As a retailer, you probably have a love-hate relationship with your metrics.

On the one hand, you know they provide you with a complete, bird’s-eye view of your business. On the other, you likely feel uncertain about which metrics to track and how to best measure your optimization strategy.

If that sounds familiar, you’re not alone. Most ecommerce retailers feel the same way.

But there’s one thing that’s certain: you want more sales. If you don’t…well, you should probably start thinking about a career change.

A handful of specific metrics are essential to focus on if you’re serious about more sales and higher revenues.

In this post, we’re going to take a look at them and give you some practical optimization tips.

What you can find here:

What Are the Key Metrics for Retail Ecommerce?
1. Total Sales (Total Revenue)
2. Conversion Rate (CR)
3. Average Order Value (AOV)
4. Purchase Frequency
5. Retention Period (and Retention Rate and Churn Rate)
6. Customer Lifetime Value (CLV)
7. Cart Abandonment Rate
8. Checkout Abandonment Rate
9. Return on Advertising Spend (ROAS)
10. Cost per Acquisition (CPA)
Where Are Ecommerce Metrics Housed in Google Analytics?
10 Best Ecommerce Metrics: Do You Need to Track Them All?

Enjoy reading!

What Are the Key Metrics for Retail Ecommerce?

It’s the eternal question: which metrics are most important for ecommerce?

It would be great if there were an exact, one-size-fits-all answer. But unfortunately, there isn’t.

Different online retailers tend to have their own unique “metric mixes”. And this is precisely how it should be. It’s essential to track metrics that fit with your goals, market, and value proposition.

That said, every retailer should be tracking some key metrics, irrespective of size or industry.

That said, every retailer should be tracking some key metrics, irrespective of size or industry #ecommerce #metrics #cro Click To Tweet

These metrics form the basis of any successful ecommerce optimization strategy and are essential for growing sales. They’re also the best indicators of the health of a store.

With that in mind, let’s dive into the metrics themselves and look at how you can improve them.

1. Total Sales (Total Revenue)

Total sales, expressed as an amount of money, is one of the best overall barometers of how well your online store is doing. It’s a great example of “one main metric” (OMM) which you can use to measure the overall growth and momentum of your business.

 total sales figure is a straightforward indicator of the health of your storeYour total sales figure is a straightforward indicator of the health of your store. Source

Total sales is such a valuable figure because it encompasses pretty much all your ecommerce activities – marketing, traffic generation, on-site optimization, product development, and so on. As long as your revenue is increasing month-by-month, you know you’re doing something right.

It’s worth pointing out that there are potential pitfalls associated with tracking total sales. In particular, it’s crucial to ensure that you’re growing revenue in a sustainable and long-term manner.

It’s possible to incorrectly assume success when you take a short-term view, which can be detrimental to your business as a whole. But, as a general rule, it’s difficult to go wrong when you utilize total sales or revenue as your core metric.

How to Grow Your Number of Total Sales (Total Revenue)

Here’s what you can do to grow your number of total sales:

  • Understand that your total sales figure is directly linked to other “macro” optimization metrics – When you focus on improving your big four ecommerce metrics – conversion rate, average order value, purchase frequency, and retention period – your sales will naturally increase. Implementing an optimization campaign that accounts for all these metrics is the best way to grow your sales revenue.
  • Boost your site traffic – There are three ways to boost sales revenue: drive more traffic, convert that traffic more effectively, and keep existing customers for longer. You should create an optimization plan that covers all these areas and tests a wide variety of ideas. You should also take advantage of as many traffic sources as possible – social, search, and direct.
  • Break down sales figures and look for trends – There are numerous ways to break down sales data, including by audience demographics, time-period (especially seasonality), traffic-source, and more. Drilling down into your data in this way will allow you to see what’s working and what’s not. You can then flag areas for improvement. If for example, you have unusually low sales on Saturdays and Sundays, you may wish to run weekend promotions. Alternatively, seeing that a particular traffic source has exceptionally high sales may prompt you to leverage it further.

