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If you have an eCommerce store in 2023, you definitely should be monitoring your website. Much like a physical building, you have to keep it neat and presentable, take out the trash, and make improvements when needed. This is the approach you need to take when it comes to running an eCommerce website to ensure that it’s operating as smoothly as possible.
However, if you’re new to eCommerce, you’ll know how overwhelming it can be because there are so many tools at your fingertips. Which ones are best for your online business? How should you apply them? Why are there so many numbers and statistics to analyse and understand?
Take a deep breath. We understand that all metrics for eCommerce are valuable, but some are more crucial to measure for your business objectives and desires. This post covers just that and much more, from KPIs to making these metrics work for you.
- What are eCommerce metrics?
- What are eCommerce KPIs?
- What is the difference between eCommerce metrics and KPIs?
- What are the most critical KPIs for eCommerce?
- Top 10 key eCommerce metrics to track for all businesses
- The importance of eCommerce metrics for your small business
- Taking the SMART approach to eCommerce metrics
- eCommerce performance metrics: How to measure vs. how often to measure
- How do eCommerce key metrics fit into your strategy (short vs. long term)
- Benchmarking for eCommerce in South Africa: Best Practices
- eCommerce business metrics: The ideal timeframe for measurements
- Most important eCommerce metrics vs. vanity metrics
- eCommerce analytics metrics: How to leverage metrics for business growth
- Wrapping up the top eCommerce metrics in 2023
What are eCommerce metrics?
eCommerce metrics are quantifiable measurements that help people define their website’s performance. There are many different metrics one can use to determine the success of a site, which we’ll cover in detail below.
If you’re a small business owner with an eCommerce store, you can utilise these metrics to grow your business. They can give you more insight, such as how often visitors purchase from your website, what they tend to order, your sales conversion rate, and more.
Thanks to all these metrics, you can measure the progress and success of your online sales efforts. This will help you narrow down what exactly is working for you or where you’d need some improvement to generate a desired outcome.
What are eCommerce KPIs?
eCommerce KPIs, or key performance indicators, are also used to determine the success of your business. Think of them like milestones on the road to online retail success. KPIs are versatile and can be set to match your business objectives.
For instance, if you want to boost profits, you’ll use these performance indicators to monitor your sales and start strategising from there.
You can use KPIs to track and measure eCommerce success just as you would with metrics. With these, you can grade your online business growth and customer support targets, amongst other measurements.
What is the difference between eCommerce metrics and KPIs?
As you may have picked up, it’s easy to confuse KPIs with metrics regarding eCommerce. The most significant difference between the two is that KPIs are measurable, time-bound objectives that aid businesses in assessing their progression towards their goals.
At the same time, metrics are usually a collection of data points that give you more insight into how customers behave on your website. These include cart abandonment rate, bounce rate, average order values, etc.
What are the most critical KPIs for eCommerce?
Now that you know the difference between metrics and KPIs, we can quickly look at some essential KPIs worth tracking.
Revenue growth is an increase or decrease in a business’s sales from one period to the next. This KPI can help you identify trends in a business over a certain period.
Return on investment (ROI)
ROI helps you evaluate how much profit or loss you’ve earned through an investment or business endeavour.
Website traffic points to the volume of internet users that visit a site. It can be used to measure the journey of users that will help you further analyse the website’s marketing success.
The click-through rate measures the success and effectiveness of online advertising or email marketing campaigns. It’s the ratio of clicks on a specific link to the number of times a page, email, or advertisement is shown. In a nutshell, the number of people that land on a specific site after following a hypertext link.
Customer satisfaction is a term often used in the marketing world, and unsurprisingly, it’s used to measure customer experience. How well do your products or services meet your customer’s expectations? That pretty much sums up what this KPI entails, but it can also help you understand purchase intentions and estimate customer loyalty.
We don’t need to tell you how crucial customer satisfaction is to any business’s marketing efforts. Analysing this performance indicator can help you predict business growth and revenue – in that sense, you’ll know if you’re stepping in the right direction.
