Selling online is more than merely producing a product and exchanging it for money. In order to drive traffic to your eCommerce site, you need to know exactly how that traffic is interacting with your eCommerce site. That’s where metrics come in.
If you’ve ever seen Moneyball, you know that paying attention to stats doesn’t matter as much as paying attention to the right stats. Just like Billy Beane and the Oakland A’s won by investing in specific talents instead of all-around players, you can use metrics to invest in specific marketing and design elements instead of all the eCommerce options. This not only saves you money but also makes you even more money in the long run.
Basic Terms and Definitions
If you’re just starting to dip your toe into eCommerce metrics, you’re going to encounter a lot of abbreviations you may find unfamiliar — KPI, SEO, AOV, CPA, CLV, CAC, SMH. Okay, that last one isn’t a metric abbreviation, but it’s what you might be doing if you’re inundated with a bunch of new technical terms. We’ll save you a little stress by laying out some basic information on eCommerce metrics.
Metrics themselves are simply measurements that help you understand how your eCommerce site is doing. In other words, metrics is a fancy word for stats. Do you know those sports fans who can tell you all of the stats on their favorite player? Your eCommerce site is your favorite player and you need to know your metrics to know how your player is doing compared to everyone else in the league.
A very specific metric is KPI, which stands for key performance indicator, with emphasis on “performance.” This metric is a specific goal you’re shooting for, a stat you want to see performed. A metric can measure how many sales you’re actually making, but KPI is the sales you want to make.
A few additional abbreviations that will be important include:
- SEO: search engine optimization
- AOV: average order value
- CPA: cost per acquisition
- CAC: customer acquisition cost
- CLV: customer lifetime value
How Visitors Become Buyers
Before understanding specific metrics, you need to understand how visitors to your site transition from casual clicking to completed shopping. A popular illustration of this is the sales funnel.
Some versions show more stages than others, but the goal is to drop eCommerce visitors into the funnel and watch them spiral down toward committing to a buy, like those coin donation vortexes they used to have at fast food places in the ‘90s. Ideally, once someone enters the funnel by finding out about your site, they should be drawn toward a purchase naturally and organically, like gravity.
At the top of the funnel are brand awareness and attraction. This is getting eyes on your eCommerce shop. Then comes consideration. They’re not only on the site, but they’re starting to browse, looking at what you have to offer with interest. After that, your goal is conversion — not only are they browsing, but they’re also selecting specific products and putting them in their cart. A fully converted customer takes action and makes a purchase.
But the funnel doesn’t end there! You don’t just want your customer to buy from your online shop once. You want them to come back. That makes the next step loyalty. You not only converted a customer once; you converted the customer forever. Finally, you want that customer to advocate for your eCommerce site through reviews and promotion.
At each stage of this funnel are metrics that can guide you toward understanding both where your shop currently falls and where you should invest time and money to grow in that stage going forward.
Metrics to monitor for attracting visitors to your site are usually very accessible on your eCommerce platform. Typically, your main admin page will show you how many users or visitors have seen your site. However, this isn’t the only metric you should measure if you want to grow your shop.
Visitors are funneled to your store from other sources, such as search engine appearances, social media posts, even influencer endorsements.
Knowing which third-party and social networking sites are yielding visitors also shows you where to further invest to grow this stage of marketing. If you get a lot more traffic from Instagram than Facebook, continue investing in Instagram rather than pouring money into a social network that isn’t doing anything for you. Monitor your subscribers, followers, shares, and likes to know what’s growing, what’s stagnating, and who you’re reaching.
A specific metric you can use for this is impressions. It may sound a little broad, but impressions cover any time your site, via an ad or other marketing content, is put in front of a potential customer. Impression metrics are often joined by reach and engagement, which are metrics that measure different aspects of how a customer is interacting with your content.
Your reach is how many people see your impressions. Your engagement is how many of those people within your reach actually engage with the content. In other words, impression is what you put out there, reach is who sees it, and engagement is who does something with it. Monitoring all of these eCommerce metrics gives you multiple angles to understand your customers and better target them in the future to grow your business.
Lastly, the tried and true standard of digital marketing is SEO, search engine optimization, and it remains a crucial eCommerce metric to track. Monitoring how your SEO is performing and keeping track of what keywords and practices are popular in your industry can make sure your shop is being found in searches and directing customers straight to you.
Once you know how and how many visitors are arriving at your site, your metrics can give you a better idea of how you’re turning those visitors into customers. More importantly, eCommerce metrics can help you turn more visitors into more customers.
There’s no point in tracking and boosting your web traffic rate if you aren’t also tracking and boosting your conversion rate. This is how many visitors become customers, determined by the number of sales divided by the number of visits. Google Analytics can come in handy in tracking this metric and can be integrated into your eCommerce platform.
