11 Essential Ecommerce Metrics for Developing Growth

Tracking and reporting upon metrics is an absolutely essential skill of anyone managing a business. But with so many dimensions and metrics to view, how do you know which to analyse, and when?

Taming your ecommerce metrics

Ecommerce is a bit of a numers game. You put numbers in and you get numbers out – fundamentally to be successful you need to get more out than you put in. So it makes sense that to do well you need to be on top of your ecommerce metrics.

Now anyone that runs a website will look at their traffic and basic ecommerce metrics, but montoring single metrics alone can be vanity much of the time, because they do not create a full picture.

One week your conversion rate might go up, but it’s because your traffic has gone down and actually you made less sales as a result, or your traffic might have gone up, but it’s because your paid advertising clicks went up and your spend now outweighs any increase in sales.

In this guide we will explore 11 of the most important metrics for you to track, and how analyse them against other metrics to generate insight that you can turn into action.

I’m also going to sneak in some tips on how to grow these metrics, and I’ll tell you how often to report and analyse so you don’t spend all day doing it, and can actually action things too.

After all, that’s why we report on numbers – to create action.

Number 1: Conversion rate

The percentage of website visitors who make a purchase. This is one of the most critical and widely used ecommerce metrics, but reporting a rise in conversion rate means nothing if it’s because the traffic has dropped and actually you made less sales.

Conversion rate, traffic and AOV go hand in hand and should always be reported together to see a fuller picture of whether action you have taken has had a positive or negative effect.

Also, it’s not enough to just report on the average conversion rate. You should get more granular and look at channel conversion rates, and even page type conversion rates on a regular basis.


Number 2: Average order value (AOV)

The average amount of money spent by customers on each order. This ecommerce metric helps you understand how much revenue you are generating per customer. As mentioned above, this is one of the holy trinity of revenue along with conversion rate and sessions.

Naturally your AOV will vary month to month, with little or no direct action to increase it it will fluctuate because the buying patterns of people fluctuate.

If you want it to increase then need to find ways to either get people to buy more expensive products, or just buy more products in each transaction.

Cross-sells and upsells are the mainstay of growing AOV, and if you add bundling or ‘you might also like’ features to your shop you might see a rise in AOV, though this needs to happen without a decrease in conversion rate, or it will have no effect on your revenue.

Many stores also employ a free delivery cutoff, which they cleverly position a little above the AOV, so that they can encourage people to buy just one more thing to reach it.

You do of course need to have smaller, and complementary items in your store to be able to get this to work though.


Number 3: Website traffic

Fundamentally, this is the number of visitors who access your website, but more importantly we track sessions because people may come back a number of times and it’s important to track things in relations to sessions rather than just straight number of visitors.

As I mentioned at the start, simply looking at your total traffic will tell you very little, because traffic can fluctuate wildly throughout the year naturally.

A sudden spike does not necessarily mean that something you are doing is working, and typically just when you think it is, the next report shows the traffic dropped back down and you may change your strategy incorrectly.

It’s better to report traffic per acquisition channel and see which area is the weakest.

If your organic traffic is not growing as quickly as you think it should, then you can act in that area.

Maybe your paid traffic is growing well, but your CPA is too high, then you might rethink that strategy.

If you’re putting 8 hours a week into email marketing and the traffic is only 3% of your total traffic with 5% conversion rate, then you should definitely evaluate the strategy there, even if it’s ‘brand building’.


Number 4: Cost per acquisition (CPA)

The average amount of money you spend to acquire a new customer through marketing channels. This metric helps you optimise your marketing budget and strategy.

CPA is one of the most important ecommerce metrics because it doesn’t matter whether you reach 1 million or 10 million potential customers, if the cost to acquire a sale is higher than your profit margin then you will not last very long.

Some people pat themselves on the back about their conversion rate, without realising that high conversion rate means nothing if your CPA is higher than the margins allow.

I recommend benchmarking CPA for your industry then seeing where you stack up. If your CPA is a bit high you need to look at your advertising strategy and ideate ways to get that down.


Number 5: Customer lifetime value (CLV)

The estimated total amount of money a customer will spend with your business over their lifetime. This metric helps you measure customer loyalty and retention.

