5 Ecommerce Metrics That Can Make Or Break Your Success

The role of any Ecommerce website is to sell as many products as possible to as many visitors one can muster. Naturally, there are numerous Ecommerce strategies that can get you there, but how do you know if your particular approach will work wonders for your overall ROI?

The answer is simple – you need to figure out which Ecommerce metrics are able to do the following: 

  • measure your progress the best possible way 
  • help you track down what you are doing wrong and where the room for improvement is
  • Help you leverage this data to step up your Ecommerce game

Much like it is the case with other similar niches within the digital marketing landscape, there is a plethora of Ecommerce metrics you can track to improve your strategy. To be more precise, there are at least 67 of them according to Shoppify’s 2018 data, while many more have emerged since then.

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This can be a bit overwhelming when measuring the overall success of your Ecommerce tactic, which is why decided to boil down this list to 5 most insightful ones that can shed some quality light onto your strategy and help you build brand loyalty as well as boost your revenue.

1. Sales Conversion Rate

Sales Conversion Rate is probably the very yardstick of online sales performance. Optimizing this KPI should be among your top priorities. Here’s a quick example: 

Having a Sales Conversion Rate at 0.1% is not a positive performance indicator as it basically means that for every 1,000 users visiting your website, only 1 transaction is being performed. This typically translates into negative ROI and is a sign that you need to make some actionable changes that may lead to a conversion boost (preferably an increase of up to 1%, which would mean that out of every 1000 visitors, 10 will make a purchase). 

The formula For Conversion Rate is shown below:

(# Of Sales) / (# of Users) x 100% = Conversion Rate

This metric is most commonly used for determining the quality of your leads. 

2. Average Order Volume

Getting potential customers on your website doesn’t mean that your job is done. Aside from making sure the right person reaches your platform, you must also be able to offer them everything they need in order to solve their problems, needs, and wants. Only then will a potential buyer become a loyal paying customer.  

If you are capable of properly meeting their needs and wants with the right items, the customer is more likely to be satisfied with their shopping experience and is therefore much more likely to add multiple products to their cart. 

This KPI can be a great measure of whether you are communicating and portraying the right purchasing opportunities to the right audiences. 

The calculating formula for this is shown below: 

Total Revenue Generated by Site / Number of Orders Placed on Site = AOV 

Optimized AOV means that your recommendation and upsell efforts are pretty strong, which will in the long run lead to much higher revenue. If, however, your AOV metric isn’t where you want it to be – you probably need to perform some tweaks in this department. 

The best way to track and utilize this data is to find an effective SEO reporting tool that is capable of providing you with a clear overview of metrics and KPIs that best describe your Ecommerce strategy performance. Once you have a dashboard that shows your custom-made list of metrics, you will be able to act quickly and focus on optimizing the ones that have room for improvement. 

3. Cost Per Acquisition (CPA) – Ad Spend / Orders

Think of Cost Per Acquisition (CPA) as the ratio between how much money you are spending on ads vs. the amount of orders your marketing budget generates. 

One of the most typical ways of measuring this metric and getting quality information is to track your website’s overall CPA, but do it within the context of a customer’s lifetime value through a customer loyalty program. According to ecommerceceo.com, 7 in every 10 consumers who earn over six-figures a year are active members of at least one loyalty program, which makes them an ideal target audience for the Ecommerce marketers looking to boost their CPA. 

Calculating your platform’s overall CPA, however, isn’t exactly a walk in the park as it depends on the type and the number of your active ad campaigns. 

This is where pulling data from AdWords and Google Analytics comes into play. These tools can help you get a clear image of your actual ad spend and get insight into:

  • how much you are spending on making sure your potential customer reaches your website
  • the engagement actions your visitors are taking once they land on your page 

 

You should use this information to steer your campaign in the right direction and funnel your traffic the right way.    

4. Add-To-Cart Rate

The add-to-cart rate is a handy and often unfairly overlooked metric that gives the percentage of buyers who put at least one product in their shopping cart during the session. This KPI provides you with valuable insight into how well you are tackling the following E-commerce aspects: 

  • product selection
  • marketing efforts 
  • site usability

The formula looks like this: 

(Sessions with cart item viewed) / (total sessions) = Add-To-Cart Rate

To better understand how well your items are selling and how well the pages that advertise them are performing, we advise you to set up a GA event and attach it to a user clicking on a CTA button (“Add to Basket” for example). Typically, you would want 6-12% of your product page visits resulting in the CTA being clicked. 

5. Cart Abandonment Rate

This is a metric that can indicate errors in your approach to the final segment of your customer’s purchasing journey. 

We’ve all been there – the potential buyer is browsing your pages, they fill up their shopping cart, and then for some inexplicable reason – they abandon the cart and never hit the transaction button. 

Cart abandonment rate formula is shown below: 

Completed Purchases / Total Number of Carts Created = CAR 

The reason for cart abandonment, however, isn’t as strange as it may initially seem. 

It usually means that you are demanding too much unnecessary information about your potential buyer in order to complete the transaction. This is why you should work on making this final stage on online purchase as smooth and efficient as possible across multiple platforms.

Wrapping Up

Needless to say, each Ecommerce platform – as well as every online shopping marketing campaign – is unique and therefore requires specific tailoring in terms of which E-commerce metrics you are tracking. 

Our best guess in terms of most important KPIs may work for some, but others could experience very little progress. As always, trial and error is the fulcrum of every marketing campaign. So, do try and don’t be afraid of errors. Use them instead. Negative information is still information.