The e-commerce industry is booming. In fact, it’s believed to be valued $4.2 billion by 2020. That means there are more opportunities for you to grow than ever. However, you have to measure your store’s performance or you’ll find behind.
There are mountains of e-commerce companies that don’t measure any KPIs or milestones. How do they know their growing? They don’t, really.
That’s why you need to ensure that you have clear key performance indicators. These are metrics you analyze on a regular basis to make sure that your e-commerce business is growing consistently.
Keep reading if you’d like to learn the 5 most important metrics to track for e-commerce growth.
Many e-commerce entrepreneurs pay attention to vanity metrics like users and social media followers. While they do have their merit, it doesn’t matter how much traffic you drive if most of it doesn’t convert. That’s why tracking your store’s conversion rate is critical.
The conversion rate is simply the number of users that come to your store and purchase. If you have 100 users come to your store on a single day and three check out, that’s a 3% conversion rate.
So, how can you begin improving your conversion rate? There are many ways. Try the following strategies to see for yourself:
- Use a heatmap tool to determine where users are clicking and interacting with your store. This helps determine what elements are distracting customers and what products they like.
- Pay attention to what products sell the most and market those more.
- Refine your buyer’s persona to improve targeting in PPC, marketing, and other advertising campaigns.
- Use high-quality images that show off every detail of products.
- Offer free shipping and discount codes to entice customers to check out.
Average order value
Imagine increasing your e-commerce store’s revenue without driving more traffic or conversions. This can become a reality by improving the average order value. This is the measurement of how large a typical order is from your business.
Let’s say that the average order of your business is $100. If you increased that to $125 and you make 100 sales per month, suddenly you’re earning $12,500 from $10,000.
E-commerce stores can increase their average order value through a variety of means. The first way to do this is by simply increasing the price of products. If you decide to, carefully observe how it affects sales. You may find that sales continue to remain steady, yet you’ve instantly increased revenue.
Secondly, offering bundled deals can boost average cart value. This can be done accomplished through grouping similar products and offering them as a single product. They are often discounted, as well.
Lastly, e-commerce store owners can take advantage of discounts and shipping offers. This promotes customers to add more to their carts since they will save on their total later.
How many of your customers return to purchase from you again? If you don’t know the number off the top of your head, you need to analyze it quickly. It’s easily one of the most important metrics to know as an e-commerce business.
While it’s great that you can drive new customers to your store, wouldn’t it be nice to have customers come back in the future? You don’t have to win them over via marketing or advertising as they already enjoy what you sell and trust your brand.
You can improve the number of customers who return to your store through great customer service. If you treat them in a positive and professional manner while satisfying their buying needs, they’ll be much more likely to come back again.
Secondly, e-commerce stores can invest in retargeting ads that target customers who have shopped previously from you. This is normally done via a Facebook pixel which you can add to your store in the click of a button.
Did you know that 69.57% of carts become abandoned later? That means nearly a third of customers never finishing checking out. Think about all of the money you’re losing!
It doesn’t have to be that way, though. You can improve the number of cards that are abandoned with an abandoned cart recovery strategy. These are the steps you take for contacting customers to remind them that they haven’t finished checking out.
Most e-commerce platforms have built-in cart recovery systems which you can customize. The key is to not be overly pushy. We suggest sending a recovery email one to two days after it’s been abandoned. You can increase conversion rates by offering a special discount or coupon for enticing them to come back, as well.
Customer lifetime value
What is a customer worth to you over their lifetime of shopping from your business? If you could increase this value, would it drastically improve revenue? This is important to understand because it shapes marketing and advertising budgets.
For example, if you know that a customer is worth $1,000 over time, then you would be more willing to spend hundreds to acquire them as it will have a good ROI.
This metric can be improved by building relationships with customers through email marketing. Having them subscribe to your newsletter allows you to keep in touch over the long term. As a result, you improve the odds they will continually shop from you.
E-commerce stores can also collect feedback from customers via forms, surveys, and questionnaires to enhance user experience. If customers enjoying shopping on your store, they will be more likely to keep coming back, increasing their lifetime value.
Wrapping up e-commerce KPIs
The opportunities for growing eCommerce are more plentiful than ever. However, you have to be proactive or you’ll miss out on them. That’s why you need to make sure you begin tracking the major KPIs we touched on today.
Analyzing and testing these indicators will help you increase revenue, customer lifetime value, and the user experience of your store.
Carmine Mastropierro is a freelance copywriter who has written for Neil Patel, GoDaddy, Smart Insights, and other publications.