We might as well be in a Black Mirror episode because, as such, an abundance of AI and data surrounds us and everything we do. This includes eCommerce KPIs.
Every piece of information you wish to know about yourself and your customers, company, audience purchase patterns, and even more — all of it is easily available at your fingertips.
However, even with all the machines and AI doing the task of data collection for us, our task as humans (especially as professionals in the ecommerce space) is to decide which insights to use and how to apply them to improve our conversion rates.
On that note, if you’re trying to determine which types of data are most important for your ecommerce business, here are a few key performance indicators (KPIs) we recommend monitoring.
1. Website Traffic Sources
Analyzing where website traffic is coming from — whether organic search, paid ads, or social media — is crucial for understanding which marketing channels are most effective in driving conversions.
Take StudioSuits, a clothing brand known for its high-quality seersucker suits for men. Since it actively uses different marketing channels to attract traffic to its site, it needs to monitor and optimize these efforts.
For instance, StudioSuits receives most of its traffic from paid channels, followed by organic search and social media. By analyzing these eCommerce KPIs, they can identify underperforming channels and strategically invest more effort into improving these areas to increase overall site traffic and conversions.
2. Customer Lifetime Value (CLV)
Nick Drewe, the founder of Wethrift, says his team monitors CLV closely, which helps them understand the financial value of a customer over their lifetime with their business.
In his own words, “Tracking CLV against CAC tells us whether we’re generally making or losing money with each acquisition.”
On that note, Customer Acquisition Cost (CAC) is another metric he recommends tracking. He states that it helps determine how much to invest in marketing and still maintain profitability.
3. Conversion Rate
Conversion rates are an important metric for any eCommerce business to track, as it allows them to understand:
- Which campaigns and referrals are working well — and
- Which might need improvements.
In fact, conversions rates also help predict the future profits and sales a business might get.
4. Return on Ad Spend
Return on Ad Spend (ROAS) measures the outcome of every penny spent on advertising your product/service within a specific time period.
By tracking ROAS, you’ll understand how effective your marketing campaigns were, where to allocate your remaining budget/resources for the year, and how much profit you can expect by the end of your Google Ads campaign.
5. Churn Rate
The churn rate indicates the percentage of customers who have stopped providing your ecommerce store business. In truth, it’s also a key indicator of:
- Future revenue or profits
- Customer satisfaction
- Company’s growth
To reduce churn rates, you must ideally start by identifying customer pain points and bumps in their journey and then do everything you can to provide them with the best possible customer experience.
6. Customer Retention Rate
Opposite of the churn rate, the customer retention rate measures how many customers are invested in doing business with you for the long term.
A good customer retention rate symbolizes that a business is on a steady path of growth, revenue, and sales. In other words, you are on the fast track to customer loyalty.
Experts suggest that to increase customer retention rates even further, you must invest in building relationships with your audience and treating them as part of a community.
For example, you could consider offering loyalty programs, listening to customer feedback, sending surprise samples, and offering referral discounts.
7. Bounce Rate
Anytime a customer bounces off your website to a different webpage, it’s counted as part of the “bounce rate.”
To reduce bounce rates, you must ensure:
- Your website has a clear value proposition (stay clear of using vague words or fluffy language);
- Your content is relevant and timely — and
- You provide an overall splendid experience to those who land on your site (this includes reducing your website loading time, investing in UI/UX, ensuring your web pages are optimized for all devices, and meeting accessibility requirements).
8. Subscription Rate
For an ecommerce business, a subscription rate refers to the number of customers who set up repeating orders with them over a period of time.
If you track this subscription rate, it’ll help you predict your profitability, understand how much inventory to keep in stock, and gauge operational efficiency. Plus, the mere fact that someone is renewing a product or service with your brand is already telling you that you are doing something good.
By tracking these, you can unlock valuable insights to increase sales, customer lifetime value, and retention rate. Let’s take a look at Magic Hour’s tea subscription box — a gold mine for data!
Offering this sample tea box allows them to observe factors such as:
- Where subscribers come from
- Where they can get new ones
- What customers are saying about their teas on social media
- Evaluate how often customers renew or cancel their subscriptions
This, in turn, allows them to focus their marketing efforts on the channels where they perform best, continue offering the same tea blends or develop new ones based on customer tastes, and, in the same way, improve what they offer in their boxes to keep customers happy.
By obtaining this information, Magic Hour lights the way to create irresistible boxes, as well as create better promotions and continue growing as a brand.
9. Average Order Value
Businesses like WYTLABS keep a close eye on metrics like Average Order Value.
