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Case Study | Apr 1
Jessica Greene on September 9, 2019 (last modified on September 10, 2019) • 16 minute read
By broadening the number of ecommerce KPIs you’re tracking, you can get more insight into how every aspect of your funnel is performing. Are you investing your advertising budget wisely? Are you spending too much to acquire new customers? Are your customers loyal?
Tracking the right KPIs gives you the data you need to answer these questions confidently.
To find out which metrics are the most important to track, we asked 58 marketers to weigh in with their votes on the most important ecommerce KPIs. For our initial poll, conversion rate came out on top:
But in their individual comments, our respondents also recommended tracking many metrics we didn’t include in our poll.
From conversion rate to bounce rate, return on advertising spend to customer lifetime value, here’s what our respondents said are the 23 most important ecommerce KPIs.
In both the poll above and our contributors’ individual responses, conversion rate received the highest number of votes as the most important ecommerce KPI.
“Without a doubt, conversion rate is the top KPI for ecommerce websites,” says Jaykishan Panchal of E2M Solutions. “Conversion rate is the number of visitors that take action on your website divided by the total number of visitors. That action might refer to a signup, inquiry, account creation, sale, etc.”
“In a nutshell, your conversion rate is indicative of how successful all of your business strategies are in getting people to engage with your ecommerce website. Ultimately, it impacts just about every other KPI involved in ecommerce,” Panchal says.
Robert Rand of JetRails agrees: “If you’re increasing your conversion rates, you’re typically going to see improvements in your other stats.”
“Your conversion rate is especially important for ecommerce businesses that want their customers to make a purchase,” says Andrew Ruditser of Maxburst. “It’s important to know if your strategies are working to push users to buy your product.”
“In order to know if these strategies are working, you must keep track of your conversion rates. This will give you a better understanding of which strategies work best for your company—and which do not,” Ruditser says.
At Superior Honda, Julien Malet says that “comparing month-to-month and year-over-year conversion rates allows us to pinpoint the source of our increased revenue. And setting quarterly KPIs for our goal conversion rate helps us stay on track to achieve our desired percent increase in annual revenue.”
Editor’s note: Shopfiy users can easily track their conversion rates—alongside several of the other KPIs on this list like average order value, bounce rate, and revenue per site visitor—by grabbing this free Conversion and Loyalty Analytics dashboard.
As you start tracking your conversion rate, you may find yourself asking if your conversion rate is good or not. To provide you with some benchmarks, we asked our respondents what they think is a good conversion rate for an ecommerce business.
Nearly half of our respondents said that a good conversion rate for an ecommerce business is between 1-4%. However, a good portion of the other half of our respondents said that a good conversion rate is between 26-50%:
In the end, the type of ecommerce business you’re running plays a big role in your average conversion rates, which likely accounts for the disparity in responses.
However, you can still use this data to benchmark your site’s conversion rates. If your conversion rate is currently on the lower side of the 1-4% range, try to get it closer to 4%. If it’s hovering in the low 20% range, aim for 26% or higher.
A couple of respondents also offered suggestions for how to improve your conversion rate.
Alistair Dodds of Ever Increasing Circles recommends “improving your conversion rate through onsite optimization split-testing, threshold-free shipping pricing, product bundles, and FOMO. With the same amount of traffic, you can effectively double or triple your revenue through effective conversion optimization testing.”
Kevin Williams of SurgeStream offers a few more recommendations:
Krzysztof Surowiecki of Hexe Data recommends taking your conversion rate tracking a step further and tracking conversion rate per traffic channel.
“This gives you more information on where to invest your budget do you don’t burn cash. It shows you how different channels are performing so you can move your budget from the worst-performing channels to better-performing ones. That’s a smart way to allocate your money and drive growth.”
“Customer lifetime value is the most important KPI to track according to our research,” says Gunjan Kumar of Semantics3.
Kurt Elster of The Unofficial Shopify Podcast agrees: “No metric captures the overall health of an ecommerce business quite like customer lifetime value. Conversion rate, average order value, and return customer rate are all reflected in CLTV.”
“Successful ecommerce businesses are all about building a brand connection with a customer and then becoming a go-to hub for that customer for years to come,” says Casey Hill of Bonjoro.
And as Paul Boudet says: “When you focus on CLTV, your focus shifts to increasing the value of each customer by improving their experience with the brand.”
“Knowing how much revenue a customer generates over his/her lifetime can help you invest in the right channels sooner, even if your competitors shy away because the direct revenue from that channel appears to be unprofitable,” says Troy Fawkes of Delta Growth.
And in addition to tracking your CLTV, Andrew McLoughlin of Colibri Digital Marketing also recommends tracking it “relative to the intake point to make sure that the business is growing steadily. Lifetime value should increase so that a new customer this year has a higher value than a new customer a year ago.”
“While there’s no denying the importance of expanding as a business and reaching new consumers, long-term success is often attributed to a company’s customer retention rate,” says Nate Masterson of Maple Holistics.
