As an ecommerce business owner, you are sitting on a goldmine of data. But just having a lot of performance data isn’t enough – it’s about focusing on the right metrics that provide the most valuable insights. Here are some of the most essential metrics to track, and how they can help propel your online business forward:
Revenue Metrics
Total Revenue & Revenue by Product – Most fundamentally, tracking total revenue over time as well as sales breakdowns by individual products or categories is crucial. This shows you the trajectory of your overall business and reveals your best and worst selling items. Analysing this data helps you make decisions on product assortment, inventory levels, pricing, and promotional tactics. It’s the baseline data point for gauging growth.
Revenue by Traffic Source – Beyond total revenue, you need to know where your sales are coming from. Breaking down performance by traffic source (organic search, paid ads, social, referrals, etc.) tells you which marketing channels are driving the most purchases so you can double down on what’s working and improve weaker areas.
Average Order Value (AOV) – AOV shows the average purchase amount across all your orders. It’s calculated by simply dividing total revenue by the number of orders in a given period. Increasing AOV even slightly can have a dramatic impact on profits. Tactics like offering complementary product recommendations, minimum order thresholds for free shipping, and bundled deals can all give AOV a boost.
Customer Metrics
Customer Lifetime Value (CLV) – CLV represents the total revenue you can reasonably expect from a customer over their entire relationship with your business. Understanding CLV is more important than looking at the revenue from a single transaction. It tells you the long-term value of acquiring or retaining a customer. Tactics to increase CLV include loyalty programs, subscriptions, post-purchase cross-sells, and customer retention initiatives.
Conversion Rate – Your conversion rate shows the percentage of total site visitors who complete a purchase. This metric gets at the effectiveness of your website, messaging, and sales funnel. The higher the conversion rate, the more efficient you are at turning traffic into revenue. Low conversion rates signal friction somewhere in the buyer journey that needs to be addressed through improvements in user experience, product pages, checkout flow, etc.
Acquisition Metrics
Customer Acquisition Cost (CAC) – How much does it cost on average to acquire a new customer? This key metric is calculated by dividing total acquisition spend (ads, marketing, etc.) by the number of new customers in a given period. Since customers are the lifeblood of any business, it’s crucial to understand CAC so you can control costs, optimize marketing spend, and ensure acquisition efforts remain profitable based on CLV.
Paid Media Performance – For channels like paid search, paid social, display ads etc, monitor granular metrics like spend, impressions, clicks, click-through rates (CTR), costs per click (CPC), and of course conversion rates and revenue generated. Together these metrics reveal the effectiveness of your targeting, creative, landing pages and overall ROI for each paid acquisition channel.
Logistics & Experience Metrics
Cart Abandonment Rate – On average, around 70% of shopping carts get abandoned before checkout. This directly impacts revenue, so monitoring your cart abandonment rate is crucial. When it creeps too high, it signals a need to improve the checkout experience – speeding up load times, enhancing checkout flow, instilling trust, and removing friction.
Shipping Times & Return Rate – Logistics metrics like average shipping time from purchase to delivery and the percentage of orders returned tell you how optimised your fulfilment operations are when it comes to customer satisfaction and retention. Any roadblocks or inefficiencies here can quickly deter repeat purchases.
Track this core set of metrics and dig deeper into the performance data associated with them. This will enable you to uncover opportunities to increase sales, optimise spend, enhance profitability, and deliver a better overall customer experience. Leverage your data to make smarter decisions that drive the growth of your ecommerce business.
