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6 Ecommerce Metrics Critical to Long Term Success

By: Michael Epstein Tuesday April 26, 2016 comments

6 Ecommerce Metrics Critical to Long Term Success

If you’ve ever explored Google Analytics, you’ve probably felt overwhelmed by the countless metrics that can be measured.


However, if you’re not tracking key performance indicators, you’re flying blind. You might be able to wing it for a little while. But with the immense competition online, it’s a near certainty that sooner or later, a data-driven competitor in your industry will come along and overtake you by focusing on the fundamental metrics that help an ecommerce business scale.


Below, find the 6 fundamental metrics you need to know to build a successful, scalable online store.

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Conversion Rate

Conversion rate is defined as the percentage of visitors who end up buying from your store. This metric has far ranging implications impacting not just your revenue, but your marketing channels as well.


By improving your conversion rate, your site will generate more revenue with the exact same traffic and effort, because more of those visitors become buyers.


Furthermore, by increasing your conversion rate even slightly, the ROI on all of your marketing efforts can improve drastically. Advertisements and paid traffic acquisition tactics that were previously cost-prohibitive are now profitable, allowing you to scale your traffic and order volume.


A great user experience combined with content and messaging that directly appeals to your target audience is a sure-fire way to increase conversion rates.

Cart Abandonment Rate

By examining your cart abandonment rate, you can see how many visitors demonstrated an inclination to buy without following through, and potentially do something about it. The average is nearly 70%, meaning nearly 7 out of every 10 people that start the checkout process leave before making a purchase. These visitors are likely as close to “converting” into a customer as you can get, so giving them a little nudge to reduce your abandonment rate can pay big dividends.


There are several ways to do this.


If you have already captured their email address during the checkout process before they abandoned, triggering an email series to remind them they left items in their cart and perhaps offering an incentive to complete their checkout can increase your conversions.


Other tools like exit-popups can present a special offer to customers who move their mouse in a way that indicates they are about to leave your site or close their browser, giving you another shot at converting them.


Website features such as showing limited stock availability or countdown timers can create a sense of urgency.


Even a simple survey that asks “What prevented you from completing your purchase today?” can provide invaluable insight into the friction points that exist in your checkout process or site in general.


Additionally, reinforcing your value propositions, security, or other elements that convey trust and credibility during checkout can have an impact on your abandonment rate and overall conversion rate.

Cost of Customer Acquisition (COCA)

The cost of customer acquisition is the amount of money you have to spend to get one customer. The lower the cost of acquisition, the greater the ROI of your marketing efforts. As a quick example, your COAC is $40 if you need to spend $200 to get five visitors to buy on your store.


Different channels are used to bring in visitors — Business?" target="_blank" href="http://www.getonlinewithme.com/seo-search-engine-optimization-vs-sem-search-engine-marketing-or-pay-per-click-whats-right-for-my-business/">SEO, paid ad campaigns, content creation and marketing, social media — but all of them cost you either in terms of money or time. It’s important to understand the COCA specific to each channel and ideally, down to individual campaigns in order to focus your efforts on those that produce the best results.


*Note – while a low COCA is generally good, it’s important to also understand the lifetime value of each channel (see  below). Because a channel that brings in customers inexpensively, but low value customers, isn’t necessarily better than a higher COCA channel that attracts higher value customers.

Visit the original post to learn about Average Order Value (AOV) & Customer Lifetime Value (LTV)


Your LTV is directly influenced by your churn. Churn is the percentage of customers who make a single purchase and never buy again, or in a subscription model, cancel after a short time.


Decreasing churn helps increase your LTV which increases profits. Furthermore, it helps support a higher COCA allowing you to scale your business more rapidly.


Providing a great customer experience, both on the website and with customer service, and exceeding expectations with your product or service are simple, fundamental ways to keep churn low.


Focusing on these 6 fundamental metrics form the core of your growth strategy, while numerous other data points and metrics can be analyzed that positively impact these primary performance indicators.


For example, if one page has a high exit rate (many people leave your website after visiting that page), making improvements to that page can affect your overall conversion rate. So make improving these core metrics a goal. From there, being looking for any factors that might influence your ability to achieve your goal.


As you see the numbers improve, watch as your revenue not only grows, but the pace of your growth increases and you attain a healthy, scalable business.

Michael Epstein

About the Author: Michael Epstein

Michael Epstein founded an ecommerce business 15 years ago in his college apartment with $500, and generated over a million dollars in sales the first year. He continued to grow his company until it was acquired in 2013. He now advises other online companies, from startups to $100M+ retailers, on digital marketing tactics and strategy.

Follow him on Twitter and LinkedIn or visit his blog.