“In practice, having customers come back for more is a sure sign that your ecommerce efforts are not being wasted, especially since repeat customers often refer new customers.”
“Therefore, it’s crucial for companies to monitor their customer retention rates to see if consumers are coming back—and to determine what’s driving them to stay or pushing them to leave. In turn, this will naturally have an effect on attracting new consumers,” Masterson says.
Otmara Diaz-Cooper of Diaz & Cooper agrees: “A Harvard Business School study shows that just a 5% increase in retention can increase profits anywhere from 25% to 95%. Finding ways to get more business out of existing customers is hugely profitable and cost-effective.”
Lars Lofgren of Quick Sprout says that the most important ecommerce KPI to track is annual repurchase rate. “If the bulk of your customers come back every year, you can focus on product quality and loyalty. If you have to rebuild your customer file every year, you have an acquisition-driven business.”
“Professionals look for customer loyalty,” says Renann Mendes of Profissional de E-commerce. “If customers are coming back, it means you’re doing something right. Some experts say that a company with loyal customers has more value.”
“While there are several important ecommerce KPIs to track, a great place to start is monitoring your average order value,” says Andrea Rijna’ of Sana Commerce.
“Your average order value is the average amount of money a customer spends per transaction. It’s a key KPI because it helps measure how well you capitalize on cross-selling and upselling opportunities.”
“Increasing your average order value is one of the most efficient ways to increase your ecommerce revenue,” Rijna says.
Jordan Gal of CartHook agrees: “The higher your AOV, the more you can spend to acquire a new customer. The acquisition costs can come in the form of performance, brand marketing, or any other spend. If you can increase your AOV, you can acquire more customers.”
Editor’s note: Need an easier way to track your average order value? Grab this free Ecommerce Full Funnel dashboard to track AOV alongside overall revenue, revenue by channel, conversion rate, top products, and more.
Dennis Moons of Store Growers says the most important KPI to track is net profit. “If you’re turning a profit, it means your foundation is good. It gives you breathing room and allows you to invest in sustainable growth.”
Linda Bustos of Ecommerce Illustrated agrees: “It’s very easy to boost conversions through aggressive discounting, digital marketing, and free shipping offers. But the bottom line’s the bottom line.”
“Cart abandonment rate is one of the most important KPIs for ecommerce,” says Ben Johnston of Sagefrog Marketing Group.
Mark Hayes of ROCKETSHP agrees, saying “if you can lower your cart abandonment rate, it easily generates more revenue.”
“When trying to fix a high abandonment rate, I look for things like a complicated checkout process or too-high shipping costs, and then I work with clients on fixing those. In one client’s case, fixing an overly complicated checkout process lead to $100,000 in additional revenue,” Hayes says.
“Think of cart abandonment as a source of resistance,” says Eric Melillo of COFORGE.
“If there’s too much product info, the page may seem heavy. If there are too few features or weak photography, the product feels less valuable. If pages load slowly or there are too many checkout steps, users get impatient. Inflexible or problematic checkout processes cause the user to get frustrated and bail.”
“Monitoring each friction point can help ease the checkout process. Typically, they are easy fixes that create quick wins, produce less abandonment, and generate more completed sales,” Melillo says.
Dennis Edward of Core dna recommends tracking “the not-so-popular metric add to cart rate. Add to cart rate tells you what percentage of your visitors actually added a product to their carts.”
“This is important because it tells you if you’re attracting the right audience, if your visitors come to your site with a specific purpose in mind (or if they’re ‘just looking around’), and if your products and/or prices meet your target consumers’ expectations.”
Yigit Kocak of Prisync says the most important ecommerce KPI is “orders per active customers.”
“Orders per active customers measures the average number of orders that active customers make during a specific time period. It’s an indicator of whether or not the business is attracting frequent shoppers and is directly related to growth and revenue.”
“For us, the most important ecommerce KPI is gross merchandise volume: the total value of merchandise sold over a given period of time,” says Samuel Gibson of Enjovia.
“Many other metrics are critical to improving conversions and sales, but GMV allows us to see the overall success of our ecommerce platform in one figure. Ultimately, if the overall volume is increasing, we are growing, and customers are using the system.”
“If I had to choose one KPI to focus on for ecommerce websites, it would be ROI,” says Jonathan Aufray of Growth Hackers. “If you’re able to get a positive ROI with your product, you can reinvest your profits into growth, traffic, ads, and conversion rate optimization so you can scale.”
“To get a positive ROI, keep improving your conversion rate while decreasing your lead costs.”
“More and more ecommerce businesses are relying on influencers to help them increase their reach/brand awareness, traffic, and sales,” says Josh Brown of Helpjuice. So if you’re ecommerce business uses influencer marketing, Brown recommends tracking influencer ROI.
“The problem is that too many businesses look at vanity metrics like how many likes/shares/comments an influencer post received. Instead, you should measure if that activity helps you reach your marketing goals (and ultimately a positive ROI).”