Fair warning: this is not one of the easiest ecommerce metrics to calculate. You aren’t going to find CLV in Google Analytics, you will need to calculate this yourself. Try Qualtrics guide on this.

CLV = AveragePurchaseValue × PurchaseFrequency × AverageCustomerLifespan

For ecommerce businesses, tools like Google Analytics can provide insights into purchase values and frequencies, but calculating the average customer lifespan might require a deeper analysis of your customer data. For detailed calculation, try Qualtrics guide on this.

How CLV Helps Out

CLV helps in predicting the future revenue and growth of your business. By understanding the average lifetime value of your customers, you can make more informed decisions about how much money to invest in acquiring new customers and retaining existing ones.

Knowing the CLV allows you to segment your customers based on their value. This segmentation enables you to tailor your marketing efforts, focusing more on high-value customers. Personalized marketing strategies can be developed to target these segments, enhancing customer experience and loyalty.

Moreover, CLV is instrumental in determining the cost-effectiveness of your marketing strategies. By comparing the CLV to the Cost Per Acquisition (CPA), you can assess whether you are spending the right amount to acquire customers and adjust your marketing budget accordingly.

For ecommerce businesses to increase CLV, they need to ensure that every interaction with your business is positive. This includes everything from user-friendly website navigation to exceptional customer service.

They should keep in touch with customers through email marketing, providing them with valuable content and exclusive offers. Lastly, use customer data to provide personalized recommendations and offers.

CLV is a reflection of the relationship your brand has with its customers. By focusing on increasing t


Number 6: Repeat customer rate

The Repeat Customer Rate indicates the percentage of customers who return to make additional purchases. This metric is a strong indicator of customer loyalty, satisfaction, and the overall health of your business.

A high repeat customer rate usually signifies that customers are happy with your products and services. Satisfied customers are more likely to return, which is less costly than acquiring new ones.

Acquiring new customers can be five times more expensive than retaining existing ones. Focusing on increasing your repeat customer rate is a cost-effective strategy that boosts your bottom line.

Essentially, repeat customers provide a more predictable revenue stream compared to new customers. This predictability allows for better inventory management, budgeting, and business planning. Repeat customers tend to spend more over time.

Additionally, loyal customers often become brand advocates, recommending your products to friends and family, which can lead to organic growth through word-of-mouth.

Calculating Repeat Customer Rate:

It can be calculated by dividing the number of customers who have shopped more than once by the total number of customers and then multiplying the result by 100 to get a percentage.

RepeatCustomerRate = ( Total Number of Customers / Number of Repeat Customers​ ) ×100

Here are a few suggested strategies to improve Repeat Customer Rate:

  • Enhance Customer Experience: Ensure that every aspect of the customer journey is smooth and enjoyable. 
  • Engage Regularly: Keep in touch with your customers through email newsletters, social media, and personalized offers. Regular engagement keeps your brand top-of-mind.
  • Loyalty Programs: Implement loyalty programs that reward customers for their repeat business. This could include discounts, exclusive access to new products, or points-based rewards.
  • Solicit Feedback and Act on It: Regularly ask for customer feedback and make visible changes based on their suggestions. This shows customers that you value their input and are committed to improving.
  • Offer Exceptional Post-Purchase Support: Provide excellent after-sales support, including hassle-free returns, customer service, and helpful product guides.

By focusing on strategies to improve this rate, you’re investing in building a loyal customer base that will support your business’s growth and sustainability.


Number 7: Cart abandonment rate

The Cart Abandonment Rate is a critical metric in ecommerce, representing the percentage of shoppers who add items to their cart but leave the site without completing the purchase. This rate is a key indicator of potential issues in the buying process. 

These issues can significantly impact your conversion rate and overall customer satisfaction. Here’s an in-depth look at its importance and strategies to reduce it:

  • Understanding Customer Behavior: A high cart abandonment rate often points to obstacles or dissatisfaction in the customer journey. It could be due to high shipping costs, a complicated checkout process, or simply a lack of intent to purchase.
  • Optimizing the Checkout Process: This rate helps identify areas for improvement in the checkout process. Simplifying the checkout, offering multiple payment options, and ensuring a mobile-friendly process can reduce abandonment.
  • Impact on Revenue: Cart abandonment directly affects your potential revenue. Even a small reduction in this rate can lead to a significant increase in sales.
  • Transparent Pricing and Shipping Costs: Be upfront about all costs, including shipping and taxes, to avoid surprises at checkout.
  • Retargeting and Remarketing: Implement retargeting campaigns to bring back customers who have abandoned their carts. This can be done through email reminders or targeted ads.
  • Provide Guest Checkout Options: Not all customers want to create an account. Offering a guest checkout can reduce abandonment from those who prefer a quick purchase.

