7 Key Ecommerce Metrics You Should Be Tracking

Are you tracking the right metrics for your ecommerce business? 

Your website may be getting a lot of traffic, but without measuring the right key metrics, you’ll never know if that traffic is converting into actual revenue. 

In this article, we’ll reveal the 7 key ecommerce metrics that drive revenue and give you the insights you need to make data-driven decisions. 

From conversion rate to lifetime value, you’ll learn how to track and improve these crucial metrics that can make or break your business.

Remember, you cannot improve what you don’t measure. 

So, if you’re not sure if you’re on the right track, keep reading to find out.

1. Conversion Rate

Conversion rate is one of the most important ecommerce metrics that measures the percentage of visitors to a website who take a desired action, such as making a purchase or filling out a form. It is calculated by dividing the number of conversions by the total number of visitors.

Conversion Rate Formula
Conversion Rate Formula

Tons of things can improve your conversion rate. Some steps are:

With high traffic, it’s also recommended to test different variations of your website and analyze which ones lead to higher conversion rates. 

You can also use retargeting to bring back visitors that didn’t convert, and personalization to show them products that align with their interests.

2. Average Order Value (AOV)

Average Order Value (AOV) is another key ecommerce metric that measures the average amount of money spent per order on a website. It is calculated by dividing the total revenue by the number of orders. 

Average Order Value Formula
Average Order Value Formula

Many activities can increase AOV. For example, upselling and cross-selling related products, offering bundle deals, and implementing a loyalty program. 

A common and clever way to increase the order value is by providing free shipping for orders above a certain amount. Also, you can offer financing options, allowing customers to split the cost of a purchase over time, which can increase AOV and also increase sales. 

You can also use personalization to show customers products that align with their interests and previous purchase history, which can increase the chances of them buying more items.

3. Customer Acquisition Cost (CAC)

Customer Acquisition Cost (CAC) measures the cost associated with acquiring a new customer. It is calculated by dividing the total cost of sales and marketing efforts by the number of new customers acquired during that period. 

CAC Formula
CAC Formula

Lowering CAC is important for the growth and profitability of an ecommerce business, as it means that the business is able to acquire customers at a lower cost. 

There are several ways to lower CAC, such as improving the targeting of advertising campaigns, increasing the efficiency of sales and marketing efforts, and leveraging referral marketing. 

Another way to lower CAC is by focusing on retention and loyalty, as it’s usually cheaper to retain an existing customer than to acquire a new one.

Lowering CAC with Organic Acquisition

Focusing on organic customer acquisition can help lower CAC by driving organic traffic to your website, which is free and can potentially convert into customers. 

SEO involves optimizing your website’s content and structure to improve its visibility and ranking in search engine results pages (SERPs). This can be achieved through tasks such as keyword research, on-page optimization, and link building. 

By appearing at the top of SERPs for relevant keywords, your website is more likely to be seen by potential customers who are actively searching for products or services like yours.

The best SEO automation tools can also provide insights and suggestions to improve your website’s visibility and ranking, which can help lower your CAC over time. 

These tools can automate tasks such as keyword research, on-page optimization, and link building, as well as provide detailed reporting on your website’s performance. By automating these tasks, you can save time and focus on more important aspects of your business.

4. Customer Lifetime Value (LTV)

Customer Lifetime Value (or CLV) measures the total value a customer will bring to a business over their lifetime. It is calculated by multiplying the average purchase value by the number of purchases a customer will make over a specific period of time.

CLV Formula
CLV Formula

Increasing LTV is essential for the growth and profitability of an ecommerce business, as it means that the business is able to generate more revenue from each customer.

There are several ways to increase LTV, such as improving customer retention, upselling and cross-selling related products, and creating a loyalty program.

Another way to increase LTV is by providing excellent customer service and creating a positive customer experience, as satisfied customers are more likely to return and make repeat purchases. 

Additionally, you can use personalization to show customers products that align with their interests and previous purchase history, which can increase the chances of them buying more items. 

Another way to increase LTV is by providing a subscription service, which allows customers to receive products or services on a recurring basis.

