In the world of ecommerce success metrics, there are literally thousands of metrics you may choose to track. However, only a few of them truly represent the most accurate state of your business.
The following ten ecommerce success metrics can also be turned into immediately-actionable insights that will help grow your business.
Let’s uncover the ten ecommerce success metrics that will provide you, at all times, with the numbers you need.
Understanding Ecommerce Success Metrics
ecommerce businesses that find the highest levels of success make their decisions based on eCommerce success metrics. These businesses know the exact state of their platform’s performance.
They also know the best levers to pull when they want to experience growth.
What Exactly Is Statistical Significance In a Metric?
People who often consider experiments or metrics know that you must take into account their statistical significance.
There’s a solid definition of “statistical significance” on Optimizely. It says:
“Statistical significance is the likelihood that the difference in conversion rates between a given variation and the baseline is not due to random chance.”
Boiling it down further, statistical significance is how you measure how confident you are in a measurement. It’s how you determine if the metrics you’re relying on for information are in fact, reliable.
With this, you’ll be able to decide if there’s a tangible relationship between the decisions you make and the results you achieve (or fail to achieve).
For a moment, imagine that you’re going to run an A/B test on the button colors of your site. Test A will use red buttons and Test B will run blue ones.
After running the test, you discover that Test B won with a 95% statistical significance. In a case such as this, you would be confident that your overall conversion rates would improve once you change all of your buttons to blue.
However, if you had a 4% statistical significance, it would be difficult to know that the blue buttons actually performed better, or if they were only better in that small sample size.
In other words, statistical significance relies on two different and distinct variables: Effect size and sample size.
What Statistical Significance Means To Ecommerce Stores
For ecommerce stores, statistical significance means that making business decisions based on data is more difficult when you don’t have a lot of data to work with.
Large stores with thousands of daily customers have the luxury of constant customer data to track metrics and make better decisions. But stores that only have a few customers each day don’t necessarily have a lot of confidence in the patterns they see in metrics.
Even so, it’s important to track data no matter how much traffic your ecommerce store has. Although it’ll be difficult to make big decisions until you have a lot more data, having some data is still better than having none.
The Importance of Effect Size and Sample Size
The sample size is simply how much data you’re able to measure. The bigger the sample, the more confident you’ll be in the final result of the experiment. For small samples, there’s a much higher probability that the data over-represents factors that aren’t necessarily predictors of how things will work in the future.
Effect size addresses the differences in test results.
For example, a 0.4% conversion rate change isn’t very significant on paper. You would require a large sample size to figure out if the new result, although a small percentage, may be significant on a larger scale.
KPIs Are the Success Metrics
All KPIs are metrics. However, not all metrics are KPIs.
KPI is short for key performance indicators. Obviously, not every measurable metric can be considered key. In fact, if they were all key, then none of them would actually be key at all.
A simple way to think about your KPIs is that you’re looking at the vital signs of your business. In other words, you’re looking much closer at how the heart is functioning rather than worrying about some minor facial acne.
The subgroup of metrics that best aligns with your most critical business objectives become your KPIs.
They are also referred to as ecommerce success metrics, and these are the ten most important ones to use.
1. Organic Traffic Acquisition
The best SEO efforts become useless if they don’t bring you traffic.
One of the best indicators of SEO performance is to track organic traffic acquisitions over the course of time. When you see a month-by-month increase in organic search visitors, you’ll know your SEO rankings are improving.
Remember, this could be true for keywords you weren’t even targeting.
While there are different metrics that may show short-term trends, this is the metric that will give you verifiable evidence that your marketing efforts are bringing in additional traffic.
Of course, the quality of the organic search traffic you receive will depend on the keywords you’re ranking for and your definition of a conversion.
While other metrics might show a trend, this metric gives you quantifiable proof that your efforts are actually bringing in more visitors.
2. Conversion Rate
With organic traffic now coming in, the next thing you’ll want to know is the quality of the traffic. After all, the whole point of your ecommerce business is to generate conversions from relevant traffic.
In order to measure traffic quality, you’ll need to track organic conversions.
To do this, first set up a “Goal” in Google Analytics. Some examples of goals you can track are:
- Email signups
- Making a purchase
- Form submissions
- Phone calls
After the goals are defined, you’ll be able to monitor the results in real-time in Google Analytics.
To see organic metrics, add the organic sessions segment, then navigate to Conversions > Goal Overview.
3. Email Opt-Ins
Email marketing is by far one of the most impactful tools that ecommerce stores have in their arsenal to drive business.
In fact, email marketing delivers a whopping 4400% return on investment or $44 for every single dollar spent.
The two best ways to track email opt-ins are:
- Use the analytics that are built-in to your email marketing platform
- Set a GA conversion goal that tracks the thank you page of your opt-ins
Remember how big of an ROI you’re receiving for every moment spent on email marketing.
4. Shopping Cart Abandonment Rate
This is a percentage of your shoppers that added an item to a shopping cart, then left the store without completing a purchase.
Almost 70% of online shoppers will abandon their carts. Some of that revenue is recoverable if you know how to lower your abandonment rate.
To track your cart abandonment, use a cart abandonment tool, or set up a GA funnel.
5. Customer Acquisition Cost
Getting a new customer is almost never free. The cost to gain a new customer is your customer acquisition cost.
To stay in the black, you need your customer acquisition cost to be less than the customer lifetime value. In a perfect world, the acquisition cost should be less than the average order value.
This means that you’re making money from every customer.
To calculate your CAC, simply divide your complete marketing spend by the total number of customers. This will give you an overall figure. It’s more useful, however, to also calculate CAC by source.
6. Average Order Value
The average order value is the average overall value of each purchase made in your store. To figure out your AOV, simply divide the total of all sales by the total number of carts.
If you want your customers to spend as much money as possible with each purchase, it’s important to be familiar with your AOV so that you can increase it.
7. Customer Lifetime Value
CLV, or customer lifetime value, is the metric that shows the total amount you earn from a customer over the course of their lifetime. For example, if you’re earning $10 over the course of six transactions from a lifetime cycle, your CLV is $60.
When you know your CLV, you become better informed about how much you should spend on customer acquisition and retention.
8. Customer Retention Rate
This metric measures how many customers a company is able to continue doing business with over a specified period of time.
The metric is expressed as an overall percentage of the company’s existing customers that continue to maintain business loyalty within that window of time.
9. Refund and Return Rate
This metric provides a breakdown of the reasons why certain items get returned. It helps you identify negative trends and reduce the return rate by dealing with the issues at their core.
10. Net Promoter Score
The NPS measures your customer experience and helps predict business growth.
It’s a highly proven metric that has transformed the world of ecommerce success metrics. In fact, it now provides the base measurement for worldwide customer experience management programs.
With a more thorough understanding of ecommerce success metrics and the ones you should now be paying attention to, further success is sure to follow. At Mindsize, we can help you scale your ecommerce business and guide you through the nuances of measuring your success efficiently and effectively.