If you have an online store and want to make money online, you could try dropshipping. To grow and scale your online business, it’s important to look at the important ecommerce metrics that your website data gives you.
It’s important to keep track of key ecommerce metrics because they can show problems with your sales funnel, your organic SEO, your conversion rate, and the overall performance of your ecommerce store.
This is not a new idea; business owners have always made decisions based on data. Thanks to the online platforms you can use to run and market your business, you can get insights and reports that help you make these decisions.
Everything is tracked in digital marketing. Views, likes, comments, shares, clicks, and other information are shared and saved so that you can look at the data and make plans.
But what you do with these numbers is more important than the numbers themselves. So let’s take a deep dive.
What does Metric mean?
Simply put, a metric is a way to measure data with numbers.
In our case, a metric is any number, statistic, or piece of data that measures the performance of an e-commerce business. We’ll talk about some of the most important ecommerce metrics later, but which ones are most important to you will depend on your business, your goals, and your customer funnel.
Your online store, your use of social media, your email marketing campaigns, and your Google Analytics all give you important data that you can turn into useful information to help you figure out what works and what doesn’t for your business.
What are KPIs?
If you’ve been looking into digital marketing and best practices for e-commerce, you’ve probably heard the term KPI. And you may be wondering what it means.
Key Performance Indicator is what KPI stands for.
Different metrics will become KPIs based on the source of the data you’re analyzing and the goals of your business.
KPIs use metrics and goals to give you the most important information and help you come up with ideas for your business plans.
What Makes Metrics and KPIs Different
Even though both are made up of numbers that show how well your ecommerce business is doing, KPIs are the ones that should be looked at as the most important.
KPIs give you important information that will help you decide where to take your business.
If metrics look at numbers, KPIs look at how well those numbers are being used.
You probably already know what the goals are for your business. And it’s likely that you’ve already made a plan for how you plan to reach your goals. Your strategy should have 5–7 key performance indicators (KPIs) that you can use to measure your efforts, the performance of your ecommerce site, and your growth as you move toward your goals.
KPIs are helpful because they are tailored to the goals of your e-commerce business.
Setting up your key Ecommerce metrics
There are so many different metrics for e-commerce that it’s hard to know which ones to focus on. Don’t worry, though, because we’re here to help. This is not just a list of the most important metrics in order of importance, because we could never do that.
There are too many things that could make you choose one over another. It depends on your business, your goals, and your customer funnel.
Read on, and we’ll explain how to decide which metrics are most important for measuring the health and performance of your business.
And as promised, here are the most common and important ecommerce metrics:
- Impressions, Reach, Engagement, and Cost-per-click (CPC)
- Click-through rate (CTR) on emails and cart abandonment rate
- Average order value (AOV), sales conversion rates, refund and return rates
- Customer Lifetime Value (CLV), Customer Retention Rate (CRR), Repeat customer rate
- Cost per acquisition , Customer acquisition cost
- Some of these metrics will show you where your business is doing well, while others will show you where it might be having problems.
But how do you know which is which?
Well, you should look at these key metrics in your customer funnel because they mean different things at different points. So here’s what we think.
The Sales Funnel for Customers
The customer funnel shows the path your customers take from the time they first hear about your business to the time they become loyal customers.
Not every customer will become your biggest fan, but they will all go through the same steps. They just might not get to the bottom of the funnel.
The customer funnel is made up of five stages:
By looking at your key e-commerce metrics in the context of the part of the funnel where they belong, you can figure out where your problems are and where you’re doing well.
Stats on Impressions and Reach
These are the two most important e-commerce metrics at the top of your customer funnel. The awareness phase is at the top of the customer funnel. This is where the customer has learned about your brand.
If your impressions, reach, and engagement are all going up, it means you’re getting more and more potential clients. If they aren’t growing, this could be a problem. You would need to figure out how to improve these metrics and make the awareness phase of your funnel stronger.
Metrics for Engagement and Cost-per-click (CPC)
At the second level of the customer funnel, the interest phase, these metrics are important. The customer now knows about your business and is interested in it. At the very least, they should be interested enough to interact with the content you showed them or click on a link you paid to promote.
By looking at your engagement and cost-per-click metrics, you can tell if the content you are using for marketing is interesting enough for people to click on it.
