If you are anywhere in the e-commerce field, you might have heard that data is the new oil. But what happens when you have no metrics to judge and calculate your business data?
In today’s fast-paced world, with the never-ending influx of data from all around you, it has become extremely crucial to track the right type of metrics for your e-commerce sites.
Before you jump on to tracking all sorts of analytical data, it is important to go through a step-by-step process to ensure that you get the most out of your efforts.
Once you pinpoint the key point indicators (KPIs) for your e-commerce business, then you can identify the analytical metrics necessary to track those KPIs. You can monitor their performance and make appropriate adjustments to boost the growth of your e-commerce business.
In this article, we talk about the 10 best analytical metrics for e-commerce sites, so you can appropriately optimize them to boost your sales.
The total revenue of an e-commerce site is the best example of a ‘one main metric (OMM)’, which tells you how well your website is doing. It measures the overall growth and momentum of the business, as it encompasses all your activities, such as
- traffic generation
- on-site optimization
- product development
An increasing revenue generally means that your e-commerce site is progressing in the right direction, but it is critical to ensure that the growing revenue is sustainable and feasible in the long run.
Customer Acquisition Cost
Customer Acquisition Cost is the amount you have to spend to gain a new customer for your e-commerce site. It is an important metric as it requires you to put a figure on all your marketing activities.
You need to make sure that your average customer acquisition cost is lower than the customer lifetime value for your business to be profitable.
Conversion Rate by Product
If you have a huge inventory and a number of different products, you should track the individual performance of each product, including
- number of unique purchases
- average price
- average quantity
You can compare individual product conversions against product page traffic, and can also analyze the top performers and under performers.
Conversion Rate by Traffic
You can get traffic on your e-commerce site from many sources, such as Google, Bing, Reddit, or Facebook, etc. However, it is not important to only get traffic from various sources but to calculate how much of that traffic converts into customers.
When you analyze the conversion rate by traffic, you automatically know which traffic sources you should give more attention to. Ideally, those are the ones who are bringing a higher rate of conversions, not just a higher rate of traffic.
Conversion Rate by Device
An analytical metric that has been getting quite the attention these days is the conversion rate by traffic. The ever-evolving world of technology offers new exploration avenues to people, which is why the conversion rate through mobile phones has seen a sharp spike compared to the conversion rate through desktops.
For an e-commerce site, your conversion rate through both mobile phones and desktops should be close enough. If there are any uncommon gaps, perhaps it is time to analyze and improve the user experience.
Average Order Value
Average Order Value is the average value of a purchase made through the website. You can calculate it by dividing the total revenue by the total number of orders placed on the website. It is obvious that a greater average order value defines a greater revenue.
To optimize your average order value, you can offer
- product bundles (preferably at a discount)
- free delivery above a certain order value
- upsells and cross-sells, such as add ons, related items, and accessories
Customer Lifetime Value
Customer Lifetime Value depicts how much revenue a certain customer will produce for you over the entire course of their relationship with your e-commerce business.
It allows you to understand what cost you should pay for customer acquisition to maintain sustainable revenue.
The customer lifetime value can grow by increasing the average order value and by building long-term relationships with your customers by focusing on brand loyalty.
Cart Abandonment Rate
Cart Abandonment Rate depicts the percentage of shoppers who add your products to the cart but do not move forward to make the purchase. According to a statistic, 68.63% of visitors abandon their shopping carts.
You can reduce the number of people abandoning the cart by
- reducing distractions on the checkout page
- setting up ad retargeting
- using built-in autoresponders
- stating the number of steps during the checkout process
Return on Advertisement
Return on Advertisement refers to the revenue your advertisement brings to your business. You can increase it by either reducing the expenditure on advertisements or by increasing the advertisement revenue.
You can boost your return on advertisement by
- playing around and experimenting with different audience targeting options
- utilizing different advertisement platforms
You can then settle for the one that gives the best results.
In the long run, it is better and cheaper for you to focus on your existing customers instead of getting new customers in the door.
You can calculate the percentage of returning customers by dividing the number of returning customers by the number of total customers, and then multiplying it by 100.
You can improve this percentage by going the extra mile to make your customers happy, by offering a customer loyalty program, and by sending regular newsletter emails.
Once you develop a comprehensive strategy to track all these crucial metrics, perhaps by taking advantage of different softwares, you can boost your conversions and grow your business steadily!