So, your eCommerce store is up and running, orders are rolling in, and you are getting some visibility. But how can you truly gauge whether your efforts are paying off?
In the vast world of eCommerce, keeping track of your growth is just as important as the sales themselves. That’s where eCommerce KPIs and metrics come into play. By measuring these KPIs, you get a clearer picture of what’s happening in your business, whether it is sales figures, customer satisfaction, or operational efficiency.
Ready to dive in? Let’s explore the 20+ essential KPIs and metrics you need to know. We will break down what each one means, discuss their significance, and share how to leverage them for maximum impact.
This guide is designed to make navigating the world of eCommerce metrics a breeze, so you can focus on what really matters: Growing your business.
Gauging eCommerce Success
Metrics are benchmarks. They are measurable data points that help you track the performance of your online business.
Just imagine: You are on a road trip without a map or GPS. You might be enjoying the scenery and cruising along, but without proper guidance, you could easily find yourself lost in unfamiliar territory. You may miss out on the sights you intended to see, or worse, end up miles away from your desired destination.
Similarly, running an eCommerce business without metrics can leave you feeling overwhelmed and directionless. You risk confusing opinions and guessing games, which can lead to missed opportunities for growth, optimization, and customer engagement.
When it comes to reviewing these metrics, the frequency can vary. Some metrics are valuable for weekly check-ins, while others may require monthly or quarterly evaluations for strategic insights.
Metrics vs Key Performance Indicators
Key performance indicators (KPIs) are slightly different. They are more specific measurements that help you evaluate how well your eCommerce business is achieving its defined goals.
Defining the right metrics and KPIs for your eCommerce business will depend on your customer journey and the stage your business is in. For instance, if you are just starting out, focusing on conversions can be challenging. Instead, you might want to prioritize building brand awareness and optimizing operations.
Sales Metrics & KPIs
While eCommerce business may be measured in different dimensions, sales KPIs and metrics are going to be the ones which are most thoughtfully examined.
Conversion Rate
Conversion rate is like the heartbeat of your eCommerce business. It represents the percentage of website visitors who make a purchase and become customers. A high conversion rate is what every business strives for, however, rates can vary significantly across factors such as industry, channel, season, and product category.
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According to a study by Oberlo, the average eCommerce conversion rate typically ranges from 1.5% to 3%, with 2.5% being a solid benchmark. Some industries, such as food and beverage (6.11%), beauty & personal care (4.71%), and branded retail (4.23%), boast higher rates given their business nature.
But why does the conversion rate matter so much? It acts as a key indicator of how effectively your website turns visitors into paying customers.
A healthy conversion rate signals that your marketing, user experience, and pricing are aligning well with customer expectations. However, low rates can point to potential issues in your business model, whether it’s complicated website navigation, ineffective marketing strategies, mismatched pricing, or lack of trust and credibility.
Given its importance, measuring your conversion rate should be done with care. Here are some best practices to keep in mind:
- Break down to analyze activities that drive your eCommerce goals, revealing what works and what does not
- Monitor various stages in the customer journey for a well-rounded view
- Compare your conversion rate with industry peers
- Experiment with key site elements to discover what resonates best
Average Order Value
Average Order Value (AOV) provides valuable insights into how much customers typically spend in a single transaction. It is usually expressed as a dollar amount, and understanding your AOV is crucial for several reasons.
Reason #1: A good understanding of AOV helps you segment customers effectively and create programs that drive sales. By knowing how much customers are willing to spend, you can build retention strategies such as upselling and loyalty programs that encourage larger purchases for your average customer.
Reason #2: AOV also informs your marketing budget. If your average customer spends $100, you can confidently allocate a portion of that amount to your advertising strategies, knowing you have the potential for a solid return in the near future.
Customer Lifetime Value (CLV)
Customer Lifetime Value (CLV) estimates how much revenue a customer will generate over their lifespan with your business. It is a vital metric for assessing customer loyalty and the health of your sales strategy. If your CLV is lower than the cost for acquiring a new customer, it signals a clear need to re-evaluate your marketing efforts.
Add-to-cart / Cart abandonment Rate
Add-to-cart rate and cart abandonment rate are two eCommerce terms that are often discussed together, and their meanings can be easily inferred.
- Add-to-cart rate = The percentage of site visitors who add items to their shopping carts, regardless of whether they complete the purchase.
