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Blog / Marketing tips / 20 Essential Ecommerce Metrics You Should be Tracking

Marketing tips

20 Essential Ecommerce Metrics You Should be Tracking

20 Essential Ecommerce Metrics You Should be Tracking
Aesha Ansari

By Aesha Ansari

12 min read

Numbers, your best friend as an ecommerce store owner.

When working with accurate, measurable data, any misunderstanding or miscommunication can be avoided as it gets straight to the point.

To stay ahead in the ecommerce space and grow your ecommerce sales with models like dropshipping or print-on-demand, you need to be able to analyze your online store’s performance.

In this blog article, we’ll lead you through the key ecommerce metrics to optimize your performance and increase sales!

What is an ecommerce metric?

How many customers did you get through Instagram? How many never return after adding items to the cart? You can find answers and solutions to all such questions with the help of metrics.

Ecommerce metrics are numbers, statistics, and data that help you understand your business success through the digital marketing campaigns you have implemented. It helps you see how your strategies are working and how to plan them accordingly. 

Use these findings to change or introduce new ways to promote and maintain your business.

Ecommerce metric vs. KPIs

Although widely used interchangeably, these are not the same. However, they do work together to provide an enhanced outcome to your analyses.

For easy understanding, think about them like class grades. Ecommerce metrics are like your test scores and the KPIs will be your GPA. 

So you see you need both, and they have their own focus facts in the analysis.

Key performance indicators

Key performance indicators or KPIs are the measurements that help a business understand how well they’re doing overall. Because even if the metrics are doing well but you aren’t getting enough sales, looking into KPI factors could help. 

Simply, the way you’ve organized your plans and strategies may need to be changed or optimized to get you back on track.

Average order value (AOV)

Average order value is a crucial metric in the ecommerce business. It shows how much money an average customer spends on a single visit.

Formula for calculating the average order value:

AOV = total revenue / total number of orders

Imagine your online store brought in $2,000 of sales, and during that time, you had 100 orders. This means your average order value is $20, meaning, on average, each customer purchased $20 worth of products.

This is an important ecommerce metric to measure ecommerce success, which helps you predict your revenue, promotions, and strategies, and plan your budget accordingly.

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Customer acquisition cost (CAC)

To attract customers, you need to spend money on advertisements, campaigns, and other marketing tactics.

Customer acquisition costs or CPA (cost per acquisition) measures how much money was spent per customer. And your CAC/CPA must be on a low rate, because that’s how you know your budget and marketing efforts are working well.

Formula for calculating CAC:

CAC = total cost of marketing and sales / number of new customers acquired

Imagine you spent $500 on marketing and advertising to get 50 new customers. So, your customer acquisition cost will be $10 per customer. And to make a profit, leads need to buy at least one $10 product each.

So, unless you know that all the leads generated sales(that’s a sales conversion rate of 100%), focusing on keeping a low CAC rate is the way to go.

Customer lifetime value (CLV)

Customer lifetime value is the total revenue a customer brings your business in their time with you. We love a customer who keeps returning.

As for this—the higher the better! Because it shows customer satisfaction and a strong customer base.

Formula for calculating CLV:

CLV = average purchase value x average purchase frequency x customer lifespan

If a customer buys 7 products, each worth $10, every year for 5 years, their relationship span with your business would be 5 years. Their CLV would be $350.

As a relation, if you plan your CAC budget within the revenue of your customer lifetime value, it could prevent any huge losses.

Repeat customer rate

Repeat customer rate measures how many customers have come back to your store for repeat purchases.

Formula for calculating repeat customer rate:

Returning customer rate = (number of return customers / total number of customers) x 100

You might know that getting new customers is much harder than keeping existing ones. Because existing customers already know how your product and service is, as well as, you can balance your CAC budget.

But this doesn’t mean ignoring the repeat customers, it just means you won’t need to use the same tactics and budget. You still have to make sure to keep them interested in your ecommerce store.

Traffic and engagement metrics

These metrics help you understand your customers’ behavior on your platform. And this is the key to implementing measures that align with their needs.

Website traffic

Website traffic shows you how many people visited your website, as well as how and from where. This is a very useful metric to have as it tells you what you need to focus the most on.

