Every eCommerce business wants them.
In fact, successful eCommerce merchants make decisions on the basis of metrics as they help in measuring and improving their store’s performance.
While there are ample metrics that you can track, only a few represent the state of your business and can be turned into actionable insights that help you grow.
Having said that, deciding which online business metrics you should monitor is definitely challenging. In this blog post, we talk about the top 6 KPIs to measure the growth of your online store. Let’s get started!
1. Conversion rates
A successful marketing strategy for your eCommerce store results in website traffic elevation. However, the same effect cannot be observed in terms of business sales.
Therefore, you should know the sales conversion rate of your online store as it is a key metric to analyze the performance of your eCommerce store. In order to track this metric, you can either use tools like Google Analytics or you may refer to your company’s sales records.
Here is how you can calculate it:
Total Sales/ Total Users or Visitors
If you are already tracking the metric for your eCommerce store, then you can probably optimize your business to enhance this number.
2. Loyal customer rate
This eCommerce metric refers to the number of customers who make a repeat purchase from your store over a defined time period. It demonstrates how well you’ve been able to keep your customers engaged and motivated to purchase from you. Here is how you can calculate the loyal customer rate –
Number of Repeat Customers/Total Customers
3. Product return rate
You’re making sales, but have you ever realized that the number of return requests your online store gets could be affecting your revenue? While product returns may have different reasons, the most scary one is when the product does not meet your customer’s expectations. This is why the product return rate is one of the most important metrics to keep a track of.
4. Revenue per visitor
Revenue is another important metric that helps you understand if the customer acquisition efforts are working well and how much you need to spend on those efforts.
A combination of average order value and conversion rate, it is the most reliable predictor of eCommerce revenue.
You can calculate the RPV metric by simply using this formula:
Total Revenue Earned in a Time Period / Total Number of Visitors in the Same Time Period as Above
If we consider web visitors as the common denominator of an eCommerce activity, it makes sense to divide the overall revenue by the number of visitors:
Revenue/Visitors = Conversions x Average Order Value/Visitors
Which produces the following result:
Revenue Per Visitor = Conversion Rate x Average Order Value
Cross-selling is a popular technique that eCommerce store owners use to get a customer to spend more by offering products related to what’s already bought. However, it is important to verify if the offered products are improving ROI.
To make the most of cross-selling, it is important you regularly optimize this metric. It helps you ensure that the product you are offering is adding value to the user.
6. Shopper analysis
A complete analysis of your shoppers helps you offer better deals to them while luring them into making purchases.
Likewise, if you recognize a specific segment of customers making purchases on full-price, you can offer an exclusive deal to them.
If you’re running an eCommerce business, it is of paramount importance that you know the major metrics, what they mean to your business, and how they’re calculated or applied to your business.
Once you are familiar with eCommerce metrics that matter to your business, you can analyze your performance and fine-tune your strategies to improve your store’s performance.
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