As an ecommerce business owner, it's essential to track important metrics and KPIs in order to make informed decisions about your business. There are a number of ecommerce metrics that you can't afford to ignore if you want your business to be successful.
In this article, I'll discuss 14 of the most important ecommerce metrics and explain why they matter to your ecommerce business.
In any business, it is essential to track where your customers are coming from and how much it costs to acquire them. This is known as Customer Acquisition Cost, or CAC.
By tracking CAC, businesses can make informed decisions about where to allocate their resources in order to acquire new customers. For example, if a business is spending more on advertising than they are making in sales, they may need to reevaluate their strategy. That is unless of course, the business has a high LTV (which we’ll get into later in this article)
On the other hand, if a particular marketing campaign is resulting in a high number of new customers at a low cost, it may be worth investing more in that area. Tracking CAC can also help businesses to identify areas where they may be overspending or underperforming.
In short, CAC is a vital metric for any business that wants to grow and succeed in the long term.
As any experienced marketer knows, you should be tracking the return on investment for every marketing campaign you run. This allows you to determine which campaigns are successful and which ones are not worth the money.
That’s what makes Return On Ad Spend (ROAS) such an important metric to track. This measures the return that you get from your advertising spend, and it is a key indicator of whether your advertising budget is being used effectively. By tracking ROAS, you can ensure that your marketing campaigns are producing the results that you need. This, in turn, can help you to maximize your profits and grow your business.
However, tracking your ROAS can be quite difficult post iOS 14.5 as advertising platforms such as Facebook, Instagram, Snapchat, etc don’t have the same level of transparency that they used to.
You can no longer rely on the results that ad platforms provide and you’re much better off using attribution software to accurately track your ROAS. Without proper attribution software in place, it can be difficult to know where your purchasers are coming from, especially if you’re running on multiple ad platforms.
Average Order Value (AOV) is another important metric for any ecommerce business. It represents the average amount that a customer spends per order, and it can be used to track overall sales trends and profitability.
AOV is typically calculated by dividing total revenue by the number of orders, but it can also be expressed as a per-customer or per-transaction metric. Tracking AOV is important because it can help businesses to identify opportunities for growth and expansion.
For example, if total sales are increasing but AOV is stagnating, this indicates that although you’re acquiring new customers, they aren’t adding that upsell to their cart. In this case, the business may need to focus on improving its cross-sell or up-sell offerings.
On the other hand, if AOV is increasing but total sales are flat, this could mean that the business is losing market share although the customer that are been acquired are spending more. In this case, the business may need to invest in customer acquisition or focus on driving repeat purchases. Ultimately, monitoring AOV is essential for any ecommerce business that wants to stay competitive and grow over time.
As an ecommerce business, it's important to track your conversion rate. This metric tells you how many visitors to your site take the desired action, whether it's making a purchase, signing up for a newsletter, or downloading a white paper.
A high conversion rate indicates that your site is effective at converting traffic into leads or sales. Conversely, a low conversion rate may indicate that your site needs improvement. There are a number of factors that can affect conversion rate, such as the design of your site, the clarity of your call to action, and the price of your products.
By regularly monitoring your conversion rate, you can identify areas where your site could be improved in order to drive more conversions.
CPC is a measure of how much it costs to generate a single click from an online advertisement, and it can vary greatly depending on the platform and the audience.
Tracking CPC is essential for understanding the ROI of your marketing efforts and ensuring that you are getting the most bang for your buck. By understanding your CPC, you can adjust your ad spend accordingly and focus on those platforms and audiences that are more likely to generate conversions.
Although CPC isn’t as important as conversions, it’s still essential to monitor your ad campaigns for sudden increases in CPC as this could be telling you that perhaps your ad is saturated or that you’re marketing to the wrong audience.
Tracking your business's sales by source can help you understand where your customers are coming from and what marketing channels are most effective. It can also help you allocate your resources more effectively.
You might already know exactly which source your sales are coming from if you run ad campaigns and are tracking the ROAS of each one however what about campaigns you aren’t running?
Let’s say an influencer gets ahold of your product and promotes it to their followers. You suddenly get an influx of new purchases but you’re not sure where they came from. This is where tracking sales by source comes in handy so that you can figure out which website is referring traffic to your store.
If you discover a new platform or website that works well, you could then amplify your efforts on said platform by possibly running ads, working with other influencers, or establishing a brand presence there.
Any business that wants to stay afloat needs to keep track of its customer lifetime value (LTV). This metric tells you how much revenue a customer is likely to generate over the course of their relationship with your company.
