E-commerce is a massive business, and it is only going to continue to grow in the future, which means that you need to get your business online, even if you are running a brick-and-mortar store. The numbers tell the same story. According to Statista, there were 1.66 billion digital buyers in 2017 alone, with the same number projected to climb up to 2.14 billion in 2021. Seeing as there are about 7.6 billion people in the world, that means that 21.8% of the global population are buying goods online, which is a staggering number and more than enough reason to convince you to get on the E-commerce bandwagon.
Another reason why E-commerce is the future is the fact that only 2.86% of all visits to E-commerce websites end with a purchase, which means there is plenty of room for growth. There are plenty of other advantages of opening an E-commerce business, such as lower costs, working hours (online stores are open 27/7), and providing better information about a particular product or service. However, since more and more businesses are going online, there is much more competition as well. It is no longer enough to simply offer your product at a lower price than your competitors would, since online shoppers have a huge variety of different options at their disposal when looking to buy a product.
This is why E-commerce businesses are obsessed with data that can help them get ahead of their competitors and why they are interested in monitoring different E-commerce metrics as much as they are in creating a high-quality product. With that in mind, let’s take a look at the seven most important E-commerce metrics you’ll want to check out in order to improve your business.
1. Sales Conversion Rate
Your sales conversion rate is probably the most important metric you should be looking at, whether you are running a cheap essay service or a sporting goods store. Although it sounds somewhat complicated, your sales conversion rate is nothing more than the number of your sales divided by the number of your leads. In other words, if your E-commerce store gets 5,000 visitors a month, and 5 of them end up making a purchase, your conversion rate is 0.1%. That is a pretty low rate, but by performing conversion rate optimization, you can easily boost that number to 1-5%, which means you will make 10-50 times as many sales.
According to Elizabeth Cross, who works as a marketing expert for ResumesPlanet, they have been able to increase their conversion rate from 1.15% to 4.27% through CRO. Here is what you should do for your business:
- Improve your product listing
- Add high-quality images to your E-commerce website, especially on product pages
- Add trust badges which will let the customers know that you’re a trustworthy store
- Publish reviews from satisfied customers in order to inspire trust
- Offer discounts and giveaways
- Add a live a chat feature on your website that will enable customers to contact your support team directly.
Finally, the reason why you want to optimize your conversion rate is to save money. For instance, if you are constantly spending money on driving traffic to your website and your conversion rate is still low, perhaps traffic volume is not your problem. As for tracking your sales conversion rate, there are plenty of tools out there such as Google Analytics, which will enable you to get an in-depth look into data regarding your traffic and sales.
2. Website Traffic
Let’s say you have a conversion rate of 4.5%, which is a pretty good number by any account. In practice, that means that your E-commerce business is making 45 sales per 1,000 visitors. If we assume that your conversion rate is constant, by increasing the number of visitors to 10,000, you should make 450 sales! Of course, your conversion rate is never a constant in real life, but you get the idea about the impact of traffic volume on the success of your E-commerce business.
According to Jennifer Miller, who is the head of marketing for Nerdywriters, they were able to drive more students to their assignment help services by cultivating an active social media presence. Obviously, everyone uses social media nowadays, and the only obstacle standing in your way is figuring out which social media platforms your target audience hangs out on. In addition to social media, SEO plays a huge role as well. We are talking about on-page SEO, creating high-quality content, and building backlinks.
Finally, there is influencer marketing, which has emerged as a valuable tool for marketers in recent years. Building a relationship with an influencer in your niche can get your products in front of their audience, which not only drives traffic and social proof, but your sales, too.
3. Email Opt-Ins
Email marketing is the most effective form of marketing if ROI is anything to go by (and it is). For every $1 you invest into email marketing, you get $44 back, provided that you have done it right. However, since your average users receives over 100 emails every day, getting their attention and convincing them to opt-in to your list is not easy. Email marketing is also convenient because it can be tracked easily either via Google Analytics or by contacting your local ISP.
