The 7 Most Crucial Ecommerce Metrics You Should Be Tracking Right Now

You're never going to get the amount of CO2 emitted to go down unless you deal with the one magic metric, which is CO2 per kilowatt-hour. – Bill Gates

Metrics is an all-important ingredient that acts as an informing judgment, else you are flying blind. That’s why everyone needs metrics because nothing can be improved if it can’t be measured. Go down the memory lane of school, or sports teacher, they always use some sort of metric to analyze the performance.

The digital world is no exception. There is a mammoth of data that’s burgeoning every day. The beauty of petabytes of data won’t lie in how much data the company is having; instead, it’s in how fruitful and meaningful the data is. We need to move from gathering numbers just to ‘keep the score’ to numbers that drive action. The improved visibility inside the data helps in identifying which metric is not singing.

Let’s cut to the ecommerce performance chase where we will see the metrics that showcase the store performance in real-time and the areas that need to be improved to stay successful. However, there are a lot of metrics, which creates confusion as which to consider and which not.

There are two types of metrics- vanity and actionable. A vanity metric is like delusion in deserts that appears attractive from distance, but meaningless. For instance, the huge traffic to the store may delight you, but it’s useless if it’s not converting. Actionable metrics are highly business goals-focused. For instance, you have added a new feature to decrease cart abandonment rate, the A/B testing reveals the results.

Finally, we land to the section where we will discuss the most important metrics that helps ecommerce store seamlessly run on the success track. They are:

- Acquisition cost

The store owners spend exorbitantly on email campaigns, paid search campaigns, and other types of marketing campaigns to drive the traffic to the store. But, not all the acquisition channels bring expected traffic, especially quality traffic. Poor quality traffic means the spending outweigh the dollars you earn, which means you are at loss.

It’s essential to optimize the acquisition channels to earn quality traffic that converts and keep expenses under control. At first, assess all the acquisition channels like- organic traffic, social media ads, review sites, and paid ads to estimate which channel is bringing the traffic that converts without exceeding your profits. Thereafter make your investment accordingly to create a win-win situation.

- Conversion rate optimization

The most important metric display how many leads go down the sales funnel and make a purchase. The situation of tons of traffic and no conversion means the store’s profits going southwards. There can be an end number of reasons such as poor quality leads, high price tags, untrustworthy design, or lack of social proof, which impact conversion.

Whichever is the reason, the conversion rate optimization (CRO) is vital to quickly fix the problem and earn revenue galore. The CRO is possible with the segmentation of the elements that are influencing conversion and then making them correct. For instance, find out which channel (SEO, Facebook, or AdWords), product category, and campaign type (Affiliates or influencers) turning more visitors into potential customers, and then optimize the sales funnel accordingly.

You can track what’s lacking in the hypothesis which is not allowing the customers to make the purchase and how they can be converted, which results in improved sales and revenue.

- Average order value

It’s an average of how much the customers spent while purchasing from the store. The average spending must be tracked over a period to know what things are stimulating or deterring the users to increase the basket size. It informs about the marketing activities that are gearing up the users to make more purchases.

For instance, the combo offers, add-on services, freebies, loyalty programs, bigger packs, or gamification elements work for different websites and the users, so average order analyzation upon the launch of every activity helps in evaluating which activity is a bullet-proof solution to ramp up the order value.

- Customer life value

It measures the customer’s total spending throughout the customer lifecycle. It can be computed by subtracting acquisition cost from the total revenue earned from the customer. The customer lifetime value of every customer will be different, which is difficult to measure for each customer.

That’s why the potential customers should be valued wherein the browsing behavior, purchase pattern, and marketing activity impact are analyzed, which is then replicated for another customer with nearly the same behavior and buying habits. It also unearths hidden insights such as why retention rates are not so good or as expected.

- Retention rate

The customers coming back to the store after making the first purchase to make more purchases means you have managed everything well, that’s why the customers are returning. The cost of customer retention is far less as opposed to acquisition, which implies the higher retention rate keeps the business in a profitable state.

The store should try the best to make the customers happy with the first purchase in terms of products, services, and experience. It keeps the store name on the top of the mind and the wow experience makes them buy from the same store when they purchase again.

Additionally, the best-in-class services mitigate the chances of returns and refunds, which hurt the bottom line because the customers hit the ‘buy now’ button only when they see the ‘free returns’ is available. It must be handled tactically as the spiking refund rate negatively impacts the ROI.

- Cart abandonment

Abandonment is the topmost reason due to which the store’s revenue goes southwards. Sadly, more than 50% of the people abandon the cart without making any purchase. There are so many hitches in the checkout process, which results in cart abandonment. It can be a high shipping cost, mandatory registration, too many fields in the checkout form, expedited delivery option unavailability, limited payment options, or users wish to purchase the items later.

The store should identify and fix the issues as early as possible to lower down the cart abandonment rate gradually because it’s not a game of a week or a month.

- Bottom line

No one runs the business for charity. The entrepreneurs get the funding for the new venture or spend bundles to make the bundles at a later stage. The profit is what you get after deducting all the expenses from the revenue. The bottom line can be managed to increase or not diminish by keeping a few things in mind.

Some of the ways to keep the business profitable are- the acquisition cost should not surpass the thin margins, keep the price tag of high-performing products high to increase profit margin, negotiate with suppliers to not suffer from losses due to free shipping, and keep the prices high if your audience ready to pay extra for the quality.

Takeaway

Ecommerce store is a user-focused store where everything from in-and-out is centered on the users. When the user’s lens is put on from building the store to its final launch and marketing, then there is no denying fact that the store will cherish grandeur success with high returns.

However, there are certain metrics that need to be continuously tracked and certain things to be fixed to ensure the store grows, performs, and outdo in the market. Leverage the metric to see where the store stands and what can be done to bring winning outcomes. All the best!