With any ecommerce business comes an unimaginable amount of data. Knowing what is important and what isn’t can be half the battle when getting the pulse of your business or making data-led decisions.
Before you go digging into the data, it’s important to understand the ecommerce business metrics that will be the most influential for your company's success.
Here, we explore the basics from the importance of metrics to the difference between metrics and KPIs, leading into the showstopper - the top 14 business ecommerce metrics you should be tracking today.
Measuring ecommerce metrics
Ecommerce metrics are a lifeline to understanding the success of your company. Especially on a digital level where absolutely everything can be recorded and measured, from behaviors to actions taken.
If you’re not tracking your ecommerce metrics then you are wasting resources, time and efforts. You’re essentially working blindfolded. No business can survive by just winging it.
Knowing your metrics, and keeping a close eye on them allows for a few things to happen:
Align your employees on business objectives and goals
Learn about any issues or pain points
Make informed decisions using the data
Help improve conversion rates over time
Difference between ecommerce metrics and KPIs
There is a very close relationship between metrics and KPIs. They are sometimes even used interchangeably, however they are not the same.
Firstly, metrics by definition are a quantifiable measurement used to track the performance level of a business activity for example website, social media, email marketing or sms marketing.
Key Performance Indicators or KPIs are measurable values of performance around business objectives over time. KPIs are more ‘bigger picture’ type targets used to help a business succeed on a strategic level.
Now, let’s break it down to create a clear lineation between the two.
Metrics will measure the action taken, where KPIs measure the performance of those actions.
For example, if your ecommerce business is tracking traffic generated from an email marketing campaign, your KPI may be a specific number of qualified leads achieved from email marketing over a given period of time.
How often should I be checking ecommerce metrics?
We have touched on this above, but it’s important to keep a constant eye on your metrics. This leads to a bigger question - how often should you be checking in on your metrics? Well, it depends which metrics and, of course, what’s realistic for your business.
Weekly Having a weekly check-in on certain metrics is useful to get a pulse check on your business or a specific campaign. Your weekly metrics would include those that are the most valuable to the health of your business, like traffic to the website, revenue, or social media reach and engagement.
Bi-weekly/fortnightly These would include slightly bigger sample sizes, which are not necessarily affected by variables observed on a weekly basis. For example your customer acquisition cost or cart abandonment number.
Monthly Monthly ecommerce metrics will be able to show certain patterns forming, due to the longer data collection window. This would include micro-conversion metrics like add-to-cart abandonment numbers or email open rates.
Quarterly These are your most strategic, long term metrics. It would include metrics like CLV to highlight how your business is succeeding and growing.
Ecommerce metrics and KPI's
The building blocks have been set, and now it’s time to look at the top ecommerce metrics that you can start tracking now.
There’s a reason conversion rate hits the top of the ecommerce business metrics list. It’s great if people are on your website, but if no transactions are taking place, your business is not sustainable.
Your conversion rate is your success at making visitors become paying customers.
The aim is to have your conversion rate as high as possible. Just to put things into context, in 2021 the average conversion rate for ecommerce businesses in the United States was 2.8%.
Use your conversion rate to compare against other metrics (like average order values, or website channel source) to gain even further insights on your user’s behavior. This will lead to the opportunity of making data-driven decisions to improve conversions.
Say a specific channel is out-performing another, then you can consider investing extra money into it. Or on the other hand if it’s under-performing, it’s time to dig a little deeper and find out why so you can make changes, or turn that channel off altogether.
This is the net sales generated minus the costs of goods sold (COGS), in other words this is your profit per product sold. You definitely want to know this number, to be able to see if your business is scaling properly.
The average gross margin for an ecommerce business currently sits at 45%, however this hugley depends on your type of business model. Ensure you’re comparing with a similar model, there’s little worth comparing apples to oranges.
Average profit margin
Differing slightly to gross margin, your average profit margin will show you the amount you will earn per each product sold, minus the cost of goods.
There is little point in selling a product if you won’t be making any profit from it. Many businesses will have a range of strong margined products and weaker ones. But at the end of the day you will want to keep this number higher than your Cost of Acquisition.
