It’s no surprise to you that as an e-commerce leader, monitoring your performance is a lifeline for your business. Your ecommerce website generates a great deal of data that can be used to keep track of sales performance and other services provided across the general experience. But, you cannot adjust or improve the experience you provide if you don’t have a solid data collection & analysis process alongside a performance review in place. To master these analyses, you have to be familiar with your core metrics. Keep reading to find everything you need to know about the 5 essential e-commerce metrics you should be following in order to reach your goals.
Our top 5 e-commerce metrics and how you can improve them
1. Website Traffic
It’s pretty safe to say that without visitors to your website, you won’t get any sales. Measuring user volume is part of the foundation of your e-commerce metrics.
Let’s talk about a way you can measure your traffic flow. With web analytics tools like Google analytics you can analyse your web traffic easily. Start by looking at your incoming traffic as a whole. Then break it down and measure users by acquisition sources (or the route they took to land on your site). For instance: organic, paid, social network, e-mail, and of course what campaign is bringing the users in.
It’s also important to break down your audience by demographic: geographic location, device (tablet, mobile, desktop…) or age. You may be surprised by what you learn!
The third type of analysis that is important is how your users behave on your website: what pages are they visiting, how long are they staying on the website, what keywords are they using to search for products. All of these different elements can be crossed together to create a richer and more pertinent analysis that will allow you to identify possible improvements and next steps.
And finally, what type of user is actually purchasing on your website? Is there a landing page that brings in sales more efficiently? All of this data can be found in the conversions section of your analytics tool. Don’t forget to set up your goals!
2. Conversion Rate
Speaking of conversions, as an e-commerce store conversion rate is one of the most important marketing metrics. Conversion rate is basically the percentage of users who take a specific action on your site: a purchase, a sign up, a download etc.
To calculate:
Number of purchases / Number of store visitors = Conversion rate
Investigating the different pages and user flows that affect your conversion rates will give you important insight into how to better manage the different stages of your user funnel and your site content. For example, you will be able to identify weak performing pages.
3. Average Order Value
Average order value, or average cart, is the average amount that a client spends per transaction. Monitoring AOV is important as it has a direct impact on revenue. The average amount spent by a customer can be directly impacted by trends, the economy, for example.
To calculate:
Revenue / Number of orders = Average order value
Depending on the results, you can dig deeper into understanding what your customers are buying and maybe even adapt your pricing and/or sales strategy to make improvements. Simple customer incentives can be put into place to increase your average cart: free shipping on a minimum spend, cross selling, upselling, a discount on a minimum amount spent.
4. Shopping cart abandonment
A shopping cart is considered abandoned when a customer has started the checkout process, or has filled his cart, but does not complete his or her order. Abandoned cards are way more frequent than we may think. As a metric, shopping cart abandonment is a subset of conversion rate, and permits us to take a closer look at customers, particularly the ones who get close to completing the buying process.
What could cause this action (or rather inaction)? The roadblock can be due to an overly complicated checkout process, a coupon not working, unexpected fees etc. By keeping an eye on this metric, you can find ways to impact your business positively. A lower percentage of abandoned carts can lead to an increase in sales.
5. Customer Lifetime Value
I’ve decided to leave this metric to last, but it is probably the most important. Customer Lifetime Value is an estimation of the global profitability of a customer across their lifecycle. CLTV is difficult to estimate because you have to consider how profitable a customer is, subtract the acquisition costs and estimate how long the business will be able to keep the customer. The larger the customer value is, the better.
The key to improving your e-commerce metrics?
There is no one solution to improving your metrics, but there are different strategies you can adopt to make an impact on these 5 key metrics all at the same time.
To improve the quality of customer interactions it’s necessary to question whether you can improve website performance. The smoother and faster the customer experience, the more likely you are to see a completed sale.
Is your user flow logical? Are your pages loading fast enough? Is your website usability correct across channels (mobile, tablet etc.)? If these are questions that you have, feel free to contact Front-Commerce for an audit, or to find out how our solution can help you improve your e-commerce experience and performance across the board. Related article: Which strategy should I adopt for my next e-commerce platform?