The world of e-commerce is always evolving, so to stay ahead of the competition, you need more than just a polished website and an attractive product lineup. Success is built on data-driven decisions, and that's where e-commerce metrics come into play. The best part is that all this data is easily accessible for you to track!
In this blog post, we'll dive deep into the essential statistics that empower online sellers like you to make data-backed decisions, optimize your operations, and elevate your e-commerce game.
We’ll explain the difference between metrics and KPIs – so many get these two confused. From conversion rates to customer lifetime value, we'll go through everything step-by-step focusing on the most important e-commerce metrics that every business should monitor closely.
E-commerce metrics and KPIs
Key Performance Indicators (KPIs) and metrics are related and that is why they are often confused. All KPIs are metrics but not all metrics are KPIs.
KPIs help define your strategy and play a key role specifically for your unique business needs. They serve as vital signals for measuring your business’s performance, growth and alignment with its strategic objectives. It is standard to have 5-7 key performance indicators in your strategic plan.
Metrics are any quantifiable measurements of online business performance, but not all of them are critical for your unique business. These are all the metrics that can be measured and monitored, out of which you can select a few to be the key performance indicators (KPIs) aligned with your strategic business plan.
1. Conversion Rate (CVR)
The conversion rate measures the percentage of visitors who make a purchase.
For most e-commerce businesses, this metric is extremely important as it directly reflects the effectiveness of your online store's sales funnel and the return on marketing investments. A high conversion rate proves that your website is successful in persuading visitors to make purchases, boosting your revenue.
Monitoring this metric enables businesses to pinpoint areas of improvement in their website design, product offerings, or marketing strategies. Ultimately, a healthy conversion rate is synonymous with increased profitability and is an indispensable gauge of e-commerce success.
The conversion rate calculation is easy: dividing the number of purchases by the number of sessions. Here’s the formula:
CVR = (Number of Purchases / Number of Sessions) x 100
According to the Unbounce Conversion Benchmark Report, the average e-commerce business conversion rate is 5.2%.
2. Average Order Value (AOV)
Average order value is the average amount that your customer spends in a single transaction.
This also is an important metric in e-commerce, as it directly impacts your revenue and profitability. By tracking AOV, your business can identify opportunities to increase sales, such as upselling or cross-selling. A higher AOV often leads to increased revenue without necessarily needing more customers.
Additionally, it communicates pricing and discount strategies and helps evaluate the effectiveness of your marketing campaigns. Understanding and optimizing AOV is essential for boosting the bottom line and maximizing the value of each customer interaction.
To calculate your average order value, simply divide your revenue by the number of orders.
AOV = Total Revenue / Total Number of Orders
This metric is unique to your business, and influenced by your pricing, target group, marketing and sales strategies.
3. Customer Acquisition Cost (CAC)
Customer acquisition cost represents the cost of acquiring a new customer.
It's a critical metric to track as it directly influences the profitability and sustainability of your online business. By calculating CAC, you can gain insights into the efficiency of the marketing and advertising efforts of your business.
Comparing CAC with customer lifetime value (CLV) reveals the long-term viability of customer relationships. A lower CAC implies more cost-effective customer acquisition, which is vital for profitability and growth.
Consistently monitoring CAC will help you refine your marketing strategies and make informed decisions about where to allocate resources to maximize your ROI.
Customer acquisition cost is calculated by dividing the amount you’ve spent on marketing by the number of new customers.
CAC = Amount Spent on Marketing / Number of New Customers
This metric is unique to your business, and influenced by your marketing strategy, competitors, and industry niche.
4. Customer Lifetime Value (CLV)
Customer lifetime value represents the total value your customer is expected to generate throughout their entire relationship with your business.
It's a fundamental metric to track as it assesses the long-term value of each customer, guiding strategic decisions. A high CLV suggests loyal, high-value customers, while a low CLV may indicate inefficiencies in your marketing, product quality, or customer service.
By understanding CLV, businesses like you can tailor your marketing efforts, enhance customer experiences, and focus on retaining valuable clientele.
Tracking CLV is essential for long-term profitability and sustainable growth in the competitive e-commerce landscape.
You can calculate your customer lifetime value by multiplying the average purchase per visit by the number of purchases per year, and then by the number of years of the average customer relationship.
CLV = Average Value of a Purchase x Number of Purchases Each Year x Average Length of the Customer Relationship (in Years)
This metric is unique to your business, and influenced by your pricing, business model, and sales strategies.
5. Shopping Cart Abandonment Rate
The shopping cart abandonment rate reveals the percentage of shoppers who leave items in their cart without completing the purchase.
This metric directly impacts your business's revenue and profitability. High cart abandonment rates signify potential lost sales and suggest that there may be some issues in your checkout process, such as unexpected costs or complex navigation.
By tracking and analyzing this metric, e-commerce businesses like yours can identify pain points in your customer journey, optimize your checkout process, and implement strategies to reduce cart abandonment, ultimately increasing conversions and revenue.
To calculate your shopping cart abandonment rate, simply divide the number of completed purchases by the number of shopping carts created.