The Cart Abandonment Rate is a powerful metric that reveals a lot about the effectiveness of your ecommerce site and the customer experience. Next, let’s look at how it is calculated. 

Calculating Cart Abandonment Rate:

This rate is calculated by dividing the number of completed purchases by the number of carts created, subtracting this from one, and then multiplying by 100 to get a percentage.

CartAbandonmentRate = ( 1− Number of Carts Created / Number of Completed Purchases ) ×100

The popular ecommerce platforms WordPress and Shopify provide this metric for website owners. WooCommerce Cart Reports WordPress plugin provides real-time metrics about your customers’ carts, including abandonment rates. It offers detailed insights and allows you to track abandoned carts and completed transactions.

Another plugin in this regard is the YITH WooCommerce Recover Abandoned Cart. This plugin contacts customers who have abandoned their carts with automated emails. It includes statistics about abandoned carts and recovered orders, helping you calculate and reduce the abandonment rate.

A notable feature of Shopify is its built-in analytics tools, which include cart abandonment rate tracking. You can view reports directly in your Shopify dashboard to understand your store’s cart abandonment rate and trends over time.

Furthermore, Abandonment Protector is an app that helps in reducing cart abandonment by sending automated emails to customers who didn’t complete their purchases. It also provides detailed reports to track the effectiveness of your email campaigns. 

Klaviyo is another powerful email marketing platform that integrates with Shopify. It offers advanced features for tracking cart abandonment and sending personalized follow-up emails to encourage customers to complete their purchases.


Number 8: Add to cart rate

The Add to Cart Rate measures the percentage of visitors who add at least one product to their shopping cart during their session. It is a key indicator of both customer engagement and the effectiveness of your product pages. 

This metric is calculated by dividing the number of sessions where an item was added to the cart by the total number of sessions, then multiplying by 100 to get a percentage. 

AddtoCartRate = ( Total Number of Sessions / Number of Sessions with Cart Additions ) × 100

Importance and Strategies for Improvement:

Understanding and optimizing Add to Cart Rate can significantly impact your overall conversion rate and sales. Here’s a deeper look into its importance and strategies for improvement:

Indicating Product Appeal and Page Effectiveness:

A high add to cart rate suggests that your products are appealing and your product pages are effective in convincing visitors to make a purchase. It reflects the success of your product descriptions, images, pricing, and overall page layout.

Ensure your product pages are engaging, with high-quality images, detailed descriptions, and clear calls-to-action (CTAs). By tracking this metric, you can identify which products or pages are performing well and which ones need optimization. This could involve A/B testing different elements like product descriptions, images, or calls to action.

Early Funnel Conversion Metric: 

This rate is an early-stage conversion metric. It shows how well you’re capturing the interest of potential customers as they begin their journey through your sales funnel. Implement persuasive elements like customer reviews, ratings, and trust badges to build credibility and encourage visitors to add products to their cart.

Impact on Overall Conversion Rate: 

Improving the add to cart rate is a step towards enhancing the overall conversion rate. Visitors who add items to their cart are closer to making a purchase, making it crucial to optimize this step in the customer journey.

Promotions, limited-time offers, and free shipping thresholds can incentivize visitors to add more items to their cart. It is essential to leverage social proof. Showcasing how popular a product is or how many people are viewing it can create a sense of urgency and encourage visitors to add it to their cart.

Additionally, use retargeting ads to bring back visitors who showed interest in your products but did not add anything to their cart. Furthermore, personalize the shopping experience based on the user’s browsing history or preferences to show relevant product recommendations that they are more likely to add to their cart.


