15 Must-Have Ecommerce Metrics: And Why They’re Important

As an eCommerce store owner, are you keeping a track of your business performance to make ideal decisions and generate more revenue?

Running an online store without gauging the overall performance of your business is like swimming with closed eyes and no destination.

No eCommerce business can grow and survive in the industry if they don’t evaluate and compare their business productivity and progress over a period.

With unlimited digital data to access, eCommerce Metrics comes into the role to overpower the situation to survive and thrive Online Shopify store owners. 

Now, before we directly jump to the eCommerce metrics that can improve your Shopify store’s performance, it is important to understand a few terms such as – what are eCommerce metrics? or Why do some call it KPIs? And Are they both the same thing?

What are eCommerce Metrics?

An eCommerce metric is a term used to define the evaluation of any eCommerce store.

It includes gauging eCommerce metrics ranging from total revenue to average acquisition cost, from product return rate to loyal customer rate. The list of eCommerce metrics is pretty long which we will discuss in later sections, and all that for a good reason.

eCommerce Analytics, your online eCommerce store, product pages, web pages, shopping carts, and purchases— all of these are ample data sources that seize measurable data, set up for your understanding.

For example, if one of your objectives is to get 150K monthly leads to your website, you can take raw website traffic data from Google Analytics and monitor unique leads to gauge progress toward your objective. In simple terms, monthly website leads become one of your metrics.

Tracking the precise eCommerce metric can aid retailers to know how well the company is operating and what or where improvements and changes are required and further actions to be taken for desired results. 

What are KPIs?

KPIs stands for Key performance indicators, a measure that is valuable that estimates the effectiveness of an organization and progress towards its achievable targets.

As Peter Drucker remarkably said, “What gets measured gets done.”

KPIs enable a focus for strategic and operational improvement, build an analytical basis for decision making, and help focus attention on what matters most.

Difference between eCommerce metrics and KPIs

Metrics and KPIs are often confused as relevant terms, so take into account the following differences:

  1. Metrics simply track the status of a specific business process while KPIs are different and measurable values that show you how effective you are at achieving business objectives.
  2. Every KPI is a metric, but not every metric is a KPI
  3. Metrics estimate processes, while KPIs estimate the performance of those processes.

For instance, Average Order Value is a metric, but it’s not a KPI. On the flip side, an AOV target of $50 is a KPI.

What eCommerce metrics to track?

5 Crucial eCommerce Metrics to Track to Boost Sales & Revenue

It is likely possible that if you are new and don’t know much about how to track and use your Shopify eCommerce analytics then you might be missing out vital eCommerce metrics that are essential for store performance.

For an eCommerce store, it is necessary to have a handful of specific eCommerce metrics that are essential to focus on in 2020 and beyond if you’re serious about more sales and higher revenues.

Consider the following best and most important metrics every eCommerce store owner must track to run a profitable business that goes beyond the basics

1. Engagement

An engagement rate is a metric that is used to measure the level of engagement generated from created content or a brand campaign. It can also be said as the level of interaction with followers that are generated from content created by a user.

The major components that influence engagement include consumers’ comments, shares, likes, and more.

It is a metric that is used hugely in analyzing social media and evaluating marketing competitive analysis. 

Engagement is best for evaluating social media advertising campaigns and can be applied to any social media platform such as Facebook, Twitter, Instagram, or others.  

It is also important to track the feedback received from consumers because they may offer some good suggestions for improvement of the store performance.

The formula of Engagement Rate

Engagement Rate = Total engagement/ Total followers * 100

2. Email click-through-rate

The Outbox Pattern - Kamil Grzybek

The email click-through rate is a metric gauged by the number of recipients that have clicked on at least one link, CTA in your email marketing campaign.

It helps you track the engagement of your email marketing.

Unlike click-to-open rate, an Email click-through rate estimate observes the activity of everyone that got an email in their inbox, so it can give you a deep understanding of what percentage of your audiences are interested in your social content over a period.

For a positive impact on your rates, you can create well-designed emails, strong and irresistible call-to-action, and impressive subject lines.

The formula of Email click-through rate 

Email Click-through rate = % of clicks / % of delivered emails * 100

3. Cost per acquisition (CPA)

ecommerce metrics

Cost per acquisition is an important eCommerce metric that assesses the total cost to acquire one paying customer on a campaign. 

It is used to directly measure the revenue impact of marketing campaigns.