Top 10 key eCommerce metrics to track for all businesses
Now that you know the difference between eCommerce metrics and KPIs, it’s time to look at some of the best ones to include in your business strategy.
Average order value (AOV)
The average order value shows how much each customer spends in your online store per transaction. This can show how much you spend on customer acquisition and purchase patterns.
In eCommerce, the conversion rate is calculated by dividing the total number of orders placed by the total number of unique visits to your website. This can help you see what percentage of your target market is taking the desired action on your website.
Let’s say your website had 1000 unique visits over one month, and 50 of these people order one of your products. Your conversion rate would be 5% since 50/1000 = 0.05 or 5%.
Customer lifetime value (CLTV)
Customer Lifetime Value is one of the most essential eCommerce metric measurements to help you gauge and potentially increase customer retention. This performance indicator can show you how much money an average customer will spend with your business during their time. To measure CLTV, you’ll look at the total average profit and the total average revenue generated by a customer.
Simply put, if customers spend R1000.00 a year over five years, their CLTV is R5000.00.
Customer acquisition cost (CAC)
Customer acquisition cost is an estimation of how much it will cost you to acquire a new customer. Consider things like overhead, salary of your marketers, advertising, and sales costs when calculating customer acquisition costs.
To give you an example: If your CAC is R50, but your Average Order Value (AOV) is R40, it means that you’re not making any money. However, if your AOV is R200, you’re in the clear.
Cost of goods sold (COGS)
These refer to the direct costs of goods production sold by a business. The cost of goods sold is an essential metric for your online business as it helps you track your manufacturing and production costs.
Note: These costs typically include money spent on raw materials and labour while excluding costs associated with marketing, sales, or distribution.
Shopping cart abandonment rate (SCAR)
What is a shopping cart abandonment rate? For starters, it’s one of the most significant issues any online business faces if this rate is high. In simple words, it’s the rate at which people add items to their shopping cart but then leave your site before making a purchase.
If you’ve ever shopped online, you’ve probably been guilty of abandoning your shopping cart. It’s perfectly human to add a bunch of stuff you might like, then you realise it costs way too much or that you don’t need it – whatever the reason, you jump ship and leave the cart as is. This is no big deal for consumers, but it’s like a stone in your shoe for sellers.
This is because a whopping 70% of online shoppers abandon their carts, which is why you’d want to try your best to lower this rate for your business. You can measure this metric with the formula: 1 – (Number of Completed Orders / Number of Generated Shopping Carts) x 100.
Mobile traffic and sales
More and more people are using their mobile devices to purchase online goods. It is quicker, easy, and more convenient since our phones are practically glued to our hands (whether we want to admit it or not). So, tracking mobile metrics for traffic, sales, and user experience is vital.
What this means for eCommerce businesses is that you need to make your site mobile-friendly to improve the overall user experience of your customers. The more people enjoy using your site on their phone (without any delays or glitches), the more they are likely to shop.
Improving these metrics ensures that your eCommerce website is mobile-responsive and suitable for any mobile device, such as tablets and smartphones.
Pro Tip: Consider developing and launching an app that users can download and purchase to generate more mobile business.
Want to know how people are finding your website? You’ll get this type of data and more, including which sources generate the most engagement, by tracking the traffic sources metric. You’ll learn about the different sources allowing people to land on your site, like social media channels, search engines, and email.
How would knowing this information benefit your business, though? This metric will reveal what marketing channel you need to focus on. What’s the point of spending a ton of money on Facebook advertising if most of your customers find you through email outreach, for example?
Also, if you have the budget and want to increase your reach, you can invest in the channel that isn’t getting the desired traffic. For instance, you can use WhatsApp advertising to target loyal, long-term customers if other campaigns don’t reach them successfully.
Return on ad spend (ROAS)
Return on ad spend (ROAS) is a valuable metric that allows you to track the success of your marketing campaigns. This applies to any advertising campaign you’ve launched across all marketing channels, including social media. The ROAS metric measures how much income you receive for each Rand spent on advertising efforts.
A high ROAS means that ad campaigns are successful. You can avoid low ROAS by optimising your ads and landing pages. Also, ensure that your site is mobile-friendly and look at trends – assess what your competitors are doing that you might be lacking in.