There’s no real science behind it, your profit margin will increase if your product price also increases, and your COGS decrease. You can get a little creative though in improving your profit margin;
Product bundles containing your most popular product
Ensure your more profitable products are always highlighted in any marketing activities
Set up referral campaigns rather than simply offering discounts
Your AOV is the average price of your customer's shopping cart upon checking out. This is one metric that can be tracked over a longer period of time - monthly, or quarterly - in order to gain a better understanding of a campaign's effectiveness.
We would recommend tracking your AOV as a whole, then segmenting it further into categories like device type, or traffic sources. Platforms like Google Analytics will be able to perform this for you. Knowing these smaller segmented AOV metrics will provide learnings on the source of your highest AOV customers, to then fine-tune future marketing campaigns.
While you’re looking at your AOV, it would also be beneficial to check in on the Average Abandoned Order Value (AAOV). This value represents the average amount of money that is essentially being lost each time your customer leaves before checking out.
To improve your AOV score use tactics like loyalty programs, coupons, or add-ons.
This can also be known as the Customer Acquisition Cost. It refers to the cost involved to acquire a new customer, including all sales and marketing activities.
Implementing multiple expensive marketing activities, with only a small number of customers acquired each time will not be a sustainable business model.
To improve your CAC, get a better understanding of who your customers are and how they behave, then segment campaigns and personalize marketing messages.
Your Ortto account can bring together your customer’s transactional and behavioral data from all of your data sources and turn it into a single view of the customer. Allowing you to create custom activities and track the customer activities that matter. Delivering a truly remarkable customer experience.
Cart abandonment rate
For this metric, we are talking about all those customers who have added an item to their cart, then for whatever reason have chosen to exit the website without purchasing the item. Not uncommon, with the latest data from SaleCycle showing the average cart abandonment rate at 81.08%.
Cart abandonment rate will highlight any issues that arise when customers enter the check-out process. You will be able to follow your customer until the point when they leave your site. With this data, you will be able to identify patterns to make informed decisions about site changes.
Unexpected delivery costs, a complicated checkout process and having to create an account are a few popular reasons why customers abandoned their cart.
Something to keep in mind, your cart abandonment rate can also be impacted by the device used by the shopper. In 2021, the abandonment rate for those using a mobile phone reached 80.6%, compared to 66% on a desktop.
Checkout abandonment rate
Checkout abandonment rate is the percentage of customers who have initiated checkout, then abandoned purchase.
This differs slightly to cart abandonment rate as the customer has moved on to the next step in your checkout process, meaning you have also spent more time and effort to get them there.
If your business is suffering with a high cart abandonment rate, then analyzing this metric and forming a revitalized strategy will assist in reducing the rate.
Once you’re able to investigate why customers are abandoning their cart in check out, you can set up unique strategies personalized to their specific pain point.
For example, if you are regularly seeing customers exit during the delivery cost section of checkout, you could set up an email campaign in Ortto using this action as a trigger that automatically sends an email with a special ‘delivery is on us’ message. Campaigns like this can overcome barriers that are holding you back from conversions.
Customer lifetime value (CLV)
Customer lifetime value (CLTV, CLV, LTV) shows the average total revenue generated per person over their lifecycle as a customer. Basically, it’s the value of that specific customer.
This ecommerce metric earns its place in our list as it shows the loyalty of your customers. Not to state the obvious but the more loyal your customers are the more they are likely to repeatedly purchase through you.
There are three different methods in working out your CLV score. Each one will need to be higher than your acquisition cost for your business to be generating revenue.
Customer retention rate (CRR)
This is the percentage of repeat customers (making more than one purchase) from your total number of customers. This metric is measured over a longer period of time.
Whilst acquiring new customers is always important, nurturing and serving your current customers to ensure they keep coming back is more efficient in the long term.
You may have heard of the Pareto Principle or “80/20 Rule”, a tool used by business owners in growing a company, where by it states, 20% of your customers represents 80% of your revenues. These customers are your priority.
There are a few ways to influence your current customers to continue to return to your business;
Chat to your customers - using metrics like a Net Promoter Score can help measure your customers' satisfaction
Implement a loyalty program
Write a newsletter and show up on social to keep your brand top of mind
Automate reactivation emails to one-time buyers, or reminder emails if they are due to run out of the product
The old favorite - discounts on the next order
Website activity metrics
These metrics will give you an indication of how your customers engage with your product when they are online. Successfully translating this data will provide insights and the ability to provide your customers with an ideal digital experience. Let’s get into it.