- Cart abandonment rate = The number of carts created but not purchased, divided by the total number of completed purchases.
These two metrics can reveal crucial insights about the user experience on your website. A high add-to-cart rate typically indicates positive website performance or strong product interest. However, since it doesn’t directly correlate with conversions, it warrants further investigation.
On the flip side, a high cart abandonment rate signals that there might be obstacles preventing customers from completing their purchases. Common factors contributing to cart abandonment include:
- A lengthy or complicated checkout process that frustrates customers
- Additional costs revealed late in the purchasing journey
- Comparison shopping that distracts potential buyers
- Limited payment options that don’t meet all customer needs
Churn Rate
Churn rate measures the percentage of customers who stop interacting with your business over time. A high churn rate may indicate underlying issues with customer satisfaction or retention.
Marketing Metrics & KPIs
Marketing KPIs and metrics can be particularly complex in eCommerce. They focus on the costs and returns of marketing investments while encompassing a variety of channels, such as social media, email, SEO, PPC, content marketing and more, each with its own unique set of “rules” to play by.
Measuring effectiveness presents challenges as well, mainly due to the multi-touch nature of the customer journey, where multiple interactions can influence purchasing decisions.
Customer Acquisition Cost (CAC)
Understanding Customer Acquisition Cost (CAC) is key for eCommerce owners when gauging the health of their marketing efforts. It encompasses all expenses tied to sales and marketing, such as advertising, promotions, and other initiatives aimed at attracting potential customers before they make a purchase.
By breaking down CAC by channel, you can identify which strategies yield the most conversions and repeat purchases at the lowest cost. This insight allows you to replicate successful tactics in future campaigns.
To enhance your CAC, focus on targeting customers most likely to respond to your campaign’s call-to-action and landing pages. This strategic targeting can maximize your budget and boost your overall effectiveness.
Customer Retention Rate
The customer retention rate reflects the percentage of customers who return to make repeat purchases. Retention is crucial because studies by Bain suggest that retaining an existing customer can be worth up to 10 times more than acquiring a new one. It also highlights the effectiveness of your customer service and loyalty programs.
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Return on Advertising Spend (ROAS)
Specific to advertising, Return on Advertising Spend (ROAS) is a crucial metric that measures the revenue generated for every dollar spent on ads.
For example, if your campaign brings in $10,000 in revenue at a cost of $2,000, your ROAS would be $5, meaning you earn $5 for every dollar invested.
Your ROAS is a great way to assess how well your campaigns are doing. It clearly shows which ones are hitting the mark and which might need a little tweaking. Plus, its simplicity makes it easy to compare different campaigns, channels, or time periods, so you can plan your future advertising strategies with confidence.
Email Open Rate / Email Click-through Rate
When it comes to email marketing, tracking both the open rate and click-through rate (CTR) is a common practice.
While the open rate reflects how many people opened your emails, the CTR goes a step further by showing how many of those recipients took action, like clicking through to your website after reviewing your email content.
Well-designed emails, including mobile-friendly design and good CTAs, can positively influence the improvement of this marketing metric.
Social Media Engagement
Depending on the social media platforms you use, eCommerce businesses can track various engagement metrics to assess performance across channels like Facebook, Instagram, and Twitter. Here are a few key metrics to consider:
- Reach and impressions
- Engagements: Comments, likes and shares
- Follower growth
- Click-through rates
- User-generated content, mentions and referral traffic
Traffic Sources
You can keep an eye on traffic sources to see where your website and social media visitors are coming from: Organic, paid, or referral.
This information should be easily trackable in tools like Google Analytics or your social media campaign dashboard, helping you identify which channels perform best and where to optimize your marketing efforts.
Bounce Rate / Time on Site
In digital marketing, the bounce rate is also a carefully reviewed metric. Bounce rate measures the percentage of visitors who leave your website after viewing one page, without further looking into other pages. A high bounce rate is not good for SEO rankings.
The significance of bounce rate can be multifaceted. Primarily, it is a great indicator of customer engagement and content relevance. If visitors land on a product page and leave, it means that they do not find the product or content pages useful.
Similarly, time on site is the average time visitors spend on your site. It offers a different view to how visitors engage with your content.
Net Promoter Score (NPS)
The Net Promoter Score (NPS) measures customer loyalty by assessing how likely customers are to recommend your brand. It is calculated by subtracting the percentage of detractors from the percentage of promoters.