ROAS is measured by dividing the revenue you’ve received from an ad campaign by the amount of money you spent.
Bounce rate is one of the eCommerce metrics you want to lower. This is the rate at which people leave your website after they’ve landed on it. Now that you understand why keeping a close eye on this metric is important, how can you lower it?
Firstly, a vital benefit of lowering the bounce rate is that you’ll have increased engagement, which leads to potential sales and new customers. One way to reduce this rate is to ensure your ads or search engine results align with the corresponding landing page. Ensuring high-quality content on your landing page can also improve engagement.
You can track your bounce rate through website analytics (which we’ll touch on below). For good measure, an acceptable bounce rate is anywhere between 20% to 45% – however, anything below this would be excellent for your business.
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The importance of eCommerce metrics for your small business
Tracking eCommerce metrics and KPIs is crucial for any business that wants to improve its performance, increase revenue, and grow its audience. These metrics offer valuable insights into how your eCommerce business is performing, but they can also assist in your decision-making.
If you want to track the success of your business, you will have to measure its progress. This is where data and analytics can make a difference. Not entirely convinced yet? The following reasons may sway you into tracking metrics for eCommerce.
- Metrics can help you to identify trends: Identifying trends in sales performance, customer behaviour, and marketing allows you to make better-informed decisions and get ahead of your competition. It also helps you react proactively instead of retrospectively since you are constantly monitoring these trends. Which means less loss in rands and opportunity.
- Metrics can help you measure your eCommerce site’s performance: Measuring the performance of various metrics and KPIs, such as customer acquisition, retention, and sales, can help you identify your strengths and weaknesses. As a result, you’ll make data-driven decisions that allow your business to improve and grow.
- Metrics can help you track ROI: Tracking your return on investment of advertising campaigns gives you insight into where to optimise your spending and increase revenue.
- Metrics can help you monitor customer satisfaction: Monitoring your customer satisfaction can garner helpful information, such as areas where customers experience concerns and issues. As a result, you can address these concerns and boost customer satisfaction.
Read Next: eCommerce for retailers.
Taking the SMART approach to eCommerce metrics
“SMART” is an acronym for Specific, Measurable, Achievable, Relevant, and Timely. These objectives can be used as a framework for setting and achieving goals for your business endeavours.
- Specific: In this step, you’ll determine your exact goals – what do you want to achieve?
- Measurable: Is your objective measurable for success? Identify what success is for you, ensure the goal is quantifiable, and that progress is easy to track.
- Achievable: After establishing your goals and how they could be a success, you’ll ask yourself if they are realistically attainable.
- Relevant: Is your goal addressing your core business objectives?
- Timely: Once you’ve answered yes to all of the above, it’s time to set a deadline and create a schedule so you can start your new eCommerce adventure.
How SMART objectives help you to achieve your eCommerce business goals
Right now, you might be wondering what goals you are meant to achieve concerning eCommerce. SMART objectives can potentially help you achieve the following goals:
Create a good customer experience
Excellent customer service is your ticket to acquiring and retaining clients. Remember, word of mouth is the most powerful marketing tool that can make or break your business, and with good service, customers will have positive things to say. You can also ask your customers for feedback on the service to constantly improve their overall experience with you.
You can use SMART objectives to identify customer service as one of your goals and then use it to improve your service in various ways. For example, you can set an objective for responding to all customer inquiries within 24 hours and ensuring that all complaints or queries are dealt with immediately.
While maintaining a steady revenue is fine, nothing beats being able to increase your profit margin. This goal should be on everyone’s list of objectives who want to see a boost in earnings. With SMART thinking, it’s possible to achieve this.
For example, your specific goal can be to offer good quality inventory, consistently, then you’ll do some research to establish if your supply chain can deliver on these expectations. Next, you need to be confident that this goal is attainable – this step would involve assessing the quality of your products and if these are made for the long run.
After that, you need to evaluate and confirm if your target audience would also consistently and continuously be interested in what you have to offer. Finally, you can start by providing good products to your customers – give yourself a time frame to achieve this goal.