CPA provides you an estimate of how much your new customers are costing you and supports you to determine whether your strategy needs to be upgraded or not.

You can also improve your CPA by segmenting your campaigns to only target customers who will best respond to your campaigns and will help you boost your call-to-actions, and manage your campaign budgets carefully.

The formula of Cost Per Acquisition

Cost per Acquisition = % total cost spend on a campaign/ % New customer acquired by the same campaign

4. Organic acquisition traffic

Organic acquisition traffic refers to the metric that measures how many of your visitors reach the site organically, which is commonly available in all analytics platforms.

Unlike Paid traffic where visits are generated by paid ads, organic traffic are visits of the visitors obtained from the appearance of the site in the results of a search that visitors perform in search engines, such as Google, Yahoo, or Bing.

The easiest way to enhance the organic traffic of your website is to publish quality and relevant content on your blog regularly.

Another effective point is it has a lower bounce rate and visitors stay longer time on site and more pages per session than traffic from paid search.

5. Reach Rate

Reach rate is an eCommerce metrics that measures the total number of people who have seen your company post.

You might think that every time a person sees your post will be counted in your data again and again but that is not the case here.

If the same person sees your post 5 times, it will be counted as 3 impressions but the same person will be counted as 1 in reach.

This makes it a vital metric to evaluate how many people are seeing your post.

The formula of Reach Rate

Reach rate = the total reach of a post / total number of followers.

You can also calculate the average reach rate per post to measure the average reach rate of all your posts published in a specific period.

6. Cart Abandonment

Cart Abandonment Stats: Tackling Shopping Cart Abandonment in 2020

Cart Abandonment Rate is an eCommerce metric that scales the percentage of online shoppers who add items to their shopping cart but before completing the purchase they leave the site.

It shows the rate of interested potential customers who exit the site without buying anything compared to the total number of shopping carts created.

Any product that users add to the shopping cart but never makes it through the transaction is viewed as “abandoned”.

Cart abandonment rate is an important metric for e-commerce sites to monitor as a high abandonment rate would indicate a poor user experience or broken sales funnel. 

It also helps online retailers to understand the shopping behavior of their website visitors and customers. 

Reducing shopping cart abandonment leads directly to more sales and revenue, so focusing on optimizing the checkout flow is vital for online retailers.

The formula of Cart Abandonment Rate 

Cart Abandonment Rate = ( 1 – {total number of completed purchases / number of shopping carts created}*100 

7. Micro to macro conversion rates

A micro conversion rate is an eCommerce metric that relates to smaller engagements such as a newsletter sign up or a user watching a product video. On the other hand, the macro conversion rate is

the primary conversion on a website such as a completed sale on an eCommerce site or a completed lead generation form. 

Micro conversions are activities that drive your users towards the bigger goal, i.e, macro conversion. 

Macro conversions are usually defined as website goals, as they deal with the end goal of the website that the user will be clicking.

So a macro conversion is generally a completed purchase transaction. On another note, a micro conversion is a completed activity, such as email signup. 

For an effective response, It is important to carefully measure and select them.

8. Average order value (AOV)

eCommerce metric

Average order value (AOV) is an eCommerce metric that gauges the average amount of money your customers spend in a single transaction. 

Unlike conversion rate that tells you how many of your visitors end up making a purchase, AOV informs you how much revenue is generated through each of these purchases.

It can also be said as an average amount of revenue your business earns from all the checkout orders or complete transactions.

AOV is a critical metric for all data-driven businesses to keep track of their online businesses and understand their customers’ buying habits to uplift profits and enhance business growth.

The formula of Average order value

Average order value = Revenue / number of orders

9. Sales conversion rates

The Sales Conversion Rate metric evaluates the efficiency of your sales team at converting visitors into new customers.

It’s a crucial metric for sequencing your sales and marketing team as they will employ this metric to identify the quality of leads.

Growing your conversion rate is important as having a good conversion rate is the baseline of higher sales conversion.

The formula of Sales conversion rates

Sales conversion rates = ( Number of conversions / Number of clicks) / 100

10. Customer Retention rate

10 steps to improve customer retention with journey analytics

Customer Retention Rate is an eCommerce metric that measures the percentage of customers the brand has retained over a given period. 

The significance of retention rate as a metric differs depending on the industry such as for businesses providing services or selling software goods, customer retention is crucial and it immediately affects the profitability of the business.

