't track all of them. Consider what dependent variables are in play and decide on the metrics that matter most based on their impact on these variables. If you're not sure how a particular metric affects revenue or other variables, you should select more relevant metrics instead.
How Often Should I Check My Ecommerce Metrics?
The frequency with which you should check your ecommerce metrics depends on your business goals, the size of your ecommerce store, and the amount of data you generate. However, in general, it's a good idea to check your ecommerce metrics on a daily, weekly, monthly, and quarterly basis.
Daily
You should check your ecommerce metrics daily to monitor your website's performance and ensure everything is running smoothly. This includes checking website traffic, bounce rates, conversion rates, and any errors or issues that may arise.
Weekly
On a weekly basis, you should review your sales data and assess your advertising campaigns' performance. This includes reviewing your advertising spend, conversion rates, and customer engagement metrics.
Monthly
On a monthly basis, you should evaluate your customer acquisition and retention strategies. This includes reviewing customer feedback and analyzing customer behavior to identify areas for improvement.
Quarterly
On a quarterly basis, you should assess your overall ecommerce strategy, including your goals, target market, and budget. You can also use this time to review your competition and make any necessary adjustments to your strategy.
By regularly monitoring your ecommerce metrics, you can identify areas for improvement and make data-driven decisions to help grow your business.
10 Critical Ecommerce Metrics You Must Track
There are so many eCommerce website metrics you can track, which is why measurement can be daunting unless you know what to look for. To help you prioritize which metrics to track for your eCommerce site, the following are some of the most critical metrics to use in this space:
- Conversion rate
- Average order value (AOV)
- Customer lifetime value (CLV)
- Shopping cart abandonment rate
- Bounce rate
- Traffic sources
- Mobile traffic and sales
- Return on ad spend (ROAS)
- Time on site
- Repeat customers
Here we'll dive into each of these metrics and what they're all about, including what they are, how you can calculate them, why you need them, and how you can improve them. In most cases, incorporating segmentation and personalization will significantly help improve the following metrics.
Conversion rate
Your conversion rate is one of the most essential metrics to measure. It helps you determine how well you're turning visitors into leads and leads into customers. A high conversion rate means you're effectively carrying people all the way through the buyer's journey, which means higher income for you.
Many people actually consider this metric to be the most important to measure, with one Databox poll finding that 40% of marketers in the eCommerce industry make it a top priority.
You can easily calculate the conversion rate by dividing the number of conversions by the number of visitors to your website. For instance, if you have 100 visitors and 30 conversions (i.e. sales), you would have a conversion rate of 30%, which would be exceptional (and extremely rare).
According to BigCommerce, the ideal conversion rate to have for an eCommerce website falls around 2.5-3%. If you want to improve your conversion rate, there are several steps you can take. For example, if you're seeing low sales but plenty of engagement with your product pages, you might want to optimize the checkout process. You might want to shorten the amount of time it takes for people to make a purchase. You can also see if there are points on your website where people fall off the buyer's journey short of converting and making any necessary adjustments.
Average order value (AOV)
Another vital metric to measure is your average order value or AOV. This is the average value of each purchase that people make on your website. This metric is ideal to track due to its ability to measure overall income, and it can help you determine how to further maximize cart size for each customer.
Measuring this metric is simple. The formula is as follows: Total Revenue / Total Number of Purchases = AOV. Based on this number, you can determine how many customers you'll need to acquire within a given time period.
If you want to boost this metric, you can do so by finding ways to encourage people to beef up their orders. As an example, you might include relevant upsell recommendations during checkout based on the items in the customer's cart. You could also bundle items together when appropriate.
Customer lifetime value (CLV)
This metric indicates the total amount of money you can get from customers over the course of their entire relationship with your brand. A high CLV means you're doing something right regarding retaining customers and encouraging repeat business.
Calculating the CLV entails taking the average value of each order, multiplying that by the number of times, customers buy from you each year, and multiplying that by the average number of years your customers buy from you.