Maybe most of your sales are from leads through Facebook, even though you spent more on TikTok. It could mean you need to put more effort into Facebook marketing or maybe try a different approach on TikTok to secure more leads.

a screenshot of a graphSource: Blue Hills Digitals

Conversion rate

Your conversion rate is one of the most important ecommerce metrics to keep track of. It’s because this shows you how many people proceeded with purchase out of all the visitors/leads you had.

Formula for calculating conversion rate:

Conversion rate: (number of conversions / total visitors) x 100

For example, if 100 people visit your online store, and 10 of them buy a custom hoodie, your conversion rate will be 10%. As you can see, the higher the sales conversion rate, the better!

The average conversion rate of ecommerce stores in 2023 is 1.99%, so if you have a 2%-3% rate, your online business is doing a decent amount of sales. There are many reasons as to why the conversion rate could be low, some of which you can fix from your end.

Bounce rate

Bounce rate tells you how many visitors clicked on your links and entered the landing page, but left without any further exploring. This could mean that you need to have a better user interface or customer experience, or even consider informative content.

Formula for calculating bounce rate:

Bounce rate = (single-page sessions / total sessions) x 100

For example, if out of 100 visitors, 20 only visited 1 page, 20% of your visitors bounced.

Basically, you need to work on keeping a low bounce rate, as it shows more promise in a high conversion rate.

Shopping cart abandonment rate

Shopping cart abandonment rate is the number of people who visit your ecommerce store and add your products to the cart to buy, but for some reason end up not buying.

According to Baymard Institute, the average Shopping Cart Abandonment Rate is 70.19% in 2023.

Formula for calculating shopping cart abandonment rate:

Shopping cart abandonment rate = (number of carts abandoned / number of carts created) x 100

Let’s say 100 people added products to their cart. Then 40 of them dropped out and didn’t finish the purchase. That leaves a 40% cart abandonment rate.

There could be various reasons for cart abandonment: from purchasing at a competitor’s store to just forgetting they added it by accidentally closing the tab. Or maybe you should check how complicated or time-consuming your check-out/payment process is to an average customer.

Average session duration

Once you get a visitor on your ecommerce platform, how long they stay can influence their purchase decision. So, the average session duration shows you exactly that data. It helps you see how engaged and interested customers are with your content and products.

Formula for calculating average session duration:

Average session duration: total duration of all sessions / number of sessions

The longer the session duration is the higher the chance of conversion rates.

Unique visitors

This metric tracks how many of your website visitors are actually new. Meaning it won’t count the same person again. It helps you understand how many people actually are interested in your ecommerce site.

Because even if you might see that you had 750 visitors last month, it doesn’t mean there were actually 750 people, it could be 30 people who viewed your website 25 times. That’s why keeping an eye on unique visitors could help grow your business.

Social media and advertising metrics

Source: Pexels

Source: Pexels

Social media engagement

Every like, share, and comment matters. Because it helps you to track metrics that also show you your relevance in different platforms, demographics, and niche. The more people engage with your content, the more likely you’ll get exposure.

You can also build an online community, although different from the customer base, this is a gateway to future customers. And since you can engage with your followers more casually, the feedback (even tips!) you get is more genuine and easy flowing.

Ad impressions

Ad impressions are how many times your ads are displayed. Combined with other metrics, this can help you get a deeper picture of how to plan your marketing channels and where to focus your paid ads.

Cost per click (CPC)

For every click you get on a paid ad, you pay a set price called cost per click. It helps you to track the competence of your marketing and advertising strategies. Through that, you can implement and enhance your campaigns more cost-effectively.

Formula for cost per click:

Cost per click = total cost of advertising / number of clicks

Imagine you run an online advertising campaign for your custom t-shirt online store, and you spend a total of $100 on the campaign. During the campaign, if your ads are clicked 200 times by potential customers, the CPC is $0.50, which means you paid $0.50 for each click you got as part of your advertising campaign.

And you don’t have to worry about going over the budget, because you can set a limit to how much you can spend on CPC.

Click-through rate (CTR)

Click-through rate is the number of people who click on your links after seeing them. It tells you how effective and engaging your content is at getting people to take action.

Formula for calculating click-through rate:

CTR = (number of clicks / number of ad impressions) x 100

A high click-through rate means you have a high organic website traffic as well. This ecommerce metric is essential for your PPC success because it gives a high quality score.

A quality score is given to you by whichever advertisement platform you use. It analyzes how well your ads perform and bring you leads and sales. So, a high quality score means you can maintain your ad position for lower costs. It also means that you’re driving many people to your website.

