Rachel Hobble
The start of a new year is the perfect time to re-evaluate your eCommerce site performance and recalibrate your goals. The metrics that you track will help you measure your site performance and also determine the value of your efforts online. Below we've compiled a list of metrics that will help you track your growth in 2019.
Average Order Size
This number is calculated by dividing revenue by the number of transactions, and shows you how much each customer contributes to the bottom line. There are a few ways to change this metric, all of which take already-converting customers and grow the total dollars they spend. One option is to provide free shipping at several dollars over your current average order value (AOV) to boost order size. Calculate the cost of shipping vs. the total net dollars to determine what dollar amount will be worth the shipping loss. You could also raise prices, but be sure to monitor overall conversion to make sure you aren’t raising AOV only to cut total site revenue. Cross sells and checkout upsells are also commonly-used techniques to raise AOV. If you add upsells in checkout, first baseline the checkout funnel performance and ensure the upsells aren’t negatively impacting checkout completion. These tactics should add overall value to your customers' shopping experience–not get in their way.
Customer Lifetime Value (LTV)
HubSpot defines LTV as 'the metric that indicates the total revenue a business can reasonably expect from a single customer account.' Satisfied customers will return to your site again and again, increasing their value over time. To calculate LTV, you need to calculate average purchase value and multiply that number by the average purchase frequency rate to determine customer value. Then multiply that number by the average customer lifespan to determine LTV. To increase this number, focus on improving brand loyalty and increasing average purchase value (see previous point for examples on how to do this). According to the Pareto Principle, 80% of your sales come from 20% of your customer base, so driving brand loyalty should always be a top priority to grow your business.
Cart Abandonment Rate
This measures how many visitors initiated an order versus how many completed an order. In percentage terms, that's [1 – (the total number of people who complete checkout divided by the total number of people who start checkout)]. If shoppers are filling their carts before leaving your site, your prices or shipping costs may be too high. You could send abandoned cart emails to recapture this traffic, but ideally these potential customers wouldn't leave your site in the first place. Closely analyze the checkout funnel to see where and when visitors are leaving to understand and address underlying reasons. In the case of one Virid client, examining checkout behavior revealed many users leaving the checkout process to visit a shipping rates page. Updating checkout to display shipping costs and rules in the funnel significantly decreased the abandonment rate. Login issues are another common reason for abandonment, especially with a customer base that buys infrequently. If this appears to be an issue on your site, consider the timing of account login, password reset experience, and the overall value of requiring user login for checkout. It might be costing more than it’s worth–the more friction you can remove from the checkout experience, the better.
Cost per Acquisition
CPA is a measure of the total cost to acquire one new paying customer on a channel or campaign level. This metric can tell marketers the effectiveness of marketing campaigns, and it is particularly valuable when it comes to your eCommerce business. If you are spending money on social media advertising, influencer marketing, or any other marketing campaigns, frequently analyze your CPA number and adjust your efforts to make sure you are focusing on the channels that are bringing you business and working on optimizing the ones that are not.
Number of Reviews
This number is a good indication of how many consumers actually want to engage with your brand, and (assuming the reviews are largely positive) how many customers are actually willing to be brand advocates online. Product ratings and reviews provide social proof and increase conversions on your eCommerce site. Having a greater number of reviews per product improves the legitimacy of a star rating and can give customers the confidence to make a purchase. If you already have ratings and reviews implemented on your eCommerce site but are having trouble getting customers to leave reviews, check out these 4 easy ways to get more product reviews. By encouraging customers to leave reviews, you can emphasize that their voice is heard and that your brand cares about its customers.
Micro Conversions
Some of the metrics that you should be tracking may not translate immediately into sales, but increase brand loyalty, LTV, and revenue over time. These micro conversions include customer actions like your email opt-in conversion rate, number of customers registering for your rewards program, and likes and follows on social media. Any positive interaction a consumer has with your brand opens the door for future sales. Considering acquiring a new customer costs 7x more than keeping an existing one happy, the value of brand loyalty should not be underestimated.
For more content like this, subscribe to the Virid newsletter. And be sure to follow us on Twitter, LinkedIn, Facebook, and Instagram!