Ecommerce Metrics Every Store Owner Should be Using
Sometimes, as a store owner, you can feel like you're floundering. You may not know where to start determining what is the best measurement of the success of your store. Is it enough to simply determine your profit margin? Is that the endgame or is there more to it all? Well, at the very least, I will say operating an e-commerce store is like moving a wheel. There are many moving parts, so monitoring only one spoke on the wheel is probably not the best way to go. When all the moving parts come together, things will run smoothly, but without it, you're in for trouble. With that being said, here are some of the best metrics to use for your store.
Sales Conversion Rate
For obvious reasons, this is probably the most important metric to monitor. It is far from the only one to measure, but, as I said, it's obviously the most important one. If your store is selling anything and the goal is to keep selling anything then you'll want to track your store's data to make sure that you are indeed selling enough. This goes for any store, whether it's digital or brick and mortar. You don't want to be operating at a loss.
Finding the sales conversion rate isn't hard. You can either use Google Analytics, or any other analytics tool, and it can be calculated for you that way. You can also do it manually. The formula for finding your sales conversion rate is a pretty simple one: (number of sales/number of users) X 100 = sales conversion rate.
It's said that a conversion rate between 1% or 5% is pretty good, so if you're already there or higher, kudos! If not, you'll want to review ways to improve that rate. You might want to do a survey or email campaign to find out what the apprehension is with your customers. Lack of trust is a huge factor with many consumers, so make sure you build trust with them by having security badges, reviews, and making your site and your business as transparent as possible for them. There are other ways to increase sales for your site, you'll just have to determine which one works best.
I know I've mentioned this many, many times. but that's because it's very, very important. Over half of all consumers abandon their carts, so you would do well to pay attention to this metric. The reasons why a consumer might abandon their products range from "just browsing" to unforeseen costs during checkout. Naturally, you'll want to reduce that number as much as possible. If your cart abandonment rate is a little high, there are ways to reduce that number. And even if your measurement isn't that bad and you just want to learn how to improve in general, you can do that too.
Ensuring that your site has a decent traffic flow is pretty important to your site's success too. If your site isn't visible, then you won't have a high traffic flow. This could also affect your conversion rate negatively. Having a high traffic flow, however, will only help your conversion rate. The more people to see your site, the higher the chance that your products will be purchased. These statistics can also be tracked in Google Analytics, or the reports of whatever platform you're using.
So, what happens if you already have a decent sales conversion rate? How would you want to optimize that? By getting more traffic of course. Say you have 500 visitors a day and around 4% are purchasing from your site. You're getting 20 sales from your current traffic flow. If you were to increase the traffic, you would also increase your sales. You can increase the traffic by means of search engine optimization (SEO).
Influencer Marketing is a great way to increase traffic to your site. In case you didn't know, influencer marketing is essentially the new wave of advertising for many e-commerce sites. Many consumers trust influencers over traditional advertisements now, so not only could this increase your traffic, it could also increase your sales. Link building is another way to increase SEO and traffic.
Percentage of Returning Customers
One thing about any business is that, while new business is great, the key to growth and sustainability is retention. If you're only focused on the new customers then all you've have is new customers. Eventually, you won't have any "new" customers left to focus on if word gets around that you're not very good to existing customers. Consumers want to feel appreciated and you can't blame them. They can spend their hard-earned money anywhere but they choose to spend it with you.
When I worked in retail, the businesses focused heavily on new customers, but they focused even more heavily on retaining customers. I worked in retail a long time with many different businesses and each one was the same in this aspect. You must have a solid core for your business. If you're unsure of ways to get customers coming back, don't worry. There are plenty of ways to accomplish this. You can also do researches and surveys to determine why consumers might not be returning.
Average Order Value
So, once you've determined your sales conversion rate, you'll also want to pay attention to the amount those customers are spending. If they're spending $10 per order, that's obviously less than ideal. You will never stay afloat that way nor will you make your goals. While working in retail, management was consistently monitoring our average order value, which varied depending on which department you worked.
Management always recommended up-selling or add-ons as they were the best way to build the value of a given purchase. For example, when I worked in the cosmetics department, I would always ask if the customer had a good eye cream, moisturizer, etc. If they came in for one thing, let's say a serum, they probably hadn't known about the latest moisturizer. I would then demo the product, get them to fall in love with it, then they would buy it. When I worked with dresses it was the same thing. I would usually recommend a purse or shoes to go with the dress.
You can employ the same methods on your site. If ever you've shopped on virtually any other site, you'll see that most sites utilize this tactic. While you're viewing one product, you'll get recommendations for another product that would work very well with it. This may also occur during checkout ("customers who purchased this also bought..."). Having a high average order value is obviously great for your business because it plays a key role in growth.
This is a pretty important metric because it's more or less a doorway to other metrics and factors of your business. You want your consumers to be signing up for emails because it allows you to control your own business. Yes, you might be advertising on social media and other places, but you never know when changes (such as algorithms) limit your visibility. It also allows you to reach your consumers in more ways than one. Typically, on social media you might see a handful of products advertised to you. But with email opt-ins, you can tell the consumer about a sale, new products, send them coupons, the list goes on. This is why I say that, with emails, you can control your traffic and your business. Emails are great way to increase the average order value, your sales conversion rate, increase returning customers, AND decrease cart abandonment. You can't lose with this measurement, so it would be wise to pay attention to it.
I know these all seem like a lot, but it's not as bad as you might think. The first thing you're wondering is how to track all of this. Chances are high that the platform you're utilizing is able to track all of these metrics for you. You may just have to enable them or set up a rule. If not, the Google Analytics will certainly track them for you. There are other analytical tools, but Google is probably the best.
Overall, you can breathe easy knowing that tracking all of this is going to mean great things for your business. If you know where your problems are, you know what to fix. At that point, you can only improve.