And this isn\u2019t possible as well!<\/i><\/em><\/strong><\/p>\nWhile it is great to have access to every single metric, getting overwhelmed by a large number of metrics at your disposal isn\u2019t unusual.<\/p>\n
So how do you decide which metric should you be using or what should you be tracking? Don\u2019t panic. We will help you identify the metrics you should be tracking\u00a0on a regular basis and the ones that are good to know but not so vital for your business success.<\/p>\n
Let us start with the not-so-vital or the vanity metrics before we talk about the interesting stuff.<\/p>\n
Vanity metrics are:
\n<\/b><\/strong>\u201cMeasurements and calculations that are designed to make you feel good but don\u2019t help with decision-making. In other words, they exist to impress, not to offer any actionable insights.\u201d<\/p>\nSome of these include:<\/p>\n
\n- Social media following<\/li>\n
- Pages per session<\/li>\n
- Average session duration<\/li>\n
- Unique users<\/li>\n<\/ul>\n
Pretty clear!<\/p>\n
Now that you know some of the metrics you should NOT spend your time on, let\u2019s move on to the crucial ones!<\/p>\n
M<\/b><\/strong>OST <\/b><\/strong>I<\/b><\/strong>MPORTANT E<\/b><\/strong>C<\/b><\/strong>OMMERCE <\/b><\/strong>M<\/b><\/strong>ETRICS <\/b><\/strong><\/p>\nConversion Rate
\n<\/b><\/strong>This is probably the most important among all eCommerce metrics.\u00a0It simply means how many visitors convert into customers.<\/p>\nHowever, it is also the most difficult to achieve. A large number of eCommerce merchants struggle with huge traffic but no sales.<\/p>\n
To give you heads up, the average conversion rate\u00a0for the eCommerce industry tends to be around 2.5%. Reasons vary – design, content, high prices, insecure payments etc.<\/p>\n
Now, since conversion\u00a0is basically how successfully you turn visitors into customers, it is significant to calculate it at regular intervals.<\/p>\n
C<\/b><\/strong>alculate your website\u2019s conversion rate<\/b><\/strong>\u00a0by using the following formula:<\/b><\/strong><\/p>\n![\"website](\"https:\/\/www.nethues.com\/blog\/app\/uploads\/2019\/10\/website-conversion-rate.jpg\")
<\/p>\n
By tracking your conversion rate, you can identify how many visitors make actually make a purchase. Further, you can start working on areas that might be stopping visitors from buying. This is called conversion rate optimization (CRO) wherein you can generate hypotheses about why<\/p>\n
customers don\u2019t convert and how to make them purchase from your website.<\/p>\n
Customer Acquisition Cost(CAC)<\/strong>
\nAre you aware of the cost you spend on acquiring a new customer?<\/p>\nWhat if we tell you that every new customer you acquire costs you more money than his\/her spending on your website?<\/p>\n
Horrifying thought? Yes!<\/p>\n
To prevent this, you must measure your CAC. It involves everything from marketing and sales expenses to salaries and overhead associated with attracting and converting a visitor into a customer.<\/p>\n
Calculate your website\u2019s customer acquisition cost by using the following formula:<\/strong><\/p>\nTotal Sales and Marketing Expenses\/<\/strong><\/p>\nNumber of New Customers<\/strong><\/p>\nIt\u2019s important to calculate your CAC so that you know how many resources you should be spending on a customer so as to be profitable.\u00a0Make sure this cost is lower than the customer lifetime value (discussed below).<\/p>\n
Customer Lifetime Value (CLV)<\/strong>
\nThe third actionable metric every eCommerce business must track is the lifetime value of every customer.\u00a0This is the overall revenue you forecast a customer to bring you during their lifetime or time as your customer. Knowing your CLV tells you how much you can spend to acquire a customer and how far you should go to retain them.
\nCalculate your website\u2019s customer lifetime value by using the following formula:<\/p>\n(Average Purchase Value – Average Purchase Frequency) <\/strong>
\nx <\/strong>
\nAverage Customer Lifespan<\/strong><\/p>\nThis metric also encourages businesses to shift from focusing on short-term customer relationships to long-term ones. Further, it has a lot to do with customer retention and experience.<\/p>\n
Cart Abandonment Rate<\/strong>
\nAccording to\u00a0SaleCycle, the average cart abandonment rate in 2018 was around 76 percent. This metric is the percentage of shoppers who add items to their shopping cart but leave your store without making a purchase.
\nIn eCommerce, this rate varies by niche:<\/p>\n![\"eCommerce\"](\"https:\/\/www.nethues.com\/blog\/app\/uploads\/2019\/10\/eCommerce.jpg\")
<\/p>\n
Calculate your website\u2019s cart abandonment rate by using the following formula:<\/strong><\/p>\n![\"cart](\"https:\/\/www.nethues.com\/blog\/app\/uploads\/2019\/10\/cart-abandonment-rate.jpg\")
<\/p>\n
It is critical to know this rate so that you can start working on the weak areas. Though the reasons behind a high rate can be endless, here are a few tips that could help in reducing it:<\/p>\n
\n- Simplify your checkout process<\/li>\n
- Use remarketing\u00a0to engage your customers<\/li>\n
- Use emails to remind customers about items in the cart<\/li>\n<\/ul>\n
Average Order Value
\n<\/b><\/strong>As the name suggests, AOV tracks the average revenue your business gets from a purchase. Knowing it is critical to understanding\u00a0the lifetime value of your customer and help\u00a0you align better strategies for growth.<\/p>\nC<\/b><\/strong>alculate your <\/b><\/strong>website\u2019s average order value by using the following formula:<\/b><\/strong><\/p>\nTotal Revenue\/<\/strong>
\nNumber of Orders Over a Period of Time<\/strong><\/p>\nRemember to keep a regular track and strive for increasing it.\u00a0In case you are unable to drive it up, here are a few tips:<\/p>\n
\n- Offer product bundles so customers can get everything in one click<\/li>\n
- Set a free shipping criteria<\/li>\n
- Include additional features or premium product<\/li>\n
- Recommend products that can complement purchases<\/li>\n<\/ul>\n
CONCLUSION
\n<\/b><\/strong>Any store, whether large or small, should certainly pay attention to these metrics. This not only helps in knowing the real status of your business but encourages you to improvise.<\/p>\nFurther, as your store grows to process more orders, and therefore has more data if can be difficult to handle everything all at once. So, start small and end big.<\/p>\n","protected":false},"excerpt":{"rendered":"
Do you know how the most successful eCommerce businesses\u00a0make win-win decisions? Well, they swim in data.\u00a0They constantly track actionable metrics to know the current state…<\/p>\n","protected":false},"author":8,"featured_media":1579,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[30],"tags":[],"yoast_head":"\n
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