For ecommerce businesses, tracking LTV is especially important. That's because the cost of acquiring new customers is often higher than the cost of retaining existing ones. By understanding your LTV, you can make informed decisions about where to allocate your marketing budget and which customers are worth investing in.
Additionally, tracking LTV can help you identify trends and patterns that can be used to improve the customer experience. Ultimately, understanding your customer lifetime value is essential for any ecommerce business that wants to grow and prosper.
Gross margin is the difference between the cost of goods sold and the selling price of those goods. By tracking gross margin, businesses can ensure that they are making enough money on each sale to cover their costs and generate a profit. Additionally, gross margin can be a useful tool for evaluating pricing strategy. If gross margin is low, it may be necessary to raise prices in order to increase profitability.
Conversely, if gross margin is high, businesses may be able to lower prices and still make a profit or use that extra profit to invest in new products, more marketing, or added staff.
Your abandoned cart rate represents the percentage of customers who add items to their shopping cart, but then leave the site without completing the purchase. According to Optimizely, the top reasons for shopping cart abandonment include lack of trust, high shipping costs, and complexity.
A high abandoned cart rate can also indicate that your customers are not ready to buy, or that they are comparison shopping and will return to your site later to make their purchase. Tracking your abandoned cart rate is essential for understanding the health of your business and for making necessary changes to improve your conversion rate.
By reducing your abandoned cart rate, you can increase your sales and improve your bottom line.
In any business, it is important to know what your best performing products or variants are. By looking at data such as sales figures, conversion rates, and customer reviews, you can get a clear picture of which products are selling well and which ones need to be improved.
Additionally, tracking best-performing products can help you identify trends and predict future demand. By understanding which products are in high demand, you can make sure that your inventory is well-stocked and that your prices are competitive.
Tracking your returning customer rate helps you to gauge the health of your business - are customers coming back? Are they happy with their purchase? If the answer to either of these questions is no, you need to make changes.
A high returning customer rate means that people are purchased from your store and were happy with what they bought. They may also tell their friends or family about you, which can lead to even more business.
A low returning customer rate indicates that there is a problem with your store. Perhaps the quality of your products is poor, or you do not have a good selection. Whatever the reason, if you are not getting repeat customers, you need to take action.
The first step is to track your returning customer rate so that you can identify any problems. Only then can you take steps to improve your business and attract more customers.
Email marketing is an essential tool for driving sales and fostering customer loyalty. Whether you use listing building software to collect email addresses or simply reach out to past purchasers, your email list can be incredibly profitable.
In order to maximize the effectiveness of your email campaigns, it is important to track conversions. By tracking how many people open your emails and click on links, you can get valuable insights into what kinds of content are most effective.
Additionally, tracking conversions can help you to identify potential problems with your email delivery or website. By keeping an eye on your email conversion rate, you can ensure that your business is making the most of its email marketing efforts.
In the world of ecommerce, returns are inevitable. No matter how carefully you select your products or how well you craft your listings, there will always be customers who are not satisfied with their purchase.
While some returns are simply the result of buyer’s remorse, others may be due to damaged goods or incorrect descriptions. Regardless of the reason, it’s important to track product returns so that you can identify any patterns and make necessary changes to your business. By tracking returns, you can pinpoint which products are being returned most often and make adjustments to your listing or inventory accordingly.
By tracking product returns, you can keep your ecommerce business running smoothly and minimize any major negative impacts on your bottom line.
Although website traffic doesn’t directly correlate with revenue or profit, it is an important metric to check in on every once in a while to ensure your business is on the right trajectory.
Getting quality traffic with high buyer-intent should always be the goal of every ecommerce store owner. You shouldn’t sacrifice a small amount of high-quality traffic for a large amount of lower-quality traffic that doesn’t covert. Website traffic is more of a vanity metric than the others in this article however as long as your traffic remains high-quality you should continue to track and focus on growing it.
Additionally, tracking website traffic can help businesses identify any potential issues with the site, such as broken links or pages that are taking too long to load. By regularly monitoring website traffic, businesses can ensure that their site is performing optimally and that visitors are having a positive experience. In today's competitive online landscape, this is more important than ever.
As an online business owner, it is vital to be aware of the most important ecommerce metrics and track them regularly. If you’re an agency owner you should be tracking these metrics for your clients and some of them even for yourself to help determine your agency’s profitability.
By doing so, you can identify problems and opportunities early on and make necessary changes to improve your business. These 14 ecommerce metrics are a great place to start and you can use a platform like Triple Whale to track the most important ones for your business.
Author bio: Cody is the founder of CodyArsenault.com, a blog that focuses on providing the tools and techniques to help others learn how to make money online. He's operated several e-commerce and niche blogs and has generated multiple 7 figures in online sales.
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