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The 9 Must-Have Metrics for Your E-commerce Business

by Nedim Talovic · Updated 14 Jul 2021
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Measure everything they say. But, with so many potential measures, you need to sort out what is the most important for you.

So, you should ask yourself: Am I using right metrics for my E-commerce business?

Don’t worry, we’re all doing these kinds of questioning and constantly doing our research. That’s why I’ve decided to help you with this matter.

In this blog post, I’ll show you 9 must-have metrics for tracking in your E-commerce business. Test yourself and find out how many of these metrics you’re applying to yours.

#1 Total Traffic

When analyzing your data, traffic number is definitely a starting point.

Based on a number of visitors, you can start creating basics, like logistics, sales, customer support and many other plans. For e.g. you ain’t gonna need a logistic center if you have 1,000 visits per day.

Also, you’ll need this metric when you get to analyze your competition. I suggest using SimilarWeb to check how many visitors your main competitors have.

#2 Bounce Rate

Simply said, bounce rate tells you whether your visitors are interested in your offer.

If you are getting a high percentage, let’s say 95%, it means that 95% of your visitors are leaving your website without additional interactions, like viewing a product or adding to cart.

Average bounce rate for retail sites should be between 20% and 40%.

To check your bounce rate, you can use different tools, but Google Analytics is absolutely the best for measuring bounce rate and it’s absolutely free.

So, how can I reduce my bounce rate?

There are different strategies to lower a bounce rate, including:

  • Improve website’s speed
  • Excellent user experience
  • A/B testings
  • Call-to-action
  • Mobile Responsivity

If you want to learn techniques, read our How To Reduce Bounce Rate article.

#3 Conversion Rate

Let’s assume that you get 1000 clicks from Google AdWords and you have a conversion rate at 3%.

In other words, the result is 30 orders. As a percentage of people who bought your products, the conversion rate is definitely a key metric for the business.

Do simple analysis for the industry or region, and you’ll a have clear picture where are you standing at.

Ecommerce Retail Conversion Rates By Device Source: Smart Insights

As you can see from the table, an average conversion rate in the United States is 3.62%.

If you’re on that level, every 1000 visits will bring you about 36 orders. You can also measure micro-conversion rates.

Typical situations are when someone subscribes to your newsletter list or adds a product to the cart.

#4 Average Order Value

Average Order Value is something you should mark as REALLY important.

Why?

Knowing your Conversion Rate and Average Order Value will let you easy forecast your revenue. Let’s say your metrics are:

  • Conversion Rate: 2.5%
  • Average Order Value: $50
  • Total Monthly Traffic: 100,000

You’ll have 2,500 orders (CR × Total Monthly Traffic) and since your Average Order Value is $50, your monthly revenue will be $125,000.

Assuming your gross margin is 40% there will be $60,000 left.

Bottom line: You need to hit 100,000 monthly traffic for less than $60,000. Otherwise, you won’t make the profit.

#5 Customer Acquisition Cost

Now that you know your Conversion Rate and Average Order Value, it’s time to get CAC (Customer Acquisition Cost) insights.

With Average Order Value of $50 and gross margin of 40%, you get to spend a maximum of $20 on acquiring a new customer, if you’re to stay in the profit zone.

If you’re advertising on Google AdWords, you can easily measure your CAC directly in AdWords dashboard.

What’s more, you can go for CPA bidding. Now, what the heck is CPA bidding? Instead of explaining what the CPA bidding is, I’ll paste some paragraphs from Google Ads:

“Using historical information about your campaign, Target CPA bidding automatically finds an optimal CPC bid for your ad each time it's eligible to appear. AdWords sets these bids to achieve an average CPA equal to your target across all ad groups and campaigns using this strategy. Some conversions may cost more than your target and some may cost less, but altogether AdWords will try to keep your cost per conversion equal to the target CPA you set. These changes in CPA take place because your actual CPA depends on factors outside Google's control, like changes to your website or ads or increased competition in ad auctions. Additionally, your actual conversion rate can be lower or higher than the predicted conversion rate.”

The basic spreadsheet will be enough to track a CAC.

How To Calculate Customer Acquisition Cost In a Basic Spreadsheet

According to the table above, our imaginary web shop spent $9,460 on 8,900 clicks.

Assuming that Conversion Rate in average was exactly to 1.82%, the shop got 165 orders.

Customer Acquisition Cost Formula

CAC = 9460/ 165 = $57.24

At this point, we know it’s not profitable (with assumed gross profit margin of 40%). You see why we need the metrics?

#6 Email Open Rate

Make no mistake - Email Marketing is still the most efficient marketing channel.

Firstly, It has the largest reach and what’s more, according to MarketingSherpa, people want promotions through the email rather than through the social media and other channels.

What is a good email open rate for E-commerce?

If you’re leaning to 20%, you’re doing a pretty good job, since an average Email Open Rate is slightly above 16% for E-commerce startups.

On the other hand, anything below 15% is a signal for a different approach. To improve Email Open Rate you should consider:

  • writing more effective subject lines
  • learning about spam filters and how to avoid them
  • checking your email lists

#7 Churn Rate

Churn rate tells you how many customers stopped doing business with you - churned, during a particular period of time.

Although the most common way of showing churn rate is a percentage, you can easily calculate it in value or actual number of customers.

No matter how will you show it, the main goal is to reduce it as much as possible.

But how to track churn rate for E-commerce?

Firstly, you need to figure out what your churn is, or in other words, to define your customers.

For e.g., if the majority of your customers repeats their purchasing in the first year, there you have it - ones that aren’t coming back after this period you should mark as churned.

This counts both for non-subscription and subscription based businesses.

#8 Abandoned Cart Rate

Now this is a frustrating moment.

After getting potential customers to your site, showing them your products, they putting them in the cart … but somehow most of them are abandoning just a step away from buying.

Trust me on this, it will happen. Your traffic is good, CTA’s working just fine, but you are failing to finalize the process.

What’s wrong?

It’s a well-known issue for E-commerce business, and it’s happening because of various reasons. According to Statistia root causes of shopping cart abandonment.

Reasons For Online Shopping Cart Abandonment Based on 33 different studies on e-commerce shopping abandonment, Baymard Institute calculated the average value of 68.63%.

What can I do to reduce Abandonment Cart Rate?

Try some of these suggestions:

  • Offer free shipment
  • Improve user experience
  • Do the remarketing

#9 Google Ads CPC

It’s more likely that you will pay per click and not per impression, and because of that an average Cost Per Click is another must-have metric!

According to HubSpot, in the E-commerce industry, you can expect to pay $0.29 per click on Display Network and $0.88 on Search Network.

AdWords CPC Data

Also, E-commerce industry has 0.45% CTR (Clickthrough rate) on Display Network and 1.66% on Search Network.

Put this in the formula, and with 1.91% conversion rate, you can expect to have nearly 19 conversions (on every 1000 clicks) which will cost you exactly $880.

By doing some additional math, you’ll definitely know that you need to make exactly $46.31 to be close to zero.

Surely, if you have enough equity, you can deliberately make a loss because you might know that almost every customer makes 5 orders and in the long-term period you will actually make the profit.

Conclusion

Metrics are essential to any business. It used to be rather hard to have effective metrics. Whether it was a matter of time, money, skills or something else, there were limits.

Fortunately nowadays, different SaaS are doing most of the job, and they’re doing it cheaply (often for free), fast and with a great precision.

Based on the different metrics you’ll make business decisions, get signals if something is going wrong and generally improve your business. .