7 Most Important eCommerce Metrics For The Online Entrepreneur
Successful business owners make decisions based on data. Sales, budget details, marketing endeavors, inventory, and salary are just a few of these common business measurements. However, the intricacies that make eCommerce fundamentally unique from brick-and-mortar retail present a unique situation when measuring data. Considering the thousands of available statistics provided by eCommerce platforms, how can a business owner know exactly which eCommerce metrics are most important?
Measuring the success of your online store does not have to be confusing. In fact, knowing the proper metrics upon which to focus can help you easily judge the effectiveness of your online endeavors. Then, with that knowledge, you can make changes where needed or implement more of what works well.
Here are the seven most important eCommerce metrics that you can turn into actionable insights for your online store:
- Conversion Rate
- Bounce Rate
- Email Opt-Ins
- Visitor Navigational Behavior
- Average Order Value
- Customer Acquisition Cost
- Cart Abandonment
1. Conversion Rate
First, and arguably most important of the eCommerce metrics, your conversion rate details the percentage of your store's visitors who make a purchase. While most analytic platforms highlight this important measure, you can also manually calculate it. Simply divide the number of people who completed a purchase by your total number of visitors, and then multiply that figure by 100.
Typically, the accepted norm in the eCommerce industry is 1-5% conversion. Though this may seem low, keep in mind the enormous amount of online browsing that people do each day. If you make 1-2 sales per every 50 visitors, your site is, indeed, performing at an average standard.
Conversion rate is such an important metric because it specifically defines how successful your platform is at selling products. Further, you can - and must - use this statistic to improve your website and your marketing.
For example, the two most common causes of a low conversion rate are website-related issues and unclear advertising. Visitors may leave your store because of a problem in functionality with your website, or because your site doesn't provide exactly what is advertised. Consequently, your conversion rate will drop. In this case, reevaluate your store's usability, and strive to improve your ad targeting. After you implement the necessary changes, monitor your conversions over the next few months. Without fail, your rate is likely to improve, bringing you more sales than ever before.
2. Bounce Rate
Another important eCommerce metric is your website's bounce rate. Basically, your bounce rate shows how many visitors land on your store and exit quickly, before interacting further on your page. In online retail, the average bounce rate is between 20-40%. In other words, 20-40 visitors out of every 100 leave your store within a few seconds of landing there.
This metric is exceptionally important, mostly because it is indicative of the effectiveness of your marketing campaigns. Specifically, a high bounce rate reveals that you are not targeting the right customers. Therefore, you benefit by tightening the scope of your advertising, in order to attract customers who are actually willing to shop around after landing on your site. This way, every marketing dollar is well-spent.
However, if your advertising is already highly focused, a large bounce rate may indicate an issue on your landing page. Reevaluate this area to make sure your best products are featured properly and most effectively. Further, ensure that your marketing and landing page reflect the same offer to encourage potential customers down the sales funnel.
3. Email Opt-Ins
Email marketing is one of your most valuable tools as an eCommerce business owner. In fact, it has a 4,400% ROI (return on investment) according to a study from Campaign Monitor. Plus, unlike ads on search engines and social media, your mailing list is not dependant on another platform's quirks and algorithms.
For these reasons, tracking your email list statistics can provide valuable insight into the success of your opt-in prompts. To gain as many new email sign-ups as possible, track the number of opt-ins for every opt-in source on your website. Verify which sign-up prompts are the most successful. Then, implement similar characteristics into those that don't perform as well. Paying some close attention to this important eCommerce metric will help increase your email list faster and more effectively than ever before.
4. Visitor Navigational Behavior
Have you ever wished for the ability to read your customers' minds, instead of having to evaluate your way through copious amounts of eCommerce metrics? Well, if only it were that simple. However, by studying your visitors' navigational behavior, you can ascertain a glimpse into what they think, feel, and view when shopping on your site.
Navigational behavior and tracking apps like Lucky Orange and Mouseflow offer more insight into your customer's minds. By recording shopper actions like clicks, mouse movement, and scrolling behavior, you can see exactly where customers look, what they search for, how long it takes them to locate a product, and so on.
Once you determine the rate of ease at which a customer finds what they are looking for, you can implement changes accordingly. Perhaps shoppers seem confused by certain navigational prompts, or a popular product requires too much scrolling to locate. Whatever your case may be, studying visitor navigational behavior and making the proper changes is a proven method for improving the shopping experience and more effectively leading customers down the purchase path.
5. Average Order Value
eCommerce dashboards usually feature the average order value metric, or, in other words, the average amount of money that customers spend in your store. While seemingly simple, this important statistic shows how much profit you earn per customer, and is critical for scaling eventual revenue growth.
Plus, studying your average order value offers just another view of your customers' shopping behavior. It helps entrepreneurs plan pricing and marketing strategies (which we will discuss in the next topic, customer acquisition cost) more successfully and with increased profits.
To improve your average order value, consider conducting a carefully executed price test, comparing slightly different values on basically the same product (like different color options, for example.) This way, you can ascertain exactly how much customers are willing to spend.
Additionally, you can implement more cross-selling or upselling techniques, perhaps offering a discount on related products if purchased together. Offering free shipping is another common method to increase your order value. Ultimately, almost all of us at some point have succumbed to the temptation of adding just a few more items into our cart in order to meet the requirement for free shipping.
6. Customer Acquisition Cost
Basically, a company's customer acquisition cost is the price of marketing required to gain a customer. To calculate your CAC, simply divide the total amount spent on marketing by your number of customers. This is an important eCommerce metric to track because your CAC needs to be less than your average order value in order to make a profit.
If you discover that your customer acquisition cost is keeping you "in the red," try implementing some of these simple, yet effective fixes:
- Improve your conversion rate.
- Focus on customer retention. (We discuss 5 ways to reduce costly "customer churn" here.)
- Optimize paid ads for better targeting and more productive use of your marketing funds.
- Invest in less-expensive marketing methods like social media, email, and online communities.
By delving into your customer acquisition cost, you locate a leak that could potentially drain your company of all profit. Strive to lower your CAC and retain more funds that can be spent where they really matter the most.
7. Cart Abandonment
Shopping cart abandonment: when a customer places an item in their cart, only to leave your store without completing the purchase. So close, and yet, so far. This may seem like a major disappointment, especially if your store is newer. However, studies show that, on average, around 75% of carts are abandoned by online shoppers.
Instead of becoming discouraged by the excess of abandoned carts, pay attention to this metric in order to learn where you can make improvements.
This study, provided by Statista in 2018, showed some of the common cart abandonment reasons. Provided you cannot always turn a browser or researcher into a shopper, take time to see which areas your site can improve.
For example, a total of 79% of shoppers in 2017 were deterred from completing a purchase by shipping costs alone. You can mitigate this unexpected "surprise" for the customer by offering free shipping. Alternatively, display "real-time" updates on the price before the customer arrives at check-out.
Further, don't forget to make sure your site is properly optimized for speed, usability, and clarity even during checkout. 21% of users in 2017 abandoned a cart due to a long checkout process; poor site navigation deterred another 16%. Try your hand at, what is affectionately dubbed, the "mom test." In other words, if your mom can't easily navigate the checkout procedure, simplify it.
Reach eCommerce Success With These Vital Metrics
Your online store is guaranteed to thrive if you take careful notice of these seven important eCommerce metrics.
Whether just starting out or solidly established on your little corner of the internet, meticulously track these values. Be sure to compare for changes over time, and after implementing adjustments. Never stop testing new ways to improve your metrics.
Diligently make decisions based on your metrics, and always strive to improve your store. Doing so puts you on the path to true eCommerce success.