It can also be defined as the steps taken to unveil and record how nicely a business is retaining customers and improving revenue.

To maximize the retention of customers, it is essential to dig deeper into understanding their purchasing habits. 

The formula of Customer Retention Rate 

Customer Retention Rate = (( number of the customer at the end of a period- number of new customers acquired during that period ) / number of customers at the start of that period ) * 100

11. Customer lifetime value (CLV)

Customer Lifetime Value is an eCommerce metric, it is used to measure how valuable a customer is to your company.

CLV is a crucial metric as keeping existing customers is cost-effective than to acquire new ones, so enhancing the value of your existing customers is a great way to drive growth.

In simple words, it is the profit margin an eCommerce store expects to earn over the entire business relationship with the average customer.

It is important to understand that failing to calculate CLV properly can place you behind your competitors.

The formula of Customer Lifetime Value

Customer lifetime value = Average Value of Sale × Number of Transactions × Retention period × Profit Margin

12. Repeat customer rate

repeat customers ottawa marketing - Creative Designs

Repeat customer rate is an eCommerce metric that gauges the total percentage of the customers who come back for another purchase to your brand. It can also be considered as the backbone of customer retention.

Evaluating your repeat purchase rate is an exceptional way of evaluating how well your retention strategy is working. 

The range of repeat purchase rates will always vary from 0% to 100%, the higher the number is, the more customers are willing to return to your store.

To boost your customer repeat rate, you should emphasize on the Well-oiled customer lifecycle marketing.

The formula of Repeat Customer Rate

Repeat customer rate = Number of customers who have shopped more than once / number of customers

13. Refund rate

The return rate is an eCommerce metric defined as the number of orders refunded by a seller divided by the number of orders in the period of interest. 

It can also be calculated as the percentage of the total transactions that were refunded during a period.

When computing this metric, we consider all refunds initiated by the seller for any reason.

For an effective store performance, retailers should aim to maintain a Refund Rate below 5%. As the lower the Refund Rate, the better your store is functioning.

To reduce the number of refunds, a store should focus on fulfilling the orders promptly and deliver promptly.

The formula of Refund Rate 

Refund rate = the number of orders refunded / the number of orders in the period 

14. Ecommerce churn rate

A churn rate is an eCommerce metric that gauges the rate at which a business is losing its users within a specific period. 

Churn rate is an important metric as it can be used to measure the performance of either eCommerce or SaaS business’s performance.

The churn rate sheds light on the actual growth of the store.

To achieve significant growth, it is important to focus on low churn rates as lower the rate, higher business performance.

To reduce churn rate, deploy marketing automation, and build better brand loyalty for customer retention.

The formula of Churn rate 

Churn rate = (number of churns during a certain period/number of customers at the beginning of that period) x 100

15. Net promoter score (NPS)

How to Use Net Promoter Score System in Your Customer Feedback ...

The Net Promoter Score is an eCommerce metric that has an index ranging from -100 to 100 that evaluates the promptitude of customers to recommend a company’s services to their knowns. 

NPS supports the brand as a substitute for measuring the customer’s overall satisfaction with their products or service and the loyalty of the customer towards the brand.

In other words, this metric gauges the overall customer experience and predicts business growth.

It has transformed the world of business and now offers an essential evaluation for customer experience management programs across the globe.

You can calculate your Net promoter score using the answer to a key question that on a scale between 0-10 how likely is it that you would recommend our brand to a friend or relative?

The formula of Net Promoter score 

Net Promoter score = % of Promoter – % of Detractor

Here, promoters (loyal enthusiasts) are those who recommend brands between 9 to 10 on the scale, and detractors (unhappy customers) are those who recommend brands between 0 to 6. We also have passive (satisfied but unenthusiastic customers) who share scores between 7-8.

Final Thoughts 

Now that you finally know what eCommerce metrics are must to track, you can analyze and design wiser business decisions and pinpoint areas that require immediate attention.

With all the metric information together, you can easily run a data-driven eCommerce business where the campaigns are initiated, managed, and refined with a purpose.

But the important now that comes is how to measure all these eCommerce metrics?

So there are many apps you can use to keep an eye on your eCommerce business metrics. 

Among all the apps, to effectively connect your Shopify store and eCommerce analytics, try Audiencefy as it creates segments of each metric based on revenue, AOV, City, value shopper, total orders and many others to help you understand your overall store performance with ease.

audiencefy-cta

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