Say that your metrics for impressions and reach are doing well, but your metrics for engagement and cost-per-click are not… Your content might not be interesting enough to get people interested in your brand who are just learning about it.
Cart Abandonment Metrics and Email Click-through Rate (CTR)
Once your customer is in the third stage, which is the desire phase, the email click-through rate (CTR) and the number of carts that are left empty are important metrics. Customers know about your goods or services, are interested in them, and now want them.
So much so that you can send them to your website through an email campaign. Or, they add items to the online shopping cart of your store but don’t finish the checkout process.
If these numbers are going up, that’s a good sign. That means you’re bringing customers into the middle of your funnel. If these key ecommerce metrics don’t meet your expectations, you may need to change the desired stage of your funnel and find ways to improve it.
The Cart Abandonment rate is a tricky thing to figure out. On the one hand, a higher rate of shopping cart abandonment can mean that more people are interested in your website. On the other hand, it could mean that people have stopped wanting to buy your product.
You’ll need to look at this metric closely (and compare it to your other metrics) to figure out how well it works in your customer funnel.
Average Order Value (AOV), Sales Conversion Rate, Refund and Return Rate Metrics
The action phase is the next step in the customer funnel. Congratulations, people are buying from you!
But, you’re not done yet!
Average Order Value, Sales Conversion Rate, and Refund and Return Rate are all important e-commerce metrics that show how many customers buy your product or service and how happy they are with it.
They can tell you if you need to pay attention to your action phase.
If your Average Order Value or Sales Conversion Rates are going up, it means that your sales funnel is working so far to turn your audience into customers. If your rate of refunds and returns is going up, it could mean that your products or services aren’t meeting your customers’ needs.
Metrics for Customer Retention Rate, Customer Lifetime Value (CLV), and Rate of Repeat Customers
You’ve reached the last step in your sales funnel, which is to keep customers coming back. Here are the people who buy from you the most. They have bought from you before and keep coming back for more.
By looking at these metrics, you can find out how loyal your customers are to your business, your products, and your brand. If all of these numbers go up, you’ve done a good job of building a customer funnel.
Rate of bounce
The bounce rate of a website is the percentage of visitors who only look at one page or have only one session. This is similar to the rate at which people leave their shopping carts. The average bounce rate for ecommerce is 44%. If a lot of people leave your site right away, it could mean that there are several serious problems with how it works. Bounce rates can change based on how many pages a user looks at and how many people visit a page in total. Google analytics makes it easy to keep track of your bounce rate.
Cost per acquisition or Customer acquisition cost
Your CPA, or cost per acquisition, is one of the most important key metrics you should keep track of. Your cost per acquisition is how much each new customer costs you. Aside from a total CPA, it can be helpful to look at campaigns, landing pages, and individual products to see what works best. When you compare CPA to other conversion metrics like customer lifetime value, you can get a much better idea of how well your ecommerce store is doing overall. You can figure out your CPA by dividing your marketing costs by the total number of new customers you gained during a certain time period.
Using Key Metrics for E-Commerce
It’s not just a good idea to use metrics to measure the success of your e-commerce business; it’s a must. It should be one of your top priorities to turn the data that’s given to you into useful business decisions.
But how can I do that?
- Well, we suggest making a tool so you can track your metrics and see how well your business is doing. Choose your most important e-commerce metrics based on your goals and your customer funnel, and pay close attention to how they are doing.
- Use a spreadsheet and update it from time to time so you can track how well they are doing over time. Use your spreadsheet to fix problems in your customer funnel and find ways to make your business and marketing campaigns better.
- Checking your KPIs and metrics needs to be done in a careful way. If you do this too often or not often enough, you won’t be able to see the big picture.
- You can focus on getting new customers if you look at top of the funnel metrics more often. If keeping customers is your top priority, you should pay attention to the metrics at the bottom of the funnel.
Start making money online with your key metrics.
Accessing a lot of data that can give you deep insights that can help your e-commerce business do well has never been easier.
Choosing the e-commerce metrics that are most important to your business’s strategies and goals is a great way to help it grow and scale.
If you haven’t started your dropshipping store yet or need help, make sure to read our Ultimate Guide to Dropshipping. It will help you get started.