Did you know you’re twice as likely to hit a business goal you track? Whether it’s a goal you want to hit next week or in 5 years, monitoring your progress can be the difference between success or failure.
From this logic, observing your eCommerce business performance can position you for huge wins. Yet just 1 out of 10 small to medium-sized businesses with growth targets track them in real-time. It’s time to turn over a new leaf. To get you started, we’ll share the essential eCommerce to follow and when. Let’s dive in!
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Why tracking KPIs and metrics is essential for growth-focused eCommerce brands
Right now, you’re probably tracking areas in your business, like outbound shipments and great customer feedback. But tracking KPIs and metrics is necessary to move the needle in your business growth. Let’s cover some reasons why:
- Get and stay on track: There’s nothing like knowing what you want and establishing a plan to get there. KPIs and metrics help you gain clarity on whether the actions you’re taking are edging you closer to your goals.
- Spot developing opportunities and issues: If there’s a problem in your business or potential troubles on the horizon, tracking metrics will allow you to pinpoint and course correct sooner. This perk minimizes losses and disruptions.
- Make your store more profitable and efficient: Efficiency across the board is critical to driving profits. Tracking KPIs helps you move each business area closer to its optimal levels strategically.
Essential eCommerce KPIs to track monitor
Now we know why tracking KPIs is critical. It’s time to take your eCommerce business to the next level with the right intel. Let’s jump into the top eCommerce KPIs and metrics to keep tabs on:
KPI and metrics to track annually
Product category performance
Product category performance is a metric that analyzes how a product category is performing in terms of its sale. You can compare past performance or different product categories.
How to check your product category performance
- Create reports from your store analytics for each product category you sell.
- Find product category performance results from competitors or on marketplaces to use as benchmarks.
- Compare the results.
Why tracking your product category performance is important
- Monitoring product category performance Drive business growth by gaining data on which product categories are the best investments and which ones to cull.
High gross margin items
Tracking high gross margins identifies the top-performing items in terms of margins. For example, products with a 50% margin. What counts as a high margin will depend on your product type, niche, and business circumstances.
How to find your gross margin items
- Run through your product portfolio and organize it by margins
- Highlight the items with the highest margins
Why tracking your product category performance is important
- You can use the information to guide your sales and marketing strategies, such as which products you can afford to use paid search and influencer marketing.
- Know which customer types or audiences you should prioritize investing into by assessing the products bought.
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KPIs and metrics to monitor quarterly
Customer Lifetime Value (CLV)
Customer Lifetime Value measure how much a buyer is worth in net profit to your business on average throughout their time as your customer. For example, a buyer could be worth $4000 over the 7 years they shop with a brand.
How to check your CLV
Average transactions each month x Average Order Value x Average Gross Margin x Average customer lifespan in months / Number of buyers in a specific timeframe
Why tracking your CLV is important
- CLV gives you insight into whether you’re retaining customers and, if so, how successfully. From here, you can act to improve customer retention and double down on what’s working.
- Once you have your CLV figure, you can gauge how much profit you can anticipate in a certain period. This information helps you plan business investments.
Gross profit margin
Gross profit margin is a KPI assessing a business’s financial health. It highlights how much cash you have left once you’ve paid off the fixed and variable costs from inventory manufacturing.
How to calculate Gross profit margin:
Revenue – COGS / Revenue = Gross Profit Margin = Gross profit margin
Why tracking gross profit margin matters:
- This KPI provides a simple way to monitor your store’s financial health. You’ll know very quickly whether your store’s revenue exceeds its costs.
- Gain insight on stock-related trouble so you can course-correct. For example, if you’ve got a history of shakey gross profit margin results, it could indicate poor market fit or insufficient inventory management.
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KPIs and metrics to measure monthly
Cart Abandonment Rate (CAR)
Your store’s Cart Abandonment Rate reveals the percentage of shoppers that add to cart on a website but don’t complete their order and exit.
