Metrics are essential if you want eCommerce business success. Without them, you will never know how your campaigns are doing, whether they are doing what they’re supposed to do or not.
What is it that can ensure your new eCommerce business success? The answer is metrics. Of course, you need to set up your new store right – marketing and all. But those don’t matter if your store’s performance is unknown to you all the time. Tracking some key performance indicators (KPIs) or metrics can help you with this.
It sounds presumptuous to say that knowledge is power. But in business, it is. Many eCommerce companies don’t use insight from their data, which is why they are far from success. Fortunately, it is now easier to access digital analytics that can help you make decisions that provide value to your eCommerce. Digital analytics help you with that through metrics.
There are thousands of KPIs you can track. However, only a few of them can help you find out how your business is doing. You can turn the information they provide into actionable insights that will kickstart your eCommerce business. On that note, let us find out which rate and non-rate metrics are essential to measuring your eCommerce business success.
Sales Conversion Rate
The sales conversion rate refers to the percentage of visitors on your website who make a purchase. You want to measure how many qualified prospects you have turned into a sale if you want to know how effective your marketing strategy is. More specifically, you want to know if your landing pages and calls-to-action are doing what they are supposed to do. Most analytics tools can tell your site’s conversion rate, but you can also find it out yourself. All you need to do is divide the number of actual buyers by the total number of your visitors. The sales conversion rate is the KPI you should worry about the most, so make sure you set it up for your eCommerce business.
Average Order Value
One of the main factors that defines the success of an online business is its online ordering system. In this regard, it’s important to pay attention to such a thing as AVG. Just as it says, average order value refers to every purchase’s average cost. As an eCommerce business owner, your goal is to get your customers to buy from you as much as possible. That way, you will also earn as much as possible. You can find ways to increase how much your customers spend by determining your average order value.
Analytic tools can tell you this, and you can also calculate it manually by dividing your total revenue by how many orders you have. When you know your average order value, you can find out what marketing strategy helps offset your customer acquisition cost. Doing this reduces your payback period, increases your ROI, and substantially accelerates your growth to profitability.
Cart Abandonment Rate
This KPI is just as its name suggests, the percentage of shoppers who drop items to their shopping cart but leave before making an actual purchase. Around 70% of shoppers leave their carts before buying, but don’t worry because it is still recoverable. Before you can do that, though, you need to find out your cart abandonment rate. You can use a cart abandonment tool for this. You can also use Google Analytics by setting up a funnel there. Just like the other metrics here, you want to find out your cart abandonment rate so you can work on how to reduce it. Reducing the number of visitors who abandon their cart is essential to increasing ROI and growing your business.
Revenue by Traffic Source
The revenue by traffic source is a KPI that tells your total income for every channel, such as organic search, paid search, social, and so on. Through this metric, you can find out which sources are the most valuable by directing the highest traffic to your site. It’s a metric that perfectly shows you why they say not all traffic is equal. Knowing your revenue by traffic source is crucial precisely because of the above statement. Given that some traffic sources will send you visitors that probably won’t be customers, why would you invest money on that? Calculating this metric helps you identify which sources bring more traffic, which sources you need to work on, and which ones you need to let go.
Customer Lifetime Value
In this metric, you want to know the total number you’ve earned from a customer throughout their life. It is critical because it tells you just how much you will have to spend to gain a customer and retain them. Calculating it is a little complicated, but here are five simple ways to calculate customer lifetime value. You can increase this rate in several ways. For the most part, though, you need to improve your average order value. After that, you need to build long-term relationships with customers. This way, they become repeat buyers. With that, you can work on getting them to become lifetime customers through techniques such as loyalty programs.
Conclusion
Metrics are essential if you want eCommerce business success. Without them, you will never know how your campaigns are doing, whether they are doing what they’re supposed to do or not. There are other KPIs you might want to track, but these five are among the most important to kickstart your new eCommerce business.
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