Number 9: Revenue per product

Revenue per Product indicates the total revenue generated by each individual product or product category. This metric helps in understanding which products are the most profitable and popular among customers, guiding inventory management, marketing strategies, and product development. It has a simple formula:

RevenueperProduct = UnitsSoldofProduct × SellingPriceofProduct

By analyzing revenue per product, you can identify which items are your best sellers and contribute most to your bottom line. Essentially, understanding which products generate the most revenue can guide your decisions regarding product development, discontinuation, or modification. 

It helps in aligning your product offerings with customer preferences and market demand. You can create targeted campaigns to promote these products, bundle them with less popular items, or use them to attract new customers. Also, improve the visibility of high-revenue products through featured listings, email marketing, and social media promotion.


Number 10: Revenue per channel

Revenue per Channel metric is calculated by tracking the total revenue generated from each channel over a specific period. You can use analytics tools to segment your revenue data by the source of traffic or the marketing channel used. 

By analyzing revenue per channel, you can determine which channels are most effective in driving sales. This includes channels like organic search, paid ads, social media, email marketing, and direct traffic.

Understanding which channels bring in the most revenue helps in making informed decisions about where to invest your marketing efforts and budget. It allows you to focus on channels that offer the best return on investment (ROI).

Analyzing Revenue per Channel helps in balancing marketing mix. It assists in creating a balanced marketing mix that maximizes overall revenue while minimizing reliance on any single channel.

This metric can also reveal underutilized channels that have the potential to generate more revenue, guiding you to explore new marketing avenues or strengthen existing ones. Continuously monitor the performance of each channel and use data analytics to make informed decisions. Test different approaches and use A/B testing to find what works best for each channel.

Lastly, I would like to remind to ensure that your brand messaging is consistent across all channels while being tailored to the specifics of each channel. Consistency helps in building brand recognition and trust.


Number 11: Profit margins

Profit Margins are one of the most renowned business metrics. They represent the percentage of revenue that exceeds the cost of goods sold (COGS). This metric is essential for understanding the financial health of your business. 

It reflects the efficiency of your operations and your ability to generate profit from sales. High profit margins indicate a healthy business with efficient cost management, while low margins could signal potential issues in pricing, cost control, or market positioning.

ProfitMargin=(  (Total Revenue / Total Revenue) − COGS ) × 100

Understanding your profit margins helps in developing effective pricing strategies. It ensures that your pricing covers costs and generates a sufficient profit while remaining competitive in the market.  

Comparing your profit margins with industry averages and competitors provides insights into your competitive position and areas for improvement. It is important to regularly review and adjust your pricing strategies to ensure they align with market demand, cost changes, and your overall business objectives.


Bonus metric 1: Sessions with search

One of my favourite ecommerce metrics, this is the number of sessions where your on-site search was used. This is a bonus metric because not all online store use a localised search feature.

Bonus metric 2: Churn rate

The ratio of customers gained versus customers lost. Only really revelant for businesses with products that people repeatedly buy, and not so much if most of your custom is one time purchases.


How often should you review your ecommerce metrics?

There are only so many hours in the day, so you can’t spend all your time reviewing ecommerce metrics. At some point you need to stop and action things, and at the other end if you do not regularly review and report some insight from your metrics, well you’re not going to know what to do.

Weekly

  • Traffic
  • Conversion rate

Monthly

  • AOV
  • CPA
  • Cart abandonment rate
  • Add to cart rate
  • Repeat customer rate
  • Product revenue
  • Channel revenue

Quarterly

  • CLV
  • Profit margins

Conclusion

You should by now have all these ecommerce metrics available to you, and if you don’t then investigate how to gain them. Ideally you want a simple dashboard or set of dashboards that you can access to view them. Larger companies might have data analytics software available with which custom dashboards can be created.

Also you should understand better the importance of cross-referencing data metrics to create real insight that can lead to action. You cannot action everything at once so make some notes of the worst performing metrics and make just one your focal point to start with, then work through them all.

Thanks for reading, follow me, please share this, and subscribe below to give me some kudos.

Chris Bradshaw

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About the author

I created Ecom Uprising because I spent more than a decade searching the internet to find the answers I needed to grow the businesses I was working for, and I wished there had been one easy to use resource with reliable information. So here it is.

Thanks for reading, Chris

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