In an eCommerce business, there are a huge variety of metrics available to see if your business is in progress or not. An eCommerce store can calculate its’ ROI in so many ways. Marketing, branding, sales, customer satisfaction, eccetra. Only with the help of Google Analytics, you can have many more metrics. There are various data analytics tools which can help you with an ocean of data.
While you can track so many metrics, you want to ensure you include metrics that tell a lot about your website performance. Here are 3 fundamental e-commerce metrics you should be measuring right now.
Conversion Rates
Making sales is one of the top most priorities of any business, let alone eCommerce store. In order to improve sales on your eCommerce store, one of the crucial metrics is to measure the conversion rate. Conversion Rates measures the percentage of visitors on your website. Here’s a simple formula you can use: CR = (the number of visitors on your website/the number of sales) × 100%. Not only for an entire eCommerce store, this metric can used for individual product pages or other website pages.
Apart from buying, conversions can also be referred as other actions like submission of information on the website. It is necessary to track conversion rates for individual products as well as landing pages. This can also help you find underperforming pages and make improvements accordingly.
Average Order Volume
As much as your goal is to gain more customers, increasing revenue should always be your priority. These doesn’t go hand in hand.
Basically, a store owner can increase the revenues even with the same number of customers. In order to achieve this, a metric you might require to offer attention to, is the Average Order Volume.
The average order volume (AOV) measures the average amount a customer spends on your eCommerce store when they complete an order. You can use this formula to calculate this metric: AOV = Total revenue for a period/the number of completed orders for that period
Of course, the average order volume will vary across industries. For instance, a luxury goods store will have a higher average order volume compared to a store selling tennis shoes and socks.
Customer Retention Rates
Even if there is industry-leading conversion rates, a bad customer retention rates can neutralize all the conversion efforts. Without high conversion rates, it is difficult for any business to grow. It’s easier and cheaper to sell to current customers as compared to the prospect.
According to research, a 5% increase in customer retention can lead to more than a 25% increase in profits.
In another sense, poor customer retention rates can indicate that you’re not meeting your customers’ expectations.
Hence, it is a necessity to know the customer retention rates for any store. Here’s a simple formula for calculating customer retention rates: Customer retention rates = (the number of customers at the end of a period – the number of new customers during the period)/the number of customers when the measured period began × 100%
The global retail sales both online and physical store is valued at a whopping sum of $26.074 trillion and just last year alone, eCommerce sales account for 16.1% of retail sales worldwide. This shows that the e-commerce industry keeps booming crazily.
If you want to achieve your e-commerce revenue and profits targets to take advantage of this boom, you need to track the right metrics. Tracking these metrics provides insights into your performance.
