Drive Growth with these 5 Ecommerce Metrics
Are you metric obsessed? If not, it could be time to start taking a closer look at some key performance indicators (KPIs). KPIs are your ecommerce metrics that most accurately show whether you’re progressing toward your specific business goals.
Think about it, if you can’t measure the performance of something, you have very little chance to improve upon it.
Measuring Ecommerce Metrics
Growing a successful business requires setting the right KPIs and measuring the corresponding data. Based on your own goals, every business can (and should) monitor their own industry-specific indicators, but there are a few essential KPIs to track progress on regularly.
1. Customer Behavior
One of the most straightforward ecommerce metrics to measure is your number of customers. Dig a little deeper for KPIs that include customer retention and new customer orders vs returning customer orders. Set specific benchmarks and compare results from last week and last year.
2. Conversion Rates
Ultimately, it doesn’t matter if you have a hundred visits on your site every day… if those visitors don’t convert to customers. Keep track of customer activity, shopping cart abandonment rates and associated shopping trends to gain a better understanding on conversion rates.
And then dissect those conversion rate metrics by channel (social media, email, AdWords, SEO, etc.) and product category to help you determine what campaigns are doing well and which ones should be discontinued.
3. Order Values
Now that you’re tracking your customers more closely, and know where they’re coming from, look at average order value (AOV). This is your moment of truth: how much money does your average customer spend in checkout? Measure this ecommerce metric by dividing the total sales value by the number of transactions.
Additionally, look at repeat business. Customer retention is a critical pillar for a successful ecommerce company. Vital customer experience measures to track include: repeat purchase rate, purchase frequency, order gap analysis and average customer lifetime value.
4. Product Performance
To understand what’s driving your revenue, you need to know your top selling products (and your worst). Once you have this insight, you can fine-tune your marketing strategy to know where to invest your time and efforts.
Dig a little deeper on sales key performance indicators to look at seasonal trends. Does it change month-to-month? Can you identify times of the day, week or month that get more sales than others? Use all this information to maximize your future marketing efforts and optimize your product mix.
5. Gross Margin
Knowing your gross margin is essential in assessing your business’ profitability. But, according to the U.S. Small Business Association, many business owners fail to recognize the significance of knowing and understanding this data.
Gross margin is the profit from a sale before operating costs; however, it must cover the cost of production and selling (including taxes, freight, duties, etc.). It’s calculated as the sale price of an item, less the cost of goods sold (COGS).
All of this data is useful to spot trends, know your company’s break-even point and identify potential issues before it’s too late.
Measuring Ecommerce Metrics
Of course, there are many more KPIs to monitor for continual business improvement. But unless you have the right strategy and system in place, you’re going to find yourself buried under Excel files, drowning in data before you know it.
At Lumiola, we offer modern accounting solutions for growing ecommerce companies and practically infinite possibilities to track and measure custom ecommerce metrics.