Improve your brand
SMART objectives can help you improve and grow your brand. Most people think branding is just a name or a logo, but it’s your business’s identity. Branding is an experience that allows people to notice and recognise your business, enabling you to tell the story you want others to know.
With branding, customers know what to expect from you, making it easier for your business to stand out in search engine results.
Cross-sell to your customers
Cross-selling is one of the easiest business goals to achieve. It’s when you offer an additional product to a customer purchasing from your online store. This will increase the value of the sale, increasing your revenue. Some examples of cross-selling include subscriptions, loyalty schemes, and discounts on future purchases.
If done correctly, this goal can help you retain loyal customers and attract new ones. Also, giving your repeat customers special offers and perks makes them feel valued, which can encourage them to support you continuously. With the SMART objectives, you can measure cross-selling success by analysing the average cart value of each completed order and the number and value of orders your customers took.
eCommerce performance metrics: How to measure vs. how often to measure
There’s no point in assessing eCommerce metrics if you don’t have a plan of action. Recording a summary of all your key performance indicators (KPIs), metrics, and strategies across marketing channels allows you to track and improve them.
Below, we’ll examine how to measure eCommerce success and how often you should do this.
How often to measure eCommerce metrics?
After learning what metrics and KPIs to look for, you might wonder how often you should track them. Overall, the frequency of eCommerce measuring depends significantly on your business goals, the size of your online store, and how much data you generate. Let’s have a closer look:
Check your eCommerce metrics daily to monitor your site’s performance and to double-check that everything is running smoothly. In this case, you’ll be checking metrics like bounce rates, conversion rates, traffic, and any 404 or 503 site errors that may have recently popped up.
Every week, you can check if the state of your business is healthy. Have a look at the traffic again and go over social media engagement and impressions. This is also an excellent time to review your sales data and evaluate your ad campaign’s success.
It’s best to check metrics that require a longer data window monthly since these are based on traffic and marketing patterns. These include analysing customer behaviour, email open rates, reviewing customer feedback, reach and cart abandonment, and multichannel engagement.
While daily and weekly metrics can reveal your business’s health, quarterly assessments can determine whether it’s growing. It’s like you’re getting a bigger picture of your business evolving (or devolving). Quarterly metrics rely more on tracking long-tail activities, such as email click-throughs, subscription rates, and customer lifetime value.
You’ll be able to assess your overall eCommerce strategy, encompassing your goals, budget, and target market.
How do eCommerce key metrics fit into your strategy (short vs. long term)
The next question you’re likely asking yourself is: “How do these metrics fit into my business strategy?” It depends. Do you want to start seeing results instantly, or are you patient enough to wait for the desired results that these metrics can provide?
Using eCommerce metrics for short-term goals
You can track the following key metrics if you want to measure your progress towards short-term goals:
- Bounce rates
- Conversion rates
- Traffic sources
- Social media engagement and impressions
Using eCommerce metrics for long-term goals
Alternately, you can track the following key metrics if you want to gauge long-term goal progress:
- Customer behaviour
- Email open rates
- Customer feedback
- Shopping cart abandonment
- Multichannel engagement
- Customer lifetime value
Benchmarking for eCommerce in South Africa: Best Practices
How do you know that you’re using these metrics to their best abilities? Are they benefiting your business, or are you just wasting your time? While these concerns are valid, they’re easy to avoid if you stick to these best practices:
- Organise your data: Index your marketing data from all platforms and channels. Organising your data can help you stay focused on your eCommerce goals and objectives. You can arrange your data into different categories to make the process easier. These can include categories like email providers, Google Analytics, eCommerce store analytics systems, and social media analytics systems.
- Adjust your data according to seasons and trends: Another best practice for eCommerce metrics involves adjusting your data according to trends, seasons, and industry events. Doing this is vital to have updated and improved SEO practices, enhancing your website’s overall performance in search engines thanks to the relevancy of new trends.
- Compare the data captured by web analytics tools to customer behaviour: Looking at excessive amounts of data alone may not help you if you’re not paying attention to your customers, too. Tracking metrics without considering customer behaviour patterns can lead to significant errors and wrong decision-making.