Improving this metric involves finding ways to keep your customers loyal. What can you do to keep them coming back to you? It might entail simply providing customers with consistently high-quality products, or it might involve marketing to them regularly with engaging messaging.
Shopping cart abandonment rate
One of the biggest issues that eCommerce brands of all types face is a high shopping cart abandonment rate, which is the rate at which people add items to their cart but leave your site before making a purchase. A whopping 69.82% of online shoppers abandon their carts, according to data from Baymard Institute. Obviously, you want to lower your abandonment rate as much as possible.
Measure this metric using the formula: 1 - (Number of Completed Orders / Number of Generated Shopping Carts) x 100.
Want to minimize your cart abandonment rate? Think of ways to simplify the checkout process and move people more efficiently toward a sale. You can also be transparent about pricing early on to eliminate unpleasant surprises that keep people from committing to a purchase.
Bounce rate
Another metric you'll want to lower as much as possible is your bounce rate. This is the rate of people leaving your website as soon as they land on it. If this metric is high, your marketing might be off, or the on-site experience may need some work to increase engagement.
Using analytics for your website, you should be able to see your bounce rate and keep a close eye on it. Anywhere between 20% and 45% is an acceptable bounce rate, but you'll want to see that dip even lower, of course.
If your bounce rate is alarmingly high, consider making sure your ads or search engine results align with the corresponding landing page. Also, make sure the content on your landing pages is of the highest quality to keep people engaged.
Traffic sources
How are people finding your website, and which sources are generating the most engagement? The traffic sources metric will give you these answers. The different sources bringing people to your site could include search engines, direct traffic from entering your website's address in the URL bar, social media channels, and email.
If you notice one source isn't getting as much traffic as you'd like, find ways to amp up these campaigns. For instance, you might send more segmented emails that resonate with different audiences instead of a broader campaign.
Mobile traffic and sales
With more and more people using mobile devices to shop for products online, these metrics are critical. You'll want to attract plenty of mobile users to your site and entice them to convert by making purchases on these devices.
To improve these metrics, make sure your website is mobile-responsive and suitable for smartphones and tablets. You may also want to consider developing and launching an app for your business to generate more mobile business.
Return on ad spend (ROAS)
Your return on ad spend metric measures the amount of income received for each dollar you spend on advertising efforts. If your ads generate a high ROAS, your campaigns are doing well.
To measure ROAS, divide the revenue you've received from an ad campaign by the amount of money you spent on that campaign. You can also use the formula: Revenue Acquired from Ads / Amount Spent on Ads x 100.
Seeing a low ROAS? Try optimizing your ads, or you can try optimizing landing pages, ensuring your website is mobile-friendly or seeing what competitors are doing that you're not doing.
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Time on site
Using analytical tools, you can also see the amount of time users spend on your website per session and in total. This metric can tell you how useful your website is to visitors, how long people spend on your site before buying, and where people tend to drop off the buyer's journey.
There are many ways to encourage people to spend more time on your website, including optimizing your website's design, minimizing loading times, incorporating videos in lieu of text content, and making sure all content is readable or even skimmable.
Repeat customers
This metric measures the rate of people returning to your website specifically to make a purchase. Having a high repeat customer rate means that you'll save more money in the long run, as it costs much more to acquire new customers than it does to retain them.
You can measure this rate by dividing the number of return customers by the total number of customers, then multiplying this number by 100.
Improve this metric by taking steps to bring your existing customers back, including remarketing efforts, emails and notifications, and personalized product recommendations.
Onsite activity and engagement metrics
Other metrics to track could include onsite activity and various engagement metrics, including pages per session, average session duration, and churn rate. These metrics will let you know how well your website is at keeping people hooked and moving along toward a purchase.
If you're seeing low numbers for these metrics, try connecting with visitors on a more personal level. Think of ways to keep people connected and provide them with personalized experiences that resonate. Use ads that speak to specific audience segments and have those ads take people to tailored landing pages. Use email and other strategies to connect with people and drive more repeat visitors and customers to your site.
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