11 Most Important Ecommerce Metrics for Small Business Owners

By Kayla Bennet November 18, 2020

Technology has taken the guesswork out of a business’s marketing success.

Before e-commerce websites, businesses had to rely on surveys and other manual methods to acquire customer data.

Fast-forward to today, businesses, big or small, harvest this precious data almost effortlessly until it’s ripe for interpretation and analysis.

The question is this: with so many pieces of e-commerce data involved, which metrics should a business focus on?

Understanding the Buyer’s Journey

Before we deep-dive into the most crucial e-commerce indicators, it’s important for a business owner to first understand the buyer’s journey.

Where does a customer come from?

Knowing which stage they’re on in the buyer’s funnel will help us understand how to put the customer data to good use.

While there are different versions of the customer funnel, all of them talk about these five stages:

  • Awareness
  • Consideration
  • Decision
  • Retention
  • Loyalty

Each stage involves essential metrics that will help drive the buyer deeper into the funnel.

In this article, we’ll discuss these key ecommerce metricsto leverage in order to achieve overall business success.

1. Awareness Metrics

Customers probably won’t discover an e-commerce website by themselves. Business owners will have to build awareness to create an impression.

Speaking of impressions, discovery metrics consist of the following:

  • Impressions—the number of times a business’s content appears on someone’s social feed or search results.
  • Reach—the number of people who will see your content.
  • Engagement—the number of people engaging with your content

Among these three, the impressions are the most controllable metric to have as the figures will depend on the budget allocated for a certain ad or activity.

To make the most of these impressions, it’s best to improve one’s reach and engagement metrics.

There won’t be a one-shoe-fits-all solution. Rather, the results will depend on how defined a brand or campaign is.

2. Email Click-through Rate

The email click-through rate is defined by the number of email subscribers who clicked through a website.

This is an important metric since it will define how effective a marketing email is.

Emails are a hit-or-miss way to market a brand, but they’re one of the most effective lead-generation channels for businesses out there.

To create emails that attract high-quality leads, consider the following tips:

  • Write a compelling subject line. Try to answer this question: what’s in it for the customer?
  • Make the copy succinct. Get your point across in as few words as possible.
  • Create strong calls to action. Make sure the design also evokes the right emotion.

Many people access their emails on their mobile devices, so don’t skip mobile-friendliness when it comes to designing business emails.

3. Cost per Acquisition

A business can’t keep spending huge amounts on campaigns that only generate a few customers.

If the total cost outweighs a campaign’s total revenue, then it’s only going to be a lesson to learn from in the future and nothing else.

The cost per acquisition (CPA) defines how much a business is paying per customer acquired.

It’s also best to interpret this data together with the average order value (AOV), which we’ll discuss later on.

If your CPA is greater than the overall cost, that should be a go signal to better one’s campaign methods.

This can mean practicing customer segmentation to target ads to the right audience or letting a professional social media agency handle one’s social networks.

It can also mean minor changes such as improving the calls to action or tweaking spammy-sounding copies.

4. Conversion Rate

Now, here comes the fun part—the actual sales. A conversion is when someone goes from being a store visitor to a paying customer.

The conversion rate is pretty straightforward. It’s the percentage of site visitors who decide to make a purchase.

Technically speaking, it’s when anyone completes a business’s desired goal.

To get the conversion rate, we need to divide the total number of site visitors who made a purchase by the total number of website visitors.

For example, an e-commerce store gains 10 customers among 200 visitors. Dividing 10 by 200, the conversion rate is 5 percent. 

The question is, what’s a good conversion rate?

The quick answer:

It varies per industry.

Some small businesses gain an average of 1 to 2 percent, while others gain up to a whopping 41 percent!

Still not getting the conversions you want?

Don’t worry.

There are a lot of ways to improve your ecommerce conversion rate. After all, it’s an ongoing trial-and-error process. 

5. Segmented Revenue

Conversions can come from different sources. These can be from website traffic, which means from search engines and social sites like Google and Facebook.

These can also be from a device, which is either desktop or mobile. Then, there’s conversion from either new or returning visitors.

Similar to conversions, revenue can also vary from source to source. It’s smart to segment one’s revenue to provide us an insight on how customers are spending depending on the source.

For example, a business owner may gain a huge chunk of conversions from Facebook referrals yet gain little revenue since these buyers only purchase a single product.

Meanwhile, an email campaign may gain a few conversions but twice the revenue, compared to social referrals.

With this data, we’ll know where to invest our time, effort, and resources more instead of always going around in circles.