Amount of traffic
This can be deemed a little bit of a vanity metric, but measuring the activity happening on your website through users and site sessions will provide great insight into your customer's behaviors and online experiences.
You will really be able to draw conclusions by segmenting your overall traffic number into categories like time on site, bounce rate, new vs returning customers.
This data can be used alongside your ecommerce sales to highlight conversion, abandonment and return on investment from each page.
You need to know what device your customers are using when visiting your website and the actions they take. For example, a customer may read or scroll through your website, but the majority of purchases are done through a desktop.
This knowledge will help you optimize for each format. From the example above, it may be time to dive deeper into your mobile checkout journey, making it easier and quicker to convert the customer.
We live in a fast-paced tech world, where customers will not always wait around. The immediacy of any task is the priority.
Website speed and checkout load times are vital to tracking the performance of your website. If your speed is taking too long, there is potential of losing customers and therefore, sales.
This is the percentage of visitors to your website, however they only visit one page and leave abruptly.
A high bounce rate can indicate a few things, firstly it could be down to poor user experience issues such as long page loading times. Or perhaps it is a sign that your marketing message doesn’t match up with your website experience or product offering.
The bounce rate can influence any site changes that need to happen to keep your visitors on-site and ideally get them to convert.
Net promoter score (NPS)
Think of this as your ultimate advocacy ecommerce metric. Do you think your current customers would refer your business to their friends?
NPS is calculated by selecting a portion of customers to then send a survey to fill out. They are provided with a numeric scoring system on a scale of 1 -10. Based on their score, they then fall into one of three segments - detractors, passives and promoters. The aim is to have a majority of promoters.
Your NPS will help indicate the satisfaction of your customers.
Email marketing metrics
With a global value set to be worth $17.9 billion by 2027, email marketing doesn’t look like it will be slowing down any time soon. Yes, there are plenty of emails that flood inboxes every day, so by understanding if your email strategy is working we’ve highlighted the right ecommerce metrics to follow.
The percentage of emails returned by the recipient's email provider or failed to deliver.
Once you can determine your own email-based metrics, it can be a good idea to benchmark them against industry averages. While every business is different, these averages will be able to provide something to either strive for or know you’ve knocked out of the park.
The percentage of recipients who opened your email. This is all about having that killer subject one-liner to entice, excite and have your customer click on the email.
There is a lot of merit in testing what subject line works with your customers. Is it making it personal? The use of emojis? Simple sale announcements? If you’re an Ortto customer, our AI can write high-performing subject lines based on your data.
The percentage of recipients who clicked at least one link within your email. By setting up unique tracking links for your different CTAs, you can get a great understanding of what interests your customers, and build customized target groups for future email send outs.
Recipients who chose to remove themselves from your mailing list. Patterns may form from a high unsubscribe rate and a particular type of email being sent out.
Refund and return rate
Do we all have that one friend who purchases five items of clothing online only to return four of them? While it’s great that this example ended with a conversion, it does lead to extra costs, not to mention impacts your business’ carbon footprint. From the actual refund to an increase in processing time, and the additional shipping cost if you offer free returns.
Fashion ecommerce does have the highest return rate compared to other industries, but even if you're playing in another sector it's important to know the percentage of online purchases returned versus the total number of orders. It is one of the quickest ways to catch potential revenue sinkholes, including product value, product and lead quality or overall customer satisfaction.
Reaching out to those customers who have returned the item is essential in nurturing the relationship, plus by finding out why the return happened, you could avoid the same for other customers. This communication can also be used as an opportunity to offer a similar product. An automated marketing email journey can help with this.
Social media engagement
Social media interaction is included within our ecommerce metrics and KPIs list because the rise in social commerce is a current ecomm trend to jump on board.
Your social media reactions, shares and followers will show you the volume of customer engagement. Love it or hate it, social media provides a front-row seat to see how customers are reacting and talking about your products.
Your social media engagement metrics can allow you to create stronger social media strategies, develop meaningful relationships with your customers and foster advocacy.
Show off your metrics
There’s no point in collecting your metrics if you’re the only one who can understand and read them. Ortto can turn comprehensive and complicated metrics into easy-to-read documents. The best part is, the reports are incredibly simple to create, yet extremely powerful.