Data is king these days, particularly when it comes to your business. If you’re operating an online business without monitoring the data, digging into metrics, and analyzing reports – well, you probably won’t stay in the eCommerce business for long.
Just as brick-and-mortar shops once relied on physical ledgers and manual inventory to evaluate the health of their business, e-commerce operators need to pay close attention to several metrics to track their performance and the state of their businesses.
While there are dozens, if not hundreds, of metrics to watch, here are just a few. Knowing what kinds of eCommerce metrics to use to determine the eCommerce KPI is very important.
Without any further ado, here are the top 9 metrics for eCommerce you should monitor and why.
If only an e-commerce website were as simple as “If you build it, they will come.”
There’s a lot more to it than that, though, and (hopefully) you are spending some advertising money on social media posts, web banners, AdWords, paid reviews, and more. It’s the cost of doing business, but hopefully, it’s a net profit.
To be sure, though, you need to track customer acquisition cost – the cost of acquisition divided by the number of new customers over a specific period.
It can get complicated, but a good BI platform will give you several ways to look at the data.
Every website visitor would lead to a new customer in a perfect world, but this is far from a perfect world. Your customer conversion rate is the rate of visitors who make a purchase, and it’s a pretty important metric for any eCommerce store.
As a guideline, various sources put a good average conversion rate at around 2.5%. However, it will vary depending on geography and industry. If your conversion rates are significantly lower than average for your market, take a good close look at the data to find out where you’re losing visitors and what you can do to retain them.
Customer retention rate plays a huge role if an eCommerce website is raking in all the customers. If not, they have to do something about it.
Once you’ve converted the visitor to a customer, you want to keep that customer. It costs a lot more to get a new customer than to keep an existing one, so it’s important to keep track of your retention rates and ensure they stay consistent.
There are several ways to slice and dice this metric –
Understanding what keeps customers coming back will help improve the retention rate – and your bottom line. This also contributes to the overall customer satisfaction, and having a repeat customer also adds to the numbers.
As noted in the acquisition costs section, you’re probably spending time and money on many different channels to attract visitors, so obviously, you want to know which ones are working.
By using analytics, you can see where your visitors are coming from. Then, you can really dig down into the reports to see if a specific campaign worked better in a certain medium or if there’s one particular social media platform that brings in customers who spend money. That potential customer might benefit from that specific social media platform, so do your best and capitalize on it by organizing an effective marketing campaign.
By digging deeper into this metric, you can focus money and energy on the channels that produce results, such as channels with a consistent flow of returning customers. That way, you are putting a marketing effort that will never go to waste since it will be productive anyway.
This is a metric you want to continually drive up in any eCommerce site. One of the best uses for this information is knowing when to offer free or reduced shipping – if the average existing customer is spending $29, offering free shipping at $35 will entice them to spend a little more on your eCommerce platform.
Of course, the shipping cost has to be balanced out by the number of customers increasing their order – which is why you want a good analytics platform crunching your data.
We’ve all put items into online shopping carts and then left them – and we always have our reasons. When customers do it, though, they don’t tell us their reasons, which is frustrating – but also an opportunity.
If your abandonment rates are too high – and much like conversion rates, you’ll want to benchmark yours against similar sites in your market and geography – take a look at why. Common reasons include:
There are many reasons, so having a good visualization of the data will help understand where the problems may lie and how to correct the situation.
There are usually extra costs associated with a return. The dreaded return rate can really eat into profits. You’ve got to go back and adjust the profits you’ve already recorded.
All in all, it’s a rate you want to minimize – and to do that, you need to understand why items are being returned. Is it a defective product, or simply one that could be represented better?
Analyzing the data will help determine whether you need to take better pictures and write better descriptions to improve customer expectations or just ax the product line.
Just as you need to know what doesn’t work, you need to know what does. Depending on the type of business you run, you may want to keep some extra inventory on hand or ensure your supply chain is geared up to produce in-demand products.
You can also get insights into items that perform well that could get better placement on your site, leading to more sales.
Data privacy laws have made sending an unsolicited email a very bad idea, so you want to make sure you’re only sending emails to people who have opted into your mailing list.
That, of course, is a number you’ll want to keep a close eye on. Having active, involved customers on a mailing list is much better than a social media campaign or another platform that you don’t own – with an opt-in email list, you’ve got direct access to customers who have chosen to be there, and you can choose the method and medium of messaging.
It gets back to the “cost of acquiring new customers versus retaining existing ones” calculation – you want to keep an eye on that mailing list to make sure you’re adding, not subtracting.
There are many more metrics you can and should watch. Still, these are just a few that can be monitored with a good business analytics platform to keep your e-commerce shop a success. It can be hard to manage an e-commerce shop while keeping your eyes peeled on these metrics to ensure that you are progressing enough, so having a trusted tool that you can use with the level of technology you need for this endeavor is a must.
DashboardFox is equipped with everything you need related to checking the metrics of your e-commerce business. Here’s how.
Time is gold in any business. Thus, we don’t want to waste your time on something we can help you do in a shorter period. DashboardFox understands that, and that’s why with our technology, you can whip up dashboards and reports that you need in checking your e-commerce’s status and progress. DashboardFox eliminates the need to hire an entire team to handle these concerns because we designed it to be more efficient and less time-consuming. It’s a win-win situation for us.
With DashboardFox, you get to save more money and get more tasks done. As a one-time fee BI platform (versus those recurring annual subscription tools), we tend to be a lot more affordable and less expensive than the other industry contemporaries. Still, we never scrimp on the quality of our work just because we cost less.
We’re simply passing on the savings as a small, lean, bootstrapped business without the burden and overhead of paying tons of staff, building, and advertising budgets like the other BI vendors.
We know how frustrating it can be when you need something from your BI tool, but no one from the developing team can help you. Instead, you have to file tickets all over, be escalated to different departments without any success at the end. DashboardFox hates that, and we made things better for you.
When you buy our BI tool, not only do you get the BI tool, but you also get a new remote team. Confused? Well, with DashboardFox, we have a dedicated team of experts who can help you with all your BI needs without having to wait for several days or even weeks. Again, time is gold, and every minute wasted is wasted money.
If you are a person who believes in “To see is to believe”, then DashboardFox offers further assistance; either give us a call (we’ll be waiting) or book a live demo with our team of experts to see the magic we can bring to your e-commerce business. This is not a high-pressured sales call, as we know you have already decided (winks).