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TOP 10 Ecommerce Metrics You Should Check And How It Affects your Business

Many business owners know that it’s important to analyze their metrics so they can take the next most profitable action. However, without the right knowledge and being unfocused, you’ll be drowning in a sea of numbers with an endless amount of work to do.

So how do you ensure that doesn’t happen?

By optimizing only the key metrics that generate the highest rate of return. 

That’s the reason for this article, where we will give you the top 10 metrics to focus on tracking and optimizing so that you have full clarity on how you utilize analytics to grow your business.

But first, often should we be tracking these metrics?

Having the right frequency for tracking these metrics can make the difference of being overworked, or actually enjoying and benefiting from it.

Here’s a general breakdown on the frequency of tracking segmented based on revenue:

Revenue

0-500k USD

500K-1M USD

1M+

Frequency

weekly

daily

daily

The TOP 10 metrics to track:

  1. Net Profit
  2. Conversion Rate
  3. Average Order Value 
  4. Return On Ad-Spend
  5. Cost Per Acquisition
  6. Customer Lifetime Value
  7. Repeat Purchase Rate
  8. Cart Abandonment Rate
  9. Website Traffic
  10. Page Load Time

Net Profit

How it affects your business: This is calculated after subtracting everything from the top line and how much money goes back into your pocket. By calculating the net profit, you can determine which parts of your business are generating the bulk of your profits, and which expense is cutting deep into your profitability. 

How to Calculate: Minus gross profit by the sum of all expenses; shipping costs, transaction fees, handling fees, marketing costs, refunds.

Conversion Rate

How it affects your business: Conversion rate has to be one of the most important metric in any online business. You wouldn’t want to spend money on acquiring traffic to your store, only to have only a measly percentage of people to convert.

Imagine driving 10k website traffic to your website and having only 0.5% convert. That’s 50 people that buy from your store, compared to the industry standard of 2%, which accounts for 200 people. 

Let’s say your net profit per order is $15, you’ll be netting $750 instead of $3000, losing out on $2,250!

How to Optimize:

Any traffic driven by Facebook/Google or any other marketing channels runs through a sales funnel. Take a look at your sales funnel and optimize each section individually. 

Facebook Ad → Product Page → Cart Page → Checkout → Purchase $$$

Average Order Value

How it affects your business: This is another metric that you should optimize as it helps improve profitability without spending money on ads.

 It helps you to understand your customers’ spending habits and also help you understand opportunities to improve it, by bundling your products, or implementing upsells which will drastically improve your AOV, and profits. 

How to Calculate: Divide the sum of generated revenue by the total number of orders.

How to Optimize: 

Product page → add to cart → checkout → purchase 

All customers that buy from you go through your sales and checkout funnel. To increase your AOV, you can either 

  • Bundling your products together, and create better offers in your product page
  • Upsell them at the check out page

Return On Ad-Spend

How it affects your business: This metric measures how effective your Facebook or Google ad campaigns are. 

How to Calculate: To calculate ROAS,  divide the total revenue generated from the ad-set/campaign with the cost of running it.

How to optimize Facebook ROAS: The key to getting the most bang for your buck in Facebook ads are highly converting video ads.

Cost Per Acquisition

How it affects your business: This metric is basically the cost to acquire a customer and it’s really important as it directly correlates with your profit margin. 

How to Calculate: Divide the total marketing expense by the number of customers acquired in the period the money is spent. 

How to optimize: To acquire a customer using less money, here are some ways; improving conversion rates, Use free marketing channels, Leverage word-of-mouth, affiliates, and referrals.

Improving conversion rates

Instead of spending more to acquire a customer, lower that cost by optimizing your conversion rate.

We’ve already talked about this in metric 2, so hop back and follow the steps

Spend the same and get more sales!

Use free marketing channels

Paid marketing is great, but with the cost of advertising going up and up day after day, is your business going to survive solely on paid traffic? 

There are many ways to get traffic to your website/landing page, and some are free. Leverage social media to produce free content on youtube, Instagram, Facebook, Pinterest, etc. 

Enforce authority and help educate people in your niche in online communities like Reddit & Quora, you’ll be surprised how much traffic these sites generate for you. 

Leverage word-of-mouth, affiliates and referrals

Always have a goal to get every customer to refer one new customer back to you. You can do this by word of mouth but of course, your product/service must be awesome to be able to do that. By offering incentives to affiliates or referrals, you’re enticing people to spread your brand without spending any more on advertising. Every referred customer costs you nothing!

Customer Lifetime Value

How it affects your business: This indicates the estimated total revenue a business generates from a single customer. Knowing your customer lifetime value means that you can have a better understanding when ramping out your marketing budget. You will also know how much you are able to spend to retain a customer.

How to Calculate: There are many ways to calculate the LTV of your customers, here’s the simplest formula; LTV = lifetime customer revenue – lifetime customer costs. 

Confused? Here’s a quick CLV calculator you can use.

Repeat Purchase Rate

How it affects your business: Repeat purchase rate is the proportion of customers in a period that has shopped more than once. It helps you to understand the tendency of your customers to return after their first purchase, and therefore, your ability to inspire loyalty. It’s important to know this because it is one of the more evident indicators of product/market fit and can help you create an inventory that is desirable for years to come.

How to Calculate: To calculate the repeat purchase rate, you take the purchases from repeat customers divided by all purchases on the site for a given date range.

How to optimize: Having a stellar email marketing campaign in place and implementing a customer loyalty program are the two sure-fire way to get repeat purchases

Cart Abandonment Rate

How it affects your business: Based on studies, 68.63% of visitors abandon their shopping carts, which leaves a lot of money on the table. Knowing this metric can uncover opportunities to get these people who abandoned their cart to convert. These are the hottest leads in your funnel and with the right tactics, you can turn them into customers.

How to Calculate: To calculate this, take the number of orders and divide it with the total number of visitors who abandoned their cart.

How to optimize: To reach the cart page, the purchase intent is already there, and there must be something stopping them from pulling the trigger. 

One way to get rid of any objections is to have a FAQ section on the product page. If done right, there is no need for a live chat on your website, as it’ll kill all doubts your customer has the moment he/she read through your product page.

Sending cart abandonment emails also works to get them to come back and complete their purchase. Some people get distracted while making a purchase and a simple reminder with an offer will do the trick.

Website Traffic

How it affects your business: Website traffic and conversion rate work hand in hand, you’ll only want to scale when your conversion rate is optimized, as, at the end of the day, all you care about is whether you get a sale. 

How to Calculate: Google analytics shows the number of visitors that frequented your site in a given period of time.

Page Speed

How it affects your business: The page load speed affects the user experience, and you’ll be surprised at how often someone will leave a website because they’re frustrated with the page load speed. 

How to Check: There are free tools to check your load speed such as; https://tools.pingdom.com/, https://gtmetrix.com/ or https://developers.google.com/speed/pagespeed/insights/.

After checking, you can ask a developer to help you optimize your page speed. There are some in Fiverr that does this for you at an affordable price.