Grappling E-Commerce Metrics

Grappling E-Commerce Metrics

Music. Sophisticated tones and phrases playing across your ears with a haunting melody that almost moves you to tears. There’s nothing quite like it. The notes seem to flow out of the violinist’s bow as though the emotions themselves were running the show, taking control, if only to express themselves. It seems as though the tune was wrung out of pure emotion.

But we all know that isn’t quite the case. The tune is a part of an intricate musical composition, born of hard work and sweat on the part of the composer, each note painstakingly marked on the score sheet. The reality is that everything about the piece of music was prefabricated.  The key, the time signature, the notes, the phrases, the rests, how loud, how soft, how fast, how slow. Measured.

Ecommerce moguls understand. Moving synchronistically, as though to music, working seamlessly as a part of the whole success story, yet each little piece is measured, analyzed, and weighed. Success doesn’t just happen. It’s analyzed into being. That’s where your metrics come into play. Carefully measuring them can bring success. Failure to do so could mean a compositional flop.

Should You Really Pay Attention to ECommerce Metrics?

In order to have a successful online sales presence, you have got to track what is working and what isn’t working. The way to do that is to set measurable goals, or key performance indicators (KPIs). But that’s not enough. You then have to identify the metrics that can best help you track those KPIs, allowing you to make shifts and changes over time.

There are notably thousands of ecommerce metrics available at your fingertips, but not all of them will prove beneficial or impactful to your business. You have to learn to evaluate with a keen eye, the desired few that can be the most helpful to you. There are really only about 10 or so that can directly represent the state of your business. The rest are just a lot of icing on a small cake. We’ll talk about the top ones to focus on that can be turned into actionable insights that can help you grow.

Conversion Rate

This is probably the most important among ecommerce metrics. It details how many people that visit your site actually become customers. A huge problem for many online entrepreneurs is getting tons of traffic, but no sales. Such a problem that the average conversion rate for the industry is around 2.5%. The reasons can vary from no social proof, non-qualified leads, site design that doesn’t appear to be trustworthy, not enough payment options, or more.

You can easily track your conversion rate through something like Google Analytics. Influencing this metric, called Conversion Rate Optimization (CRO) can be done with the help of Clock Tower Insight. They can look at your sales funnel, page views and exit pages, and visitor behavior on site to identify where the problems are and fix them.

Percentage of Returning Customers

Since retaining customers is way more profitable than trying to recruit new ones, you definitely want to be paying attention to this one. Way too many businesses focus on getting new customers in the door, but neglecting those that are already there. Tracking who is new versus who is returning can help you locate what you’re doing right. You won’t necessarily be selling to returning customers in the same way you do to new ones. Plus, it’s usually cheaper to focus on your existing customers than newer ones. By continuing to provide the service you promised, you’ll keep long-term happy customers.

Customer Lifetime Value

Customer Lifetime Value (CLV), measures how much any given customer spends with your online shop throughout the customer lifecycle. You calculate it by subtracting the acquisition cost from the revenue earned from them. If the cost of acquiring them is too high, it doesn’t matter how good their revenue is. You’ll need a lot more orders just to break even.

Keep your eye on really high value customers and try to copy what their experiences have been. Loyal customers will be more willing to buy more of your products, increasing their lifetime value, so you can work on ways to build long-term relationships with your customers. Some people only tend to shop at a discount, so focusing your retention efforts on those who tend to spend more can increase your CLV.

Average Order Value

This shows you how interested customers are in your products. The more they’re willing to spend, the happier they are with your products. You can find this value by dividing your total revenue by the number of orders taken. The more a single customer purchases in a single order, the more profit you’ll be able to make.

You can improve upon this by utilizing ad-ons, mix and match offers, promoting bundles like two-for-one sales, creating loyalty programs, and discounting seasonal items for a specific amount of time.

Average Acquisition Cost

This measures how much it costs you to acquire one new customer. Your advertising drives traffic, but not everyone converts to customers. There is no sense in you spending more to get a customer than what that customer is spending at your store. There really is a fine line between conversions and traffic. You need traffic to get sales, but you have to pay for that traffic somehow, too.

You’ll need to analyze all of the acquisition channels you have to evaluate which ones are really making the most difference to your business. Cut out those that aren’t doing you any good. Don’t be hesitant to balance out paid channels with free ones, either.

Cart Abandonment Rate

There are a variety of things that can affect customer experience through checkout. A bad experience will cause your shoppers to give up and click away from your site. An average of 68.63% of visitors abandon their shopping carts. There’s not always much you can do about the cost of shipping, but you can easily make some adjustments to these other common deterrents:

  • Checkout experiences that aren’t user-friendly.
  • Long delivery times, or those that aren’t clear.
  • No ability to check out as a guest.
  • Lack of free shipping.
  • No options for anything alternative like Applepay or Paypal.

By starting your focus narrowly on these six metrics and improving upon them, you’ll be able to see your business grow steadily. Just as though beautiful music can come from a carefully measured score, your business can enjoy the success you desire by tracking, measuring, and improving upon these simple ecommerce metrics.