Customer Satisfaction Score (CSAT)
It evaluates customer satisfaction with specific interactions, products, or services. A higher score indicates a positive experience, while lower scores can highlight potential issues with customer experience.
Customer Service Metrics & KPIs
Customers may encounter various challenges, such as shipping, returns, or product inquiries, which typically require additional support. These inquiries are often interchangeably referred to as WISMO (“Where Is My Order?”) inquiries.
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To effectively gauge customer service performance, a few key metrics are used:
- Average resolution time: How long it takes for customer support to resolve issues.
- First response time: The speed that customers receive the first response from customer service teams.
- WISMO ticket rate per order: WISMO tickets raised divided by complete orders.
While cutting down on WISMO inquiries is a key goal for eCommerce companies, let’s not forget that great customer service is the backbone of any business. For companies without physical locations or brick-and-mortar stores, effective customer support is crucial for creating a positive shopping experience.
Logistics Metrics & KPIs
Another important aspect to consider is supply chain performance. Efficient logistics and faster delivery are key to long-term customer satisfaction. To effectively measure your tracking and logistics efforts, consider the following metrics and KPIs:
- On-time delivery rate
- Transit time
- Order fulfillment time
- Order and shipment tracking accuracy
- Exception rate
- Return rate
- Average cost per shipment
- Carrier performance
- Inventory turnover rate
Achieve eCommerce Success with TrackingMore
At TrackingMore, we are dedicated to helping you achieve tracking excellence. With our carrier choices and advanced API, you are easily empowered to level up your eCommerce operations like never before.
Many larger eCommerce retail players, such as DJI, Il Makiage and PatPat have benefited from our tracking solutions upon reaching out to us.
In practice, while it may not directly drive sales and marketing outcomes, it fosters a supportive environment that enhances customer experience and operational efficiency, ultimately paving the way for better performance in these critical domains.
#1 Reduced WISMO
Tracking solutions operate on the principles of clarity and transparency. By offering accurate, real-time tracking information, you can significantly reduce the number of WISMO inquiries over time.
Our API seamlessly integrates with over 1,500 global carriers and more than 90 major airlines, delivering tracking information that is reliable, accurate, fast, and secure. Features such as branded tracking pages and automated shipment notifications empower our customers with up-to-date information about their package status. This proactive communication helps alleviate the post-purchase anxiety that often burdens founders in the eCommerce and logistics sectors.
Key improvements:
- Reduced WISMO inquiries
- Higher email open rates & click-through rates
- Decreased customer service costs
#2 Cost Savings
With TrackingMore, you can cut costs effectively by automating tedious order tracking tasks through a single, reliable API integration. Our cost-effective API can be implemented in just 1-7 days, saving you both time and money while streamlining your logistics processes.
Key improvements:
- Lower operational costs
- Increased efficiency
- Improved resource allocation
#3 Improved Customer Satisfaction
Customers appreciate timely updates on their orders. Our API equips customer service teams with timely tracking updates, enabling them to excel in exception management and post-purchase support.
This responsiveness enhances customer satisfaction, as they feel secure knowing their orders are on track for timely delivery.
Key improvements:
- Higher CSAT & NPS
- Increased customer loyalty and retention
#4 Data-driven Decisions
With high-quality, granular data at your fingertips, you can monitor key metrics such as order processing times, transit times, exceptions, delivery rates, and customer feedback, all in one place. Logistics teams are empowered with reliable tracking data that enables them to develop actionable insights for continuous improvement.
Key improvements:
- Enhanced operational efficiency
- Informed decision-making
Final Words
To enhance your eCommerce operations, understanding various KPIs and metrics is essential. By categorizing these metrics into categories like sales, marketing, customer experience, and post-purchase excellence, this article guides you ways to prioritize your customers’ needs and improve satisfaction.
Remember, effective tracking is key to achieving success. TrackingMore’s platform is designed to provide the visibility you need, just as these metrics and KPIs offer the clarity necessary to drive your business strategy forward.
However, this is not an exhaustive guide. It is also important to understand your business model and apply sound judgment in your analysis. Remember, these metrics are just guidance to your decision-making, but your insights and choices are what truly matters.
The TrackingMore team shares insights on logistics tracking technology, industry trends, and e-commerce logistics solutions to help businesses streamline shipment tracking and enhance customer post-purchase experience.