Believe it or not, there are more than a dozen metrics that should be measured when you're running an ecommerce platform. Knowing which one is integral to your businesses' success, performance and health is important if you want to grow.
First-time ecommerce website owners and seasoned enterpreneurs know how quickly things move online. In order to keep ahead of the competition, you'll need to compare your progress and strive to improve your key metrics.
But first, what are the key metrics to use in running an commerce website? Take a look at the ones below:
1. Gross Margin
Revenue is the amount of money you made from your ecommerce website in a set number of time. Other businesses call it bottom line. But after all the costs of operation and the bills have been paid, how much is left?
Changing your business model will have a direct impact on gross margin. For example, if you decide to offer free shipping for your online shop, be prepared to spend a bit more for the increased overhead. It could also mean increased profits. Gross margin, therefore is the difference between your revenue and operating costs. It makes total sense to reinvest some of the profits you made to improve your business model and grow your website as a whole.
You can set a goal for increasing your profits each month. Set the target gross margin a bit higher than acquisition costs in order to keep your ecommerce shop sustainable.
2. Subscriber Growth Rate
Email marketing can be a great platform for the following:
- Spreading brand awareness.
- Letting your audience know about specials, promotions, etc.
- Sharing updates and news.
The key thing here is that your email list should always be updated, or your marketing emails will fall on deaf ears. One way to know this is you're getting an increased subscriber growth rate. If not, you can start by putting in targeted keywords in your content, going on popular social media channels or by investing in multimedia advertising.
3. Conversion Rate
One of the more popular key metrics out there, conversion rate is a must-have no matter what industry or niche you're in. It's so important that it has a direct bearing on your business profitablity. A one percent increase in conversion rate may mean that you can get up to a hundred percent increase in profits.
While traffic is an key resource, it could mean nothing if your website isn't optimized for converting visitors into paying customers. Some of the most common reasons for failing to convert include not having a responsive website, not exuding a professional atmosphere, no social proof, high prices, preferred payment method not available, low quality product images, etc.
In essence, experiencing a low conversion rate means that you're not getting the right kind of traffic, you don't have a clear Call To Action, or your sales copy is proving to be ineffective. One way that you can get your conversion rate up is to pay attention to a factor called Conversion Rate Optimization. You'll have to take a look at your page views, visitor behavior, exit pages and your current sales funnel to get an understanding of what needs to be improved. Moreover, you can consider other factors such as changing your advertising channels, setting up email campaigns and offering new promotions that can draw new customers in.
4. Average Order Value
Ecommerce website owners can learn a lot from knowing what the average order value is on all their made sales. You can do this by dividing the total revenue from a set number of transactions per week or per month. You'll gain invaluable insight as to the exact value your customers are delivering to your bottom line.
AOV is a good indication of just how in demand your products are to your customers. An excellent ecommerce website is one that has all the right products that customers want. If you wish to increase this key metric, here's what you can do- offer a similar product that customers have on their shopping cart. You can also go popular routes such as offering free shipping which can cause your customer to spend more than what they originally intended by buying more of the same or going for a more expensive item.
If you want to keep your gross margin up, you can offer bulk discount or offer free shipping when they reach a certain amount.
5. Cart Abandonment Rate
This metric can only be calculated if you know your Average Order Value. Start by getting the numbers on how many visitors came and successfully ordered the products they want. Then count the numbers on how many visitors put items on their shopping carts but left before making the purchase. This will be the CAR, or your Cart Abandonment Rate.
The good thing about this key metrics is that there are a variety of tools designed to call your customers back and make them reconsider completing the purchase. Less abandonment rate equals more sales and more profits for your ecommerce website.
6. Website Traffic and Sources
Traffic is another popular universal metric that affects all websites. Traffic can be defined as the total number of unique visits a website gets over a certain period of time. This metric can be instantly seen when you use tools such as Google Analytics.
Traffic can come from different sources. It could be from direct sources, organic sources, referrals, email invitations and from social media platforms. Going into it further, you will see how many of your traffic are first-timers and which ones are repeat visitors. Having more new visitors mean you have a good marketing strategy in place, while having more repeat visitors mean you have great products, good customer support, etc.
Ecommerce websites stand to gain most from non-paid traffic sources. This means you should look towards word of mouth advertising, organic social media, content marketing, email and organic search results. Your goal should include having more new and repeat customers each month to attain great success.
7. Mobile Visit Percentage
Mobile shopping is on the rise, which means your ecommerce website should take full advantage of this aspect. According to the Marketing Land reports, more than 50 percent of online shoppers use their mobile phones to buy products online. Take the time to understand the sales and visits from mobile sources and tailor your marketing strategy accordingly.