6. Cart Abandonment

Now, gaining conversions isn’t all rainbows and butterflies. There will be plenty of times when customers fill their carts to their heart’s content only to abandon them later.

For a business owner, nothing can be more heartbreaking than that. 

But here’s the good thing about tracking the shopping-cart abandonment rate—you get to learn the why.

There’s always a reason customers leave a website without making a purchase.

A pro tip is to use digital tools like heat maps to visualize the user behavior. They record every user’s session on a website and can even provide videos of visitors browsing the site in real time.

7. Checkout Abandonment

If there’s anything more heartbreaking than cart abandonment, it’s this. Checkout abandonment is a metric of the number of people who leave after they begin the checkout process.

Why measure the cart and checkout abandonment metrics separately?

It’s because both will determine whether the root cause for abandonment is the checkout process or something else entirely.

If there are more people leaving the checkout process, this can mean issues with cart-management features.

Make sure customers are able to save their carts. Don’t forget, make the checkout process as quick and as seamless as possible.

8. Customer Retention Rate

Customer retention rate is the percentage of customers who keep coming back over time. This will determine how well businesses retain their existing customers.

If they get a high rate after subtracting this number with the number of new customers, they’re doing a great job at customer service.

But customer service isn’t all there is to retaining customers. It also lets business owners reflect on their price point, brand trust, and customer sentiment.

For example, customers probably won’t repurchase from a business that provided them poor shipping management. Nobody wants to get their orders mixed up or receive them later than expected.

Avoid this by using a reliable ecommerce shipping software that makes shipping out orders simpler and easier for both the merchant and the customer.

Why invest in customer retention?

The answer is simple.

Getting repeat customers is cheaper and, therefore, more profitable than acquiring new ones, whom we still have to spend on through ads and other marketing campaigns.

9. E-commerce Churn Rate

The churn rate measures the number of customers lost over a specific period. This means customers who don’t come back after making a purchase from an e-commerce site.

Now, let’s do the math.

To calculate the churn rate, follow this simple formula:

churn rate = (users at the start of the period − users at the end of the period) / users at the start of the period × 100%

This is an important metric to track, as some users may have been difficult to acquire yet stay for the long run. Other customers, on the other hand, come in easily but never come back.

Once we’ve determined our store’s churn rate, it’s time to determine if it is any good.

What really is a good churn rate?

Similar to our answer with the conversion rate—it varies. While there is no universal standard to this metric, there’s a widespread notion that it shouldn’t exceed 5 percent.

But it’s always best to maintain a smaller percentage to keep our e-commerce business going.

10. Average Order Value

The average order value (AOV) is the sum of the value of all orders divided by the total number of orders for a given period. Here is a simpler formula:

AOV = revenue / number of orders

Knowing the AOV is essential to determining how much a business earns from a certain customer.

By learning about the customer behavior, the business owner will be able to plan better strategies for growth.

In order to grow a successful e-commerce store, businesses need three things:

  • More customers
  • More repeat customers
  • An increase in the AOV

For one, increasing the AOV comes at no cost. We only need to find ways in order to improve our customer service.

This can mean any of the following:

  • Utilizing upselling and cross-selling techniques
  • Offering discounts for bulk orders
  • Free shipping for a minimum amount
  • Offering discounts or freebies on the customer’s next purchase

 11. Lifetime Value

We now know how to calculate for the AOV, which is crucial when computing for the customer lifetime value (LTV).

This refers to the overall forecasted revenue a customer brings during their lifetime.

For example, if a customer’s AOV is $52 and they’ve made a total of six purchases, then the customer’s LTV is $312.

Knowing the LTV can help businesses better understand the cost per acquisition and how much they can afford to spend on their acquisition and retention campaigns.

At the end of the day, the key to improving the LTV is focusing on customer loyalty and retention.

Put more thought and effort into these two aspects of the business to see more favorable results in the long run.

Ready, Set, Sell!

Now that we know the most important ecommerce metrics, it’s time to start putting our products out there.

Remember, success doesn’t come overnight, but with these kinds of information on hand, we’re more likely to figure out how to achieve it over time.

So, I hope you got a lot of value out of my new ecommerce metrics.

I know that there’s A LOT here, so I want to ask:

Which metrics from this guide do you want to try first?

Let me know by leaving a comment below right now.

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Kayla Bennet

Kayla Bennet works as a Content Relationship Manager for Packlane/. She specializes in digital marketing, branding and general marketing tips. She works closely with B2B and B2C companies providing useful and engaging content.

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