How to check your CAR
1 – Number of completed transactions/ orders started but not finished x 100 = CAR
Why tracking your CAR is important
- High CAR can indicate issues in your shopping experience, e.g., a lack of product information or on-hand assistance.
- Abandoned carts don’t just represent lost sales but also potential growth. So tracking CAR and taking corrective actions can help you lessen the blow.
A conversion rate measures how many visitors turn into a conversion n a percentage. A conversion can be a sale in your eCommerce store(s), but it can also represent a lead generated from a marketing campaign.
How to calculate your conversion rate
Number of conversions/ total number of visitors = conversion rate
Why tracking your conversion rate is essential
- Low conversion rates could highlight friction in your store’s buying experience.
- Improving conversion rates will directly improve your store’s revenue.
KPIs and metrics to track biweekly
Average Order Value (AOV)
Average Order Value is the typical amount a shopper spends with a store per transaction. To get a well-rounded view of your eCommerce store’s results, it’s critical to look at this metric in tandem with your conversion rate and Lifetime Revenue Per Visitor metrics.
How to check your AOV
Revenue / Number of purchases = AOV
Why tracking your AOV is important
- AOV helps you understand whether your store’s pricing strategies align with your store’s revenue goals and are driving growth.
- Tracking AOV gives you insight into where there’s room for improvement. Once you optimize your AOV, it can have positive knock-on effects on your store’s takings and gross profits.
Customer Acquisition Cost (CAC)/ Cost Per Acquisition (CPA)
CAC (or CPA as its also known when conversion symbolizes an event, e.g., email signup) reveals how much cash it takes to acquire a new customer for your online store.
How to calculate CAC:
(Total Cost of Sales + Total Cost of Marketing) / New customers secured = CAC
Why monitoring your CAC is important:
- Tracking your store’s CAC reveals whether your sales and marketing strategies are productive in getting new customers.
- Your CAC can guide your marketing investments for better results. E.g., spotlighting campaigns that perform well.
- Reveals your true marketing costs so you can plan budgets more accurately.
Metrics to track weekly
Revenue, also known as income, turnover, or sales, shares how much capital your business brings in over a certain period, e.g., week, month, or quarter. It’s also a good idea to look at sales per product, per channel, and velocity compared to the week and month prior.
How to check your revenue
Pull a sales report from your store’s data. It should account for all completed sales on every channel.
Why tracking your revenue is important
- Cashflow is the lifeblood of every business. Tracking your revenue will keep you informed on whether you’ve got enough capital coming through the doors to cover your obligations.
- Revenue figures indicate whether your marketing and sales initiatives are viable.
This metric tracks how many visitors your store gets over a certain timeframe. It’s important to consider the niche and channel average traffic to benchmark and understand your store’s performance.
How to monitor website traffic
- Use analytics software like Google Analytics, Crazy Egg, or Kissmetrics.
- Note: there may be some slight variations in results due to data lags and differences in interpreting information.
Why watching website traffic is important:
- The more visitors you can get on to your store, the more opportunities you’ll have to convert them into pay customers.
- Know whether your marketing campaigns are driving sufficient traffic.
A return rate is the percentage amount of orders sent back to you from a customer.
How to calculate your return rate
(Quantity of returned items / Total completed orders) x 100 = Return rate
Why analyzing your return rate is important:
- You can single out problem items and eliminate the stock. Conversely, you can see which customers rarely return and mimic their qualities for even better results.
- A high return rate can signal you to take a closer look at your product portfolio.
Beat the pack with eCommerce KPIs
Your eCommerce store’s dashboard and analytics may look like numbers on a page, but the opportunity lies in the data. Keeping an eye on eCommerce KPIs gives you an objective view of your eCommerce marketing, sales, and product performance. Executing optimizations based on hard facts can power growth, customer satisfaction, and profitability. So take steps now to track eCommerce KPIs to make your eCommerce business more efficient and fruitful.
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