5 Key Ecommerce website metrics to measure success
Updated: Nov 2
Ecommerce is a booming industry that offers many opportunities for online businesses to grow and succeed. But, with so much competition and customer expectations, it can be challenging to keep track of how well your Ecommerce website is performing and what areas need improvement.
That's why it's essential to measure success and analyze key Ecommerce website metrics that can help you evaluate your website's performance, identify strengths and weaknesses, and make informed decisions that drive growth.
In this blog post, we will discuss five key metrics that you should measure to gauge the success of your Ecommerce website.
Key Ecommerce website metrics are:
Average order value
Customer acquisition cost
Cart abandonment rate
Return on investment
Let's dive into each of these metrics and see why they are important and how to improve them.
1. Conversion Rate
As an Ecommerce business, your conversion rate is one of the most important metrics to track. It tells you the percentage of website visitors who make a purchase out of the total number of sessions. The formula for calculating the conversion rate is:
Conversion rate = (Number of purchases / Number of sessions) x 100
A high conversion rate means that your website is effective at turning visitors into customers, which means more revenue for your business. A low conversion rate means that you are losing potential customers and leaving money on the table.
To improve your conversion rate, you should:
Optimize your website design and user experience to make users easier to do necessary for you actions to make shopping on your website
Use clear and compelling copy texts and calls to action to keep users attention on what you expect they need to do
Offer free shipping, discounts, and other incentives to make your proposal more attractive
Provide multiple payment options to make purchases easier
Test and tweak different elements of your website to find out what content works better
2. Average Order Value
Another important metric to measure the success of your Ecommerce website is the average order value (AOV). It tells you the average amount of money that customers spend per order on your website. The formula for calculating AOV is:
Average order value = Total revenue / Number of orders
A high AOV means that you are maximizing the revenue from each customer, which means more profit for your business. A low AOV means that you are not fully utilizing the potential of each customer, which means lower profit margins.
To improve your AOV, you should:
Upsell and cross-sell related products and services to increase the number of purchases per user
Offer bundles and packages to increase the number of items in a card
Create loyalty programs and reward points to stimulate your clients to buy more
Provide free shipping thresholds and minimum order discounts to make your proposal more attractive and stimulate clients to buy more at once
Segment your customers based on their purchase behavior to propose relevant products and services to your clients
3. Customer Acquisition Cost
Customer acquisition cost (CAC) is the amount of money that you spend to acquire a new customer. It includes all the marketing and sales expenses that you incur to attract and convert a customer. The formula for calculating CAC is:
Customer acquisition cost = Total marketing and sales expenses / Number of new customers
A low CAC means that you are spending efficiently to acquire new customers, which means more return on investment (ROI) for your business. A high CAC means that you are spending too much to acquire new customers, which means lower ROI and profitability.
To reduce your CAC, you should:
Optimize your marketing channels and campaigns - effectiveness is a key
Use referral programs and word-of-mouth marketing - nobody disagrees that a referred lead - is the cheapest lead
Retarget your website visitors and email subscribers - it is always easier to keep current client than attract a new one
Leverage user-generated content and social proof - we trust those people, who are similar to us
Increase your organic traffic and SEO ranking - still actual old good validated approach
4. Cart Abandonment Rate
Cart abandonment rate (CAR) is the percentage of website visitors who add products to their cart but leave without completing their purchase. The formula for calculating CAR is:
Cart abandonment rate = (Number of carts abandoned / Number of carts created) x 100
A high CAR means that you are losing a lot of potential customers and revenue at the final stage of the buying process. A low CAR means that you are providing a smooth and frictionless checkout experience for your customers.
To reduce your CAR, you should:
Simplify and streamline your checkout process - it should be no barriers to your client’s journey
Offer guest checkout and multiple payment options - as more flexibility - as better
Display clear shipping costs and delivery times - managing expectations is important
Provide trust signals and security badges - it is easy to lose trust, never do so
Send cart abandonment emails and reminders - but not too often
5. Return on Investment
Return on investment (ROI) is the ratio of the net profit that you generate from your Ecommerce website to the total investment that you make. It tells you how much money you are making or losing from your Ecommerce business. The formula for calculating ROI is:
Return on investment = (Net profit / Total investment) x 100
A positive ROI means that you are earning more than you are spending, which means that your Ecommerce business is profitable. A negative ROI means that you are spending more than you are earning, which means that your Ecommerce business is losing money.
To increase your ROI, you should:
Increase your conversion rate and average order value
Decrease your customer acquisition cost and cart abandonment rate
Optimize your pricing and product mix
Reduce your operational costs and overhead
Analyze your data and performance regularly
Throughout this blog post, we have discussed the five key metrics that you should focus on when measuring Ecommerce success. These metrics include conversion rate, average order value, customer acquisition cost, cart abandonment rate, and return on investment.
By tracking and analyzing these metrics, you can gain valuable insights into your Ecommerce website's performance and identify areas for improvement. You can also use these metrics to set realistic and measurable goals and create action plans to achieve them.
We hope that this blog post has helped you understand the importance of Ecommerce metrics and how to improve them. Please share which metrics you use and which ones you think are worth implementing.