To boost your conversion rate metrics, you can employ a number of tactics. Many of these are adding trust to your store, like showcasing customer reviews and adding certifications to prove you’re legit. People buy from popular places they trust. You also need to illustrate to customers that they have a need that only you can satisfy. Quality content, good design, and live chats can all push visitors to commit to a purchase, boosting your conversion rate.
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What to Monitor
Now that you’ve gotten someone to your shop and they’ve decided to buy something, your job is done, right?
Wrong. More nuanced eCommerce metrics can tell you a lot about what happens between conversion and loyalty. In fact, some customers who seem to have made a decision fail to take that final step of actually making the purchase. Metrics that measure this are shopping cart abandonment and checkout abandonment. These are the number of times customers put something in their cart but fail to head to checkout or make it to checkout but don’t make a purchase.
You can measure cart and checkout abandonment by simple percentages, checking how completed purchases compare to cart creation rates and checkout visits. If you notice your abandonment percentages seem high, that’s an eCommerce metric doing its job in telling you that you have a problem area.
Common reasons for high abandonment percentages include being priced out by a competitor, buyers balking at unexpected additional costs once they reach checkout, or customers simply changing their minds. Paying attention to these metrics can narrow down specific issues with your business, whether it’s your prices, your conversion, or even your cart setup.
Return, refund, and unsubscribe rates are other metrics to monitor. Making a lot of sales means nothing if your customers are negating those sales through returns and demanding refunds.
If your industry is already prone to high return or refund rates, you might be already closely monitoring this eCommerce metric. However, any spikes can indicate something is wrong. Likewise, having your email or notification subscribers opt out at an alarming rate shows your marketing approach in that area isn’t working.
Rather counterintuitively, making it easy for customers to return items, request refunds, and tailor their subscription preferences will likely aid your metrics on these fronts, showing you’re reasonable and prioritize convenience for your customers.
Demonstrating to your customers that you’re worth coming back to is crucial to maintaining loyalty.
Remember, the goal is not just to find people interested in buying your products once, but to actually turn them into consistent customers. That makes your percentage of returning customers a valuable eCommerce metric for growth for obvious reasons. If you can see how many buyers return, you can get an idea of whether any of your other metric areas aren’t performing as well as they could to keep those buyers engaged.
To increase the percentage of returning customers, you can get customers to opt-in for additional marketing, often through email.
Email is one of the most reliable and effective marketing channels. And, like everything else, you can measure it, by your email opt-in conversation rate. This metric is determined by how many visitors to your site opted in for email updates and marketing compared to those who did not. You can monitor this manually by using your email service provider to see how many recipients are at the end of your emails, or you can automate it with a tool like Google Analytics, which can add tracking codes.
You should also keep track of your average order value (AOV) to better measure how your eCommerce site is growing. This is the average amount of money spent by customers on each order and is one that should be monitored over time to get a good idea of its trends. If you find your AOV has stagnated or is decreasing, you can run special offers, decide if certain products need to be priced differently, or establish loyalty programs that encourage users to buy more on each order.
Even more long-term is the customer lifetime value (CLV). As the name suggests, this metric measures what you earn from a customer over their lifetime. Obviously, the goal is more than one order, so your CLV metrics should show that customers come back for several purchases, have a strong AOV on those purchases, and their repeat business isn’t short-lived.
Know What’s Worth It
It’s tempting to look at all of these stats and try all of them. After all, knowledge is power and metrics provide a lot of knowledge. But while metrics by definition measure quantity, you nonetheless shouldn’t abandon the mantra that “quantity does not equal quality.” Your goal should be quality metrics — quality quantity measurement. Put simply, you need to figure out which eCommerce metrics work for you and focus on those. And guess what? More metrics can help you figure that out!
Seeing a lot of growth in your purchases is great, but not if that cost of attracting that growth essentially cancels out that growth. For instance, if you’re spending more money trying to convert a customer than that customer brings in, your efforts are fruitless. Measuring this is your cost per acquisition (CPA), also called a customer acquisition cost (CAC). A high CPA isn’t necessarily bad if your AOV is also high. However, if your CPA outweighs everything else, you’re wasting your money and need to reevaluate your metrics.
By using all the metrics we’ve discussed, you can narrow down where to invest and where to cut back to target customers.
As you’ve no doubt figured out by this point, eCommerce metrics perform a lot of functions beyond simply providing you with information about your online shop. To fully utilize these stats and measurements to grow your business, you need to know what you’re looking for in your business marketing. Then, use specific metrics to figure out what’s already working, use them to find out what isn’t, and use them to grow those areas.
Think of Dotlogics as your Moneyball for web metrics. If you’re drowning in eCommerce metrics and don’t know where to start, our experts can sift through the data, attracting visitors with eye-catching designs, converting customers with sales pages, creating loyalty with opt-in forms, and spreading the word with email and social media marketing.
Contact Dotlogics today and we’ll take all these numbers off your hands and just give you results!