eCommerce performance measurements reflect how well your company is performing. Selling online without tracking your eCommerce stats is akin to traveling with your closed eyes. No company can exist if you don't follow your success and compare it over time.
As an online shop, it's easy to get caught up in eCommerce numbers. The sheer amount of potential indicators to track and monitor can be intimidating. However, not all measurements are as relevant as others, and defining the key performance indicators (KPIs) you need to measure will help you improve the success of your online store.
Consistent development in online sales results from tracking performance in various areas of your organization over time. Keeping track of the correct indicators will allow you to enhance conversion rates over time. Any quantitative, regularly specified measurement of website performance is referred to as a metric. Important eCommerce metrics include conversion rate, average order value, cart abandonment rate, and traffic sources.
For valid reasons, the number of eCommerce analytics is lengthy. Google Analytics, social networks, your online store, category pages, webpages, checkout, and shopping carts are all significant data sources that record statistical data, ready for your analysis and trend analysis over time.
Difference between a Metric and an eCommerce KPI
So, what is the distinction between a metric and a key performance indicator (KPI), mainly since the terms are frequently used interchangeably? To begin, measurements measure processes, whereas KPIs measure the performance of those processes. In other words, key performance indicators are personal, particular goals you want YOUR store to achieve. Metrics, in essence, represent the state of something, similar to a quick snapshot of a vital piece of information. KPIs, on either hand, already have a mission and vision, which indicates they might vary per organization, as not every business will want (or even need) to concentrate on the very same topics.
Following are some of the most common metrics a business should know of:
Rate of Conversion
The amount of customers that finalize a sale after visiting your website is referred to as the conversion rate. The conversion rate is inextricably linked to overall revenue indicators.
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Gross Profit Margin
The gross margin is the actual profit you make over and above the cost of products sold (COGS). This is effectively your profit on the product after-sale, taking into account how much you spend on inventory.
Average Order Value
The average order value (AOV) is the monetary worth of a specific client order placed on your website. You should also keep track of the average abandoned order value (AAOV), which is the average value of a charge left during the checkout or cart stages of the purchase.
Cost Per Acquisition
The cost per acquisition is the expense of acquiring a new customer. This will also include the fees of advertising, email marketing, discounts given, and anything else required to purchase a customer.
This provides you with a sense of how much time and money it takes to attract a paying customer. It should be compared to various other metrics such as average order value, traffic volumes, customer loyalty values, and much more to determine how much it costs to earn a client.
Checkout Abandonment Rate
The checkout abandonment rate is the percentage of clients who begin the checkout process but then leave the purchase. This is a step up from cart abandonment, indicating that you put more effort into getting them to that point. It's critical to capitalize at the checkout because clients are most likely to make a buy.
Customer Lifetime Value
Customer Lifetime Value (CLV) is the average income earned per person during their whole life as a customer for your organization. It essentially calculates how much a customer is valuable to you on average and distinguishes between a customer who makes a $500 purchase now and one who makes ten $100 purchases over the next five years - who is genuinely more important to you. For you to produce income, this must be more than your acquisition expenses.
This number alone provides insight into how valuable each client is to you. Evaluate this to the cost of customer acquisition, conversion rates, traffic, and other factors to determine your ROI on marketing and customer acquisition initiatives.
Revenue On Advertising Spent
Divide revenue by advertising expenditures to obtain a ratio of typical payment returned depending on advertising costs. This is the amount you get for each advertising dollar invested.
It enables you to calculate the average cost of advertising to generate revenue based on current expenses and income. You may use this to determine how much promotion it takes to encourage customers to buy. By working with different or more effective advertising tactics, you should always try to increase the ROI per dollar spent on marketing.
How clients enter your store is critical to providing them with the best possible experience. Segment your eCommerce statistics by device type to understand better which devices are being used the most and customize your site's UX to each device type.
Learn performance indicators for device type breakdown, and then create mobile-optimized experiences for each platform. Try to keep your process consistent across device types, but test scores on multiple devices – mobile, web, and tablet – to get a sense of how consumers are buying and which is functioning the best.
Website speeds and checkout upload speeds are critical for keeping customers on your eCommerce site and engaging them. The efficiency, reliability, and quickness of your eCommerce platform are essential to your customers' engagement.
The degree to which your clients are engaged with your service, as indicated by reactions, shares, and subscriptions. Customers are more inclined to purchase, share, and connect with your product if they are active and enthusiastic.
You can monitor your online business metrics using a variety of methods. It is preferable to use software that allows you to segment each metric by region, device used, marketing, and product, among other things. It is also essential to understand the people who are executing your directives. Behavior-driven analytics will provide you with a new view of why and how things occur on your eCommerce site.