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Email opt-in rate

A key metric that shows how many of your website visitors manually subscribed to receive your email newsletter—known as email opt-in rate. This tells you how many people are interested in staying connected with your business.

Formula for email opt-in rate:

Email opt-in rate : (number of email subscriptions / total visitors) x 100

A high email opt-in rate is good for keeping potential and repeat customers engaged. This means they’re open to hearing from you and you have a higher chance of getting a sale through promotions, reminders, new products, and other offers.

Return on ad spend (ROAS)

The return on ad spend metric tells you how much revenue you make for every penny spent on advertising. It measures the efficiency of your advertising efforts and shows its impact on leads and customers.

Formula for calculating return on ad spend:

Return on ad spend = (revenue from ad campaign / cost of ad campaign) x 100

For example, you spent $500 on an advertisement campaign for your online store, and it brought you $1,800 in sales. This shows that every $1 you spent on ads, gave you $3.60 in sales. So, your campaign was a huge success!

Customer satisfaction metrics

Just as you measure any other aspects of your business, customer satisfaction also has value to show you. With high competition and various options available, it’s crucial to check if your customers’ needs are met and what their feedback is.

Source: Unsplash

Source: Unsplash

Keep in mind—a happy customer brings more sales!

Customer satisfaction score (CSAT)

To measure the satisfaction score, you need your customers to fill out surveys or rate your products and services. The way you gather this data depends on your niche and marketing strategies.

For example, you can send an email or a quick survey after a purchase. Some other ways include social media engagement such as polls through stories or community group chats.

Formula for calculating CSAT:

CSAT = (number of satisfied customers / total number of survey responses) x 100

Although you can ask open-ended questions, try to limit them, or the customers will get easily frustrated and leave the survey.

Net promoter score (NPS)

Net promoter score is quite a useful tool to understand how many of your customers are loyal and their loyalty level on a scale of 0–10. You can find this out with a simple question like, “How likely are you to recommend us to your friends and family?”.

Here’s how you can categorize the customers by their answers:

  • Promoters(those who score 9–10)

  • Passives (those who score 7–8)

  • Detractors (those who score 0–6)

You can also add open-ended follow-up questions, to gain a deeper understanding as to why the customer gave that score. This could be a pivotal fact to help optimize your business further.

Formula for calculating net promoter score:

Net Promoter Score = (% promoters − % detractors)

For example, from your survey yielding 200 responses, 100 people are Promoters, 50 people are Passives, and 50—Detractors. So, your NPS will be 25%, showing good customer loyalty and positive feedback with room for improvement.

Customer retention rate:

This metric indicates how well you are at keeping your existing customers. Customer retention rate is the number of customers that stay with you for a given period.

Formula for calculating customer retention rate:

Customer retention rate = [(number of customers at the end of a period – number of new customers acquired during the period) / number of customers at the start of the Period] x 100

Imagine at the beginning of the fiscal year, your online store had 1,000 customers. And by the end of the year, 900 of those customers are still buying from your business. So your CRR for the year will be 90%. And 90% of loyal customers is a very good indication of a well-running business.

Churn rate

Simply put, churn rate is something you want to see less of, or none if possible. The churn rate tells you how many of your regular/loyal customers discontinue purchases from you.

Formula for calculating churn rate:

Churn rate = (number of customers lost / total number of customers) x 100

For example, you have a total of 500 customers. Out of which you lost 100 customers. So, your churn rate for the year will be 20%. And if you imagine each of those customers bought $10 worth of products last year, this makes a loss of $1000 in total revenue.

Source: Chart Mogul_Help Center

Source: Chart Mogul Help Center 

So, if you see you have a high ecommerce churn rate, you need to strategize for reducing it. Lowering your churn rate is crucial to grow your customer base and avoid losing revenue.

It’s a wrap! 

Now you’re ready to set sail to the world of ecommerce. With all the metrics mentioned above, you now should have a deep understanding of how they work in having an optimized business.

Whatever tactics you use, remember metrics are there to help enhance it and increase your incoming dollars!

author

By Aesha Ansari on Dec 11, 2023

Aesha Ansari

Guest author

Aesha is a freelance content writer. She is also getting her Bachelor’s in Intl. Communication Management. And not so surprisingly, reading is her favorite hobby.

Aesha is a freelance content writer. She is also getting her Bachelor’s in Intl. Communication Management. And not so surprisingly, reading is her favorite hobby.