Shopping Cart Abandonment Rate = (Number of Completed Purchases / Number of Shopping Carts Created) x 100
It is important to note that shopping cart abandonment rates fluctuate throughout the year, based on the seasonality, holidays, and other factors affecting consumer behaviour. According to the Baymard Institute, the average cart abandonment rate is 70.19%.
6. Churn Rate
The churn rate measures the percentage of customers you lose over a specific period, gauging your customer retention and business sustainability.
A high churn rate suggests a leaky customer base, requiring continuous customer acquisition efforts to maintain growth. On the other hand, a low churn rate signifies customer loyalty and stable revenue streams.
By monitoring this metric, e-commerce businesses like yours can pinpoint the effectiveness of your products, services, and customer support. Reducing churn and retaining customers is essential for long-term success, making churn rate a key indicator of e-commerce health.
You can calculate the churn rate for your business by dividing the number of lost customers by the number of total customers at the start of the period, e.g. beginning of the year. To get the percentage, then multiply by 100.
Churn Rate = (Number of Lost Customers / Number of Total Customers at the Start of Time Period) x 100
According to Recurly research, on average, the overall churn rate in the e-commerce industry is 5.6%.
7. Bounce Rate
Bounce rate shows the percentage of visitors who leave your site after viewing only one page.
It provides insights into user engagement and your website's effectiveness. A high bounce rate is a red flag signaling potential issues with your site design, content, or navigation.
By tracking this metric, businesses like yours can identify weaknesses in your online shopping experience, optimize your landing pages, and improve content relevance.
Reducing bounce rates will help enhance your user satisfaction and increase the chances of turning visitors into loyal customers.
The bounce rate is calculated by dividing the number of single-page visits by the number of total visits.
Bounce Rate = (Number of Single-Page Visits / Number of Total Visits) x 100
Contentsquare benchmark data indicates that the average bounce rate in the e-commerce industry is 47% across all devices.
8. Click-Through Rate (CTR)
Click-through rate (CTR) measures the percentage of users who click on a specific link or call to action, such as an ad or product link in your email marketing and ad campaigns.
It tells you how effective your marketing campaigns are and how relevant is your content. A high CTR suggests that customers are engaging with your offerings, ultimately driving more website traffic and sales.
By tracking CTR, e-commerce businesses like yours can evaluate the performance of your marketing ads and the appeal of your content, fine-tuning marketing strategies and enhancing conversion rates. It's a key indicator of e-commerce marketing success and customer engagement.
To find your click-through rate, divide the number of clicks by the number of views or impressions.
CTR = (Number of Clicks / Number of Views or Impressions) x 100
WordStream indicates that for the e-commerce industry, the average CTR (Search) is 2.69% and the average CTR (Google Display Network) is 0.51%.
9. Customer Retention Rate
The customer retention rate represents the percentage of customers who continue to make repeat purchases.
It reflects your customer satisfaction, loyalty, and the revenue stability of your e-commerce store. A high customer retention rate signifies a strong and loyal customer base, saving you the trouble (and cash) of hunting for new customers. Retained customers tend to spend more, recommend your brand, and provide valuable feedback.
By tracking this metric, e-commerce businesses like yours can assess the effectiveness of your customer service, product quality, and loyalty programs, paving the way for long-term relationships and sustained profitability in the competitive e-commerce game.
Customer retention rate is based on the number of customers – first, subtract the customers you’ve acquired during the period, e.g. year, from the number of customers at the end of this period. Then divide the result by the number of customers at the start of the period. Here’s the formula:
Customer Retention Rate = [(Number of Customers at the End of the Period – Number of Customers Acquired During Period) / Number of Customers at the Start of the Period)] x 100
According to Omniconvert, the typical customer retention rate for e-commerce businesses is around 30%.
10. Net Promoter Score
Net Promoter Score (NPS) quantifies your customer loyalty and satisfaction.
It shows how likely your customers are to recommend your brand to others, classifying them as promoters, passives, or detractors. NPS is invaluable for e-commerce because it measures the overall customer experience and the potential for word-of-mouth buzz.
High NPS scores indicate a happy and loyal customer base likely to spread the word, fostering organic growth. By tracking this metric, e-commerce businesses like yours gain insights into customer sentiment, identify areas for improvement, and build stronger bonds with your audience. NPS helps shape strategies focused on customer loyalty, ultimately driving your business success and growth.
To calculate your Net Promoter Score, you need to survey your customers first. Once you tally up the responses, subtract the percentage of detractors from the percentage of promoters.
NPS = Percentage of Promoters - Percentage of Detractors
According to Retently, the average NPS in the e-commerce industry is 50.
Using Checkout Page to Track Key E-Commerce Metrics
The easiest way to track your key e-commerce metrics is through Checkout Page analytics. While you can view your CVR for each checkout, Checkout Page also tracks a bunch of other vital e-commerce metrics directly in your dashboard.
Take a peek at these numbers to fine-tune your business, sales, and marketing game plan, and spot the spots where you can level up and grow.