“Return on advertising spend is an important metric for ecommerce businesses that use online advertising,” says Anthony Capetola of Sales & Orders. “ROAS lets you assess how effective an ad campaign is, allowing you to determine what adjustments need to be made for any given advertising campaign.”
Monica Eaton-Cardone of Chargebacks911 agrees: “Monitoring return on ad spend ensures your efforts are leading to an increase in revenue.”
Editor’s note: Need an easier way to track your ad spend across multiple platforms? Grab the free Facebook Ads and Google Ads dashboard below to get a consolidated view of the metrics you need to calculate your return on ad spend on both channels.
“To me, the most important metric for an ecommerce business to track is return on marketing investment,” says Jeromy Sonne of Moonshine Marketing.
“This is the culmination of the labor, tools, and advertising spends across your entire organization versus your revenue coming in. The chief concern of any ecommerce operation should be to have a healthy ratio of marketing resources out versus revenue coming in.”
“The single most important KPI in ecommerce is cost per acquisition,” says Kyle Parsons of Ascenditt. “CPA is the metric that calibrates for all other KPIs to tell us if they are performing at sustainable levels. If we know our CPA, then we can safely project our ROI, which is vital to scaling up.”
“For example, if your ecommerce store converts at 7%—but your CPA leaves no room for profit on the sale and lifetime value of the customer—then 7% is actually not a good sustainable number. CPA allows us to look at every other KPI with an honest vision and determine if we’re on the right track.”
“One of the most important—yet often overlooked—ecommerce KPIs is customer acquisition cost,” says Djordje Milicevic of StableWP. “It’s the amount spent to acquire customers divided by the number of acquired customers; it tells you how much money it takes to buy a customer.”
“Knowing and understanding CAC is critical. An ecommerce business selling high-ticket items for $1,000+ is okay paying $100 to buy a customer, but if you’re selling items with a $50 price tag, you can’t afford that cost. For this reason, it’s essential to keep your CAC in check at all times.”
“Think of it like this: you could make more sales by throwing more money into marketing. But if your CAC goes up, making more sales could actually bring down your profits. You’re bleeding money on acquiring new customers. If you don’t track your CAC, your business may soon collapse, and you won’t even know why.”
“Understanding your CAC helps you plan how many customers you want to acquire in a certain period and then allocate your marketing budget appropriately to get the highest performance and profitability,” Milicevic says.
“The most important ecommerce KPI is average profit per customer,” says Stan Tan of Selby‘s. “The more profit you can get out of a customer, the more you can afford to spend on acquiring that customer.”
“For example, if each customer on average is worth $1,000 to you, you can afford to spend anything below $1,000 to be profitable. Whereas if a competitor’s average profit per customer is only $200, they can’t spend anything above $200—but you can because each customer is worth more.”
Chloe Thomas of eCommerce MasterPlan recommends tracking revenue per site visitor. “This removes all of the bumps and enables you to quickly track performance across time.”
Editor’s note: Calculate your revenue per site visitor easily using this free Google Analytics Ecommerce Sales dashboard that shows your gross revenue and number of site visitors together on a single screen.
“The most important ecommerce KPI really depends on your marketing strategy,” says Jeff Neal of The Critter Depot. “Ours is creating in-depth and informative care guides for reptile owners, so the metric we’re obsessively tracking is time on site for our care-guide pages.”
“We believe if users are spending more time on the site and learning about reptiles as pets, then they are more likely to purchase live insects from our store.”
“An important ecommerce KPI I track is bounce rate,” says Louis Watton of Shiply. “If lots of users are bouncing off of a page quickly, then you need to assess why that is. Are they not seeing the price they want? Not enough product images? No reviews or reasons to trust the site?”
“The longer people stay on your site, the more familiar they get with your company, and the more likely you are to make a sale.”
“Search rankings are important for measuring the growth performance of an ecommerce store. This will indicate whether your on-page and off-page efforts are working or not.”
“For example, if your desired landing page is ranking on the second page of Google, your next step is to check if it is properly optimized. Is the content creating any relevancy with the page? Does it have the required keywords?”
Finally, David Hoos of The Good recommends tracking customer satisfaction.
“If you’re making improvements to your overall customer experience, it will have a positive effect not only on your conversion rate, but it will also often contribute to an improved return on ad spend, average order value, abandonment rate, and lifetime value.”
Now that you know the KPIs you should be tracking for your ecommerce store, the next step is deciding which tool(s) you should use to track those metrics.
We asked our respondents which ecommerce analytics tools they use to track these 23 metrics and got a lot of different responses. However, the most-used tools included Google Analytics, Databox, Shopify, HubSpot, Mixpanel, Kissmetrics, and Crazy Egg.
If you’re interested in using Databox to track the performance of your ecommerce store, you can browse all of our dashboard templates to find one that’s right for you, or you can build your own custom dashboard using data from 70+ integrations like Shopify, WooCommerce, Google Analytics, Facebook Ads, and more.
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