Implementing a retention strategy and analyzing customer behavior can also help to identify potential areas of improvement and ways to increase LTV.

5. Bounce Rate

Bounce rate measures the percentage of visitors who leave a website after only viewing one page. It is calculated by dividing the number of single-page sessions by the total number of sessions.

Bounce Rate Formula
Bounce Rate Formula

A high bounce rate can indicate that a website is not effectively engaging visitors or that it is not providing the information or resources they are looking for. 

Reducing bounce rate is important for improving the user experience on a website and increasing the chances of conversions.

There are plenty of ways to reduce bounce rate. For example, improving the website’s design and layout, providing clear and detailed information about products and services, and optimizing the website for mobile devices. 

One more way to reduce bounce rate is by creating compelling and engaging content, such as blog posts, infographics, and videos, which can encourage visitors to explore other pages on the website. 

Furthermore, you can use A/B testing to try different variations of your website and analyze which ones lead to lower bounce rates. Another way is by providing internal linking to related pages and products, which can help visitors find what they are looking for and increase the chances of them exploring other pages on the website.

6. Abandoned Cart Rate

Abandoned cart rate is a key ecommerce metric that measures the percentage of visitors who add items to their cart but do not complete the purchase. It is calculated by dividing the number of abandoned carts by the number of initiated checkouts.

Cart Abandonment Formula
Cart Abandonment Formula

A high abandoned cart rate can indicate that there are issues with the checkout process or that the website is not effectively addressing the needs and concerns of potential customers.

 As you’re building your ecommerce website and purchasing funnels, keep in mind that each step of the cart funnel is a potential drop off. 

There are several ways to lower the abandoned cart rate, such as simplifying the checkout process, providing clear and detailed information about products, and offering promotions and discounts. 

Another method for lowering the abandoned cart rate is by sending abandoned cart emails, which can remind potential customers of the items in their cart and encourage them to complete the purchase. 

You can also provide a guest checkout option and also provide a clear return policy, which can give customers the confidence to complete their purchase. 

You can also use retargeting ads to bring back visitors that have abandoned their cart, and personalizing the ad to show the product they left behind, which can increase the chances of them returning and completing the purchase.

7. Net Promoter Score (NPS)

Net Promoter Score (NPS) is a key ecommerce metric that measures customer loyalty and satisfaction. It is calculated by asking customers to rate their likelihood of recommending a business or product to others on a scale of 0-10.

NPS Formula
NPS Formula

The responses are then grouped into three categories: detractors, who give a score of 0-6, passives, who give a score of 7-8, and promoters, who give a score of 9-10. The NPS is calculated by subtracting the percentage of detractors from the percentage of promoters. 

Improving NPS is important for increasing customer loyalty and word-of-mouth marketing for an ecommerce business.

There are tons of ways to improve NPS, such as providing excellent customer service, addressing customer concerns and complaints in a timely manner, and regularly seeking customer feedback. 

Another way to improve NPS is by going above and beyond to exceed customer expectations, such as by offering a 100% satisfaction guarantee or a hassle-free return policy. 

In addition, you can use personalization to show customers products that align with their interests and previous purchase history, which can increase the chances of them having a positive experience with your business. 

Another way to improve NPS is by creating a loyalty program, which can reward customers for repeat purchases and encourage them to become promoters of your brand.

Key Takeaways for Key Ecommerce Metrics to Track

In this article, we discussed the 7 key ecommerce metrics that every online business should be tracking: conversion rate, average order value, customer acquisition cost, lifetime value, bounce rate, abandoned cart rate, and net promoter score. 

These metrics give you a clear picture of your business’s performance and help you make data-driven decisions. We provided definitions, explanations, and tips on how to improve each metric. 

It’s hard to improve what you don’t measure, so regularly monitoring and analyzing these metrics is crucial for the growth and profitability of your online business. 

Remember, consistency and persistence are key in tracking and utilizing these insights.

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Edgar Abong

Edgar is a skilled software developer with a passion for building and evaluating software products. His expertise in software development enables him to provide in-depth evaluations of software products. He can draw out insights about features, functionality and user experience.

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