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At the moment of writing this article, there are more than 26 million ecommerce stores in the world. While this may seem like bad news to some, the reality is exactly the opposite. Sure, there is heavy competition, but at the same time, there are millions of websites you can learn from.
Today, we take a look ecommerce key performance indicators - the most important metrics for the growth of your ecommerce store. For each ecommerce KPI, we'll show you what it means, how it is calculated and how to easily improve it.
Key performance indicators and metrics are the lifeblood of an ecommerce business. Thanks to being online and in the cloud, most ecommerce websites are built on top of platforms that allow your online store to analyze every single data point you could think of.
By measuring and tracking these ecommerce metrics, store owners can find out crucial information:
Simply put, each ecommerce KPI gives you data-backed insights on how you can maximize your revenue and get the best ROI for each dollar spent on marketing or sales.
At ValueShips, taking a look at your ecommerce KPIs is one of the first thing we do with every new client. After taking a look at your metrics, we find the ways to optimize your pricing and positioning so you can get more revenue out of your existing website traffic.
No matter what you sell and whom you sell it to, these are the key performance indicators you should be tracking for your ecommerce store.
Simply put, this is the average amount that someone spends when shopping in your online store. The higher the AOV, the better. When your AOV is low, it means that customers typically choose lower-priced products or don't bundle different products together.
Some ways to improve your AOV include:
One of the most important key performance indicators for an ecommerce business is sales - and it's up to you to determine how you want to measure it.
For example: daily sales, monthly sales, quarterly, within a specific shift and more. Monitoring sales helps you determine if your marketing and sales efforts are working out and how you can drive better sales results from your existing website traffic.
Some of the ways to improve your sales include:
This is the rate at which customers shop with you more than once. The higher the repeat purchase rate, the higher the customer loyalty. As it’s cheaper to upsell and cross-sell to existing customers than find new ones, increasing the RPR should be on top of mind for every ecommerce business.
Some ways to increase the repeat purchase rate include:
This important metric includes all marketing costs and the total return you get on them in terms of sales. ROMI can include various things, from the cost of advertising platforms, the cost of email outreach, content and design tools and many others.
A high ROMI means that you’re using your existing tools and channels well, but it doesn’t mean that it cannot be improved even more.
You can do that by:
You get to this number by subtracting the total cost of goods sold from the total sales made. Gross profit. Besides average order value and conversions, this is one of the safest ways to determine the health of an online store.
Some ways you can improve your gross profit include:
This is the total costs that it takes to acquire a new customer for your online store. The higher the CAC, the harder it is to be profitable. Ideally, the CAC should be as low as possible so you can get the maximum revenue from each customer.
Some ways to get a better CAC include:
This is the total amount of money that a customer spends over the lifetime of being a customer acquisition cost of your business. Ideally, your customer lifetime value should be as high as possible, because this means that the customer is happy and wants to give you more of their hard-earned cash.
Some of the ways to improve your customer lifetime value are:
A higher customer lifetime value means more revenue, so this is one metric ecommerce businesses should always track and monitor.
This score is typically derived from a CSAT survey, asking a simple question such as "How satisfied are you with our products or services?". Not just ecommerce businesses should track this metric, as it's crucial in determining how likely someone is to shop again at your ecommerce business.
To improve your customer satisfaction score, do the following:
This ecommerce KPI shows you how many customers return to your ecommerce business over time. Customers you can retain are customers who are loyal and shop with you time and time again.
To improve the customer retention rate, try doing the following:
This is not an ecommerce metric per se, but it's one that you should be tracking because it shows you how strong your customer loyalty is. In essence, an NPS score is a number showing how likely someone is to recommend your ecommerce business to others.
Some of the ways you can improve the Net Promoter Score include:
The beauty of this ecommerce KPI is that it is highly versatile. But at the same time, you can measure the conversion rate for just about everything. For an ecommerce website, you can set the conversion rate as the conversion from a product page visitor to a customer, or from the landing page to a customer.
Some ways to improve the conversion rate are:
This is one of they ecommerce metrics because it is easy to diagnose and fix. Simply put, this is the percentage of customers who put items in their shopping cart but don't end up making a purchase. This could be for various reasons. They could simply forget to check out, get sidetracked to another product, close the tab or something else entirely.
Some ways to improve this key performance indicator include:
This is the entire cost of an item that you're selling, taking into account the manufacturing, the wages for your employees, overhead costs and all other associated costs. For the overall health of your ecommerce site and store, COGS should be optimized to be as low as possible.
To improve this metric, try the following:
This is an underappreciated ecommerce KPI that shows you which products your customers often purchase together. For example, if someone purchases a high-quality LED flashlight, they are likely to pair it with a nice rechargeable battery.
To improve the product affinity or make better use of it in your ecommerce store, try the following:
Ecommerce businesses should keep an eye on their inventory because you can't hope for increased customer retention or customer loyalty if you don't have products you can sell. This metric shows you how much of a certain product you have in stock. Monitoring it makes sure that A) you know which products to get more from your suppliers and B) that you never run out of stock, especially in critical periods such as the holiday season.
To keep tabs on your inventory levels...
A visitor is not the same as a customer, but ideally, you should convert as many visitors into customers. If you can succeed in converting website traffic to sales, you can shoot for a higher average order value (AOV), customer lifetime value (CLV), overall conversion rate and sales.
How to improve your revenue per visitor:
When just looking at KPIs doesn’t do anything for your bottom line, we can help. At Valueships, we use a mix of competitive scraping and advanced analytics to find out which opportunities you’re missing.
Here are just some of the many things we take a look at:
Once we get a deeper understanding of your product portfolio pricing, we align it with against price sensitivity and transparency. The end result? More sales and higher shopping cart values with the same traffic you’re already getting.
We deploy a price-promo linkage methodology to understand what products are sensitive to the promotion and what the ideal frequency and depth for running promotions are.
We have a standard procedure for ecommerce websites that helps us find the areas where you can get quick wins and amazing boosts for your sales.
There are many key performance indicators for the average ecomerce store, from customer satisfaction to individual products in your stock. While tracking all of these ecommerce metrics may seem like a chore, there is a good side to it - you can track and measure ecommerce success easily and find ways to get more sales through your store.
At Valueships, we can help you unlock more revenue from your store by telling you what to focus on for more sales. Increase your average order value, improve your customer loyalty, customer retention and all other ecommerce metrics.
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Certified expert in price, revenue and margin management in B2B companies and e-commerce. Member of the prestigious Professional Pricing Society. At Valueships, he is responsible for the implementation of consulting projects and taking care of the profitability of clients. Prior to joining Valueships, he worked at McKinsey & Company in the area of pricing and strategy.
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Certified expert in price, revenue and margin management in B2B companies and e-commerce. Member of the prestigious Professional Pricing Society. At Valueships, he is responsible for the implementation of consulting projects and taking care of the profitability of clients. Prior to joining Valueships, he worked at McKinsey & Company in the area of pricing and strategy.