Says Marc Bishop, the Director of WYTLABS, “Analyzing changes in AOV helps us understand the effectiveness of our marketing strategies and adjust our approaches based on customer behavior patterns.
To increase AOV, we introduced product recommendations and bundle discounts, which incentivized customers to purchase additional items. This strategy was particularly effective during the holiday shopping season for a retail client, increasing their AOV by 20%.”
10. Cart Abandonment Rate
For any ecommerce business, the cart abandonment rate is an important metric to track as it shows just how many customers are interested in buying your product but have failed to complete the task due to the following:
- Shipping costs
- Unexpected prices or delivery dates
- Security issues with payment gateways
- Complex checkout process
- Any other bottlenecks
Tracking shopping cart abandonment rates allows you to identify these bottlenecks, retarget the customers, and secure a sale.
11. Social Media Engagement Rate
If you’re a business that’s active on social media and uses those channels to get sales, tracking social media engagement rate can be just as important as it’ll allow you to understand if the content you’re posting is resonating with your audience or not (and if it’s actually resulting in any fruitful outcomes).
12. Product Return Rate
An essential factor for ecommerce businesses to track performance metrics and improve sales is to review their shipping process.
Some of the most important indicators they need to look at are the average shipping and delivery time and cost, the average number of lost shipments and delivery attempts, and the percentage of failed deliveries or damaged shipments.
Knowing this information will allow them to understand the level of customer satisfaction vis-a-vis order fulfillment. It’s important that, when selecting a courier service to fulfill your deliveries, you review these indicators to choose the one with the best numbers.
13. Net Profit Margins
As far as metrics go, net profit margin may not be at the top of this list, but it’s certainly the top priority for many businesses. As part of eCommerce KPIs, this metric alone gives businesses insights into the following:
- Company’s health
- Profitability
- Benchmarks to follow
- Risks to take
- Investors confidence
- And then much more!
14. Customer Satisfaction Score
Customer satisfaction score is a common metric mainly used by customer support teams of ecommerce businesses to measure the satisfaction of a recent brand interaction.
It’s usually measured on a scale of 1–5 and collected as part of a feedback form. It allows companies to understand what bottlenecks are troubling their customers and what they can do to eradicate them.
15. Order Fulfillment Time
Order fulfillment time refers to just how long it takes customers to receive their order after they’ve put in a request. This benchmark changes from industry to industry and is usually impacted by supply chain issues, but tracking it can have a positive outcome for your business.
For example, consider the ample sales Amazon has received with its one-day delivery promise.
Methods for Analyzing Customer Behavior to Improve Conversions
Now that we’ve covered the key metrics to help measure performance, how do you go about recording and tracking them? Use these tried and true methods for the best results for your eCommerce KPIs.
1. Heat Maps
One powerful tool for gaining actionable insights is the use of heat maps. Heat maps visually represent user interactions on your website, such as clicks, scrolls, and mouse movements, allowing you to see which areas are attracting the most attention and which are being ignored.
When analyzing heat map data alongside crucial ecommerce KPIs like conversion rates, average order value, and cart abandonment rates, you can identify specific elements on your website that may be hindering performance.
For instance, if a heat map reveals that users frequently click on non-clickable elements or ignore critical call-to-action buttons, you can make informed adjustments to improve the user experience.
Integrating heat maps with your eCommerce KPIs tracking provides a deeper understanding of user behavior, enabling you to make data-driven decisions to enhance website layout, content placement, and overall design, ultimately driving higher conversions and ecommerce success.
2. Surveys and Feedback
Surveys and feedback forms are another way to allow customers to give their opinions freely and without any judgment.
These surveys are a win-win for both parties: Customers get to express their frustrations, and companies get to understand customer pain points and develop processes to help end them.
3. Predictive Analysis
Predictive analytic tools like lead scoring models can help your sales and marketing teams understand which leads are ready to convert and, therefore, focus their efforts and attention on them to secure a swift sale.
4. Customer Journey Mapping
Customer journey mapping allows you to imagine yourself in your prospects’ shoes and consider their feelings when they interact with your business (and even before or after that).
For example, consider how they’d feel if you wrote a thank you note anytime they place an order with your business.
Where Do We Step In?
As a digital marketing agency, we understand firsthand how your marketing efforts directly impact your conversion rates and return on investment.
Safe to say: A strategic marketing campaign can result in positive ROAS. And based on our years of industry experience, if there’s one thing we know is how to create these strategic campaigns for any online business. We can help you make informed decisions about every ecommerce metric we mentioned today. But don’t let us dazzle you just yet. To see if we’re a good fit for each other, get in touch with us and request a free proposal for your business. Here’s to revenue growth!