You’ve got a good product or product line. Your online shop looks great and delivers a streamlined experience for shoppers.
You have a marketing strategy and solid social media presence. And you’ve got customers. Whilst all of this is a big achievement (congrats to you and your team!!), you’re only part way there when it comes to ecommerce success. Your next step is to harness the power of the data (metrics) that’s now being collected in the backend of your ecommerce store.
Stay with me! We know that crunching the numbers can be scary but trust us there are some numbers you want to know – because they’re the key to more revenue for your ecommerce business.
What Is Ecommerce Metrics?
Data or metrics as they’re also referred to are the numbers that tell you what you need to know about your online store’s performance. They help you to know what’s working and what isn’t; which means analysing and understanding numbers is your gateway to understanding your customers better, so you can personalise their experience of shopping with you.
Why should you care so much about customer experience?
78% of marketers see revenue increases from customer journeys that use a 360-degree customer view. (Salesforce. Fourth Annual State of Marketing). Which means following the data, finding links between the metrics and then using the knowledge to convert ecommerce store browsers into buyers, repeat customers and raving fans.
Problem is, when you first start looking at them, it can be hard to know which metrics you should be tracking, and what to do with the information you’ve collected.
What Metrics Do I Need to Track?
Fun fact! In 2021 there was 1.134 trillion MB of data created worldwide every day.
And some of that data about online consumers and their behaviour is specific to your business.
Yes! You have a lot of data at your fingertips that will help you to measure your performance and grow your revenue. This is especially true when you’re using powerful ecommerce platforms like Maropost (Neto).
However whilst there are a number of metrics you can be tracking – you don’t need to track everything that’s available to you. We recommend that you start with the numbers that tell you how your store is growing, starting with your sales conversion rate.
Sales Conversion Rate:
Your sales conversion rate is the percentage of visitors to your ecommerce website who make a purchase. With Maropost (Neto) you can check your visits to conversion rate weekly by downloading a performance report. You can also calculate your website’s conversion rate manually by dividing the number of users (visitors to your website) by the number of sales x 100%.
Knowing how many visits convert to a sale will help you to know if you’re attracting the right audience to your store and then, make adjustments in your marketing and advertising if required. To help with this we recommend drilling down on this figure even further by segmenting the results into:
- Traffic source
- Device type
- New versus returning visitors
All of this information helps you to understand how to reach, engage and convert your ideal customer so you can continue to grow your business. Which brings us to your Average Order Value and your Customer Acquisition Cost.
Average Order Value (AOV):
Your average order value is the average value of each purchase made in your store.
It’s calculated simply by dividing the sum value of all sales for a specified period (total revenue), by the number of carts (orders/transactions) for the same period. This is a useful report to download within your ecommerce store each month.
Increasing your AOV is a cost effective way to boost revenue for your ecommerce store. Your customer is already shopping with you – it makes sense to do what you can to get them to spend more whilst they are there.
Employing (and tracking the success of) strategies like the ones below, will help you to increase your AOV over time:
- Free shipping for orders over a certain amount
- Upselling and cross-selling at the point of sale
- A discount for buying more of a certain item or when the order reaches a certain value
Once you have your AOV it’s time to look at how much it’s costing you to acquire your customers.
Customer Acquisition Cost (CAC):
Growing your customer base is exciting but on it’s own it’s somewhat of a vanity metric.
- If it’s costing you an average of $40 to acquire a customer and your average order is only $30,
you’re not growing your revenue.
- This is why it’s so important to be tracking your CAC each month, alongside trying to
boost your customer’s average order value.
This metric tracks the average cost of gaining one customer including everything from marketing and sales costs to the cost of paying your staff and hosting your site. Calculating this will give you an overall figure, but again we recommend drilling down to calculate your CAC by source and device. Doing this will help you direct your marketing and advertising efforts towards the right channels, so you can bring the cost of acquiring a customer down. But this isn’t the only metric you need to consider when looking at customer acquisition costs. You’ll also need to know your customer’s lifetime value.
Customer Lifetime Value:
Customer lifetime value (CLV) measures the total amount of what you earn from an average customer over their lifetime. This is a good metric to check yearly or half yearly.
This figure is the benchmark for how much you can spend to acquire customers and nurture them over the longer term.
As we’ve already highlighted, improving your average order value will help but there are other strategies you can employ, including product retargeting emails, which act as reminders to your customers to come back and shop with you – this works especially well with consumable products. Seasonal, holiday sales and anniversary emails also help you to increase a customer’s lifetime value.
Shopping Cart Abandonment Rate
This metric refers to the percentage of shoppers who add products to their cart without completing a purchase. At Keetrax we highly recommend that you have an automated email marketing campaign in place to bring these shoppers back to their cart – this type of marketing is a very effective way to boost sales in your business.
But there will still be people who abandon their cart and do not come back.
Maropost (Neto) recommends running a most abandoned products report each month as this will help you to understand where you’re losing shoppers in the customer journey; for example on the category page, product page, or in the cart itself. Once you have this information you can review your customer journey and adjust in an effort to reduce your cart abandonment rate.
More people completing their purchase means more sales and a lower customer acquisition cost for your business.
Percentage of Returning Customers
Returning customers are ones you don’t have to pay to acquire. Knowing what percentage of customers are loyal to your brand helps you to understand how well you’re doing when it comes to:
- Customer Service
- Product Range
- Customer Experience
Loyal customers are known as your Ecommerce Whales – and whilst all customers are important, your loyal customers deserve some extra special attention. To help you boost sales by looking after your ‘whales’ we’ve shared strategies for identifying and rewarding them in this blog post.
Tracking Ecommerce Metrics – A Final Word
Tracking the ecommerce numbers we’ve outlined will help you to make improvements to your online store and bottom line over time. If you’re just getting started choose one to begin with and then spread your wings to include all of the metrics we’ve outlined here and any others that may be relevant to your business. For help understanding what metrics you should be tracking, you can always contact us.