As for improving your email opt-in conversion rate, what you need to do is offer incentives, according to Steven Hall, who works as a marketer for Ninjaessays.com. Lots of businesses make a mistake of simply updating their customers about stuff they don’t really care about, so they end up ignoring them. Give them something they are interested in. For instance, if I am a college student, I would be much more likely to order my custom essay and opt-in if I can get it at a discount price.
This also works if you are an online store. You can simply send emails with offers and discounts to customers for those items which they were previously viewing.
4. Revenue by Traffic Source
Having a lot of traffic is great, but those traffic numbers are only providing you with partial information if you are not bothering to look into which traffic sources are working for you. That is why revenue by traffic source is such an important metric in E-commerce. If you have a set budget for your marketing activities which are supposed to drive traffic to your E-commerce website, you would want to optimize your investment by focusing your money on those channels which are providing you with dedicated customers. If a traffic source is simply not working, you need to eliminate it. This is also something you can track using Google Analytics.
Also, don’t insist on a particular channel just because it’s working for your competitors, because each business is unique. For instance, Facebook might work for some businesses, but others may want to opt for Instagram, depending on their niche, or even deal sites. The idea is to mine those traffic sources which are delivering results. It’s as simple as that, and it’s really puzzling why so many E-commerce businesses fail to do that.
5. Average Order Value
Your average order value is crucial because that’s how all companies go about growing their business, apart from increasing the number of customers and driving repeat purchases, which is a subject for a different article. Your average order value is simply your revenue divided by the number of purchases made over a certain time period. By increasing your average order value, you boost your revenue. Fortunately, there are several different options you can rely on in order to do this.
One of the most common practices for improving average order value is upselling, which is basically getting your customers to spend more than they thought they would, either by convincing them to get a more expensive item or to buy another item which complements their purchase. For instance, if your E-commerce store is selling cameras and camera-related equipment, you can persuade customers to buy memory cards, tripods, battery grips, flashes and lenses to go along with the camera they have bought.
You can also organize bundle sales, offer discounts for purchases which exceed a certain figure, or give them something for free if they decide to opt for a more expensive item.
6. Customer Acquisition Cost
This important metric also plays a huge role, because you still need to spend some money in order to get a potential customer to make a purchase, whether it’s by investing into marketing or by offering something at a discount price. If you want your E-commerce business to remain profitable, your customer acquisition cost needs to be lower than your customer lifetime value, otherwise you are just losing money. Ideally, it should also exceed the average order value. Usually, large companies can afford to lose money when they make their first sale, but that is not the case with most E-commerce businesses.
Lowering your customer acquisition cost can be done by improving your site, so that it helps you get more conversions, as well as by focusing on those marketing channels which are free and which you have complete access to, such as your social media, email lists, as well as your blog. Also, you can set up a referral program for your customers. Even though this is not free, you only pay for it once a purchase is made.
7. Shopping Cart Abandonment Rate
In E-commerce, it is not uncommon for customers to fill up their online shopping carts, and then to bail before they take that final step and make an actual purchase. In essence, you have spent money to get them to your store, but they leave before you can make a return on your investment and make a profit. That is why you need to look at your shopping cart abandonment rate along with all the metrics we have previously described here. You can easily calculate it by dividing the number of purchases with the number of abandoned shopping carts.
One of the main reasons why potential customers are leaving their shopping carts on your website is because they think shipping costs are too high. You can fix this by increasing the price and then offering free delivery. Also, most people don’t like lengthy procedures, so they abandon their carts because they are required to register or because the checkout process is too complicated. Finally, slow estimated time of delivery and lack of multiple payment options are also something that might be hurting your business.
If you are serious about making your E-commerce business a success, these 7 metrics are something that you need to track on a regular basis, as well as take steps in order to improve each and every one of them. We hope that you have found this article helpful and that you will be able to implement the solutions we have shared here. Good luck!