- Track, analyse, and measure your eCommerce site’s shopping flow: Keep an eye on key areas of your eCommerce store, such as check-out sessions, add-to-cart sessions, and transaction sessions. This can help you to identify any sudden reductions in the shopping behaviour flow which could be caused by a problem within the shopping process. If you’re not doing this, you wouldn’t know if customers are experiencing any sort of issue when trying to purchase in your store, which contributes to a higher cart abandonment rate.
- Track your marketing and sales efforts: Make notes of your product category and individual product performance to identify your biggest revenue generators. This is how you’ll see which products are performing well and which are performing poorly. Also, placing your best-performing products helps you decide which items your customers like and emphasise in your ad campaigns. In contrast, this shows you which products need to be improved.
eCommerce business metrics: The ideal timeframe for measurements
So you know what metrics you can use, how to use them, and when to track them.
However, it’s important to note that many digital tactics are not instantaneous in producing results, and consistency over time is where you start to see traction in activity and, ideally, metrics.
We advise you to give any tactic and measurement a timeframe of 3 – 6 months before making a change and seeing results.
Most important eCommerce metrics vs. vanity metrics
Metrics can be divided into two categories: actionable metrics and vanity metrics. Let’s examine the difference between the two and which ones are better for your business.
What are vanity metrics?
In short, vanity metrics tend to lack any substance. While they are considered an analytics item, they are not a signifier of real return on investment. Vanity metrics include comments on social media posts, likes, and number of followers.
What are actionable metrics?
On the other hand, actionable metrics are meaningful and help you to make better business decisions. These are accessible and auditable, including metrics such as customer retention rate, activation rate, and monthly recurring revenue.
Which is better for your business?
After reading each definition above, it’s clear that actionable metrics are far better for your eCommerce business. Below, we’ve created a simple table comparing the two metrics.
|Offers unreliable data
|Data is precise and reliable
|Looks good on paper but lacks guidance
|Used to inform better business decisions
|It’s overly simplistic to measure
|These metrics are measurable
|Offers no context
|Offers enough context to take action
|Based on real-time data
eCommerce analytics metrics: How to leverage metrics for business growth
How can you leverage eCommerce metrics to grow your business? Here’s how:
1. Come up with smarter ad campaigns – The data collected by specific metrics, such as return on ad spend, helps you to take a more informed approach to launching new targeted ad campaigns.
2. Manage your inventory better – Metric data can help you manage your inventory more effectively by keeping track of current stock and predicting when you’ll need to resupply.
3. Personalise selling – You can personalise your selling methods to retain loyal or returning customers. Personalised recommendations and communication are fantastic ways to drive sales, encourage good customer relations, and boost repeated sales. Metrics will help you know how to reach your loyal customers by tracking their behaviour on your site and traffic source.
4. Improve customer experience – Excellent user experience (UX) results in a successful eCommerce business and high search engine rankings. Strong UX boosts engagement and lowers bounce rate, which any online business should strive for. With metrics, you can track your bounce rate and measure your engagement to see where your flaws lie or where you can improve.
5. Index and report your findings effectively – It’s important to index and report on all the data you collect while tracking metrics. This allows you to share your results with your team members to help you make informed decisions for your business’s future.
Wrapping up the top eCommerce metrics in 2023
There you have it – an extensive dive into the world of eCommerce metrics. While there are many more KPIs and metrics, you can start your journey by looking at the ones mentioned above. After all, if there’s a way for your eCommerce store to grow and flourish, why not give it a go?
Your worst-case scenario? You’ll have to do more research or look at a different metric. Your best-case scenario? Your online business keeps getting better and better – the possibilities for success are almost endless.
Read Next: 23 eCommerce best practices for 2023
Candice Sergeant is an experienced eCommerce Product Owner at Netcash, driving the growth strategy for SaaS e-commerce solutions in South Africa with global partner Ecwid by Lightspeed. Candice is skilled at uncovering opportunities to optimize the online presence and operations of startups and medium businesses across a range of industries.