2. Conversion Rate (CR)

Good old conversion rate. It’s the holy grail of performance metrics for retailers. And vast amounts of time and effort are spent on conversion rate optimization campaigns.

Your conversion rate represents the percentage of visitors that make a purchase. It’s calculated by dividing the number of site sessions with a transaction by the total number of sessions (individual visits to your site), over a specific period. A site “session” constitutes one self-contained interaction with your site, whether it’s for three seconds or three hours.

Calculate your conversion rate by dividing sessions with a transaction by total sessionsCalculate your conversion rate by dividing sessions with a transaction by total sessions. Source
The average ecommerce conversion rate for the ecommerce industry as a whole is 2.00%. But top-performing stores often achieve two or three times this. And Amazon has a whopping 13% conversion rate. That means for every one hundred people that visit the store, 13 will make a purchase. Crazy, right?

There’s an important caveat, however. Lots of ecommerce retailers, and we mean lots, develop tunnel-vision when it comes to their ecommerce store’s conversion rate. They’ll focus on it at the expense of pretty much every other metric. And this is a catastrophic mistake.

Growth hack your ecommerce conversion rate, sales and profits with this
115-Point Ecommerce Optimization Checklist

If you sideline crucial metrics like average order value (AOV) and purchase frequency, you’ll almost certainly suffer in terms of sales.

How to Optimize Your Conversion Rate

Most optimization techniques focus on product pages, cart pages, and checkout forms. This is exactly as it should be. Why? Because these pages are most crucial for sales. That said, there are some general sitewide tips that you should apply.

Here are the main steps for boosting your conversion rate across your whole site:

  • Optimize all your pages – It’s easy to fall into the trap of focusing exclusively on product pages, but all pages – including your home page, “About Us” page, category pages, search page, and so on – should be optimized, and you should tailor your strategy to account for this.
  • Improve your site speed – Site speed is one of the most important factors when it comes to boosting conversions. Site pages that take two seconds to load have an average bounce rate of 9%. Pages that take five seconds to load have a whopping 38% bounce rate. In just three seconds, an online store can lose 29% of its visitors. What’s more, it’s sometimes incredibly easy to boost your site speed. Head over to Google’s free tools, PageSpeed Insights and enter the address of your site. You’ll get dozens of practical tips that you can implement straight away.
  • Build urgency – Urgency is an incredibly powerful emotion in a sales and ecommerce context. Human beings are hard-wired to respond to time-limited and scarce opportunities. Including urgency-building elements, like time-limited free-shipping, notifications about low-stock items, and sales prices, can significantly boost your conversion rate. These elements are particularly powerful on product pages, and we’ve written an in-depth guide to building urgency on your ecommerce product pages.
  • Use large and colorful CTAs – Despite lots of case studies proclaiming the best formula for CTAs – you’ve probably read at least one headline along the lines of “How One Small CTA Change Improved Conversions by 3567%” – there aren’t any hard-and-fast rules when it comes to the perfect CTA. Split-testing is the only way you’ll arrive at high-performing CTAs for your own store. Fortunately, however, CTAs are one of the easiest web elements of all to experiment with. Generally speaking, CTAs should include an imperative prompt (“Buy Now”, “Add to Cart”, “Proceed to Checkout”, etc.) and stand out from the rest of the page (use color, size and shape to achieve that.
  • Show free shipping information alongside the CTA on product pages, on the cart page, and in the sidebar or header – Customers love free shipping. And doubt about shipping prices can lead to a higher abandonment rate. If you offer free or same-day shipping in any form, even if it’s only for orders above a certain amount, you should advertise this as loudly as possible across your whole site. Include a notice in your header or your sidebar, as well as on product and cart pages.
  • Use high-quality product images – There’s nothing worse than low-quality and pixelated product photographs. High-quality images communicate the professionalism of your store and brand while enabling customers to recreate an in-store shopping experience by closely inspecting details and features. Obviously, high-quality and zoomable images are essential on product pages, but they’re equally important on category pages, search results, and your homepage.
  • Add reviews to product pages and category pages – 95% of customers read reviews before making a purchase. The desire to run with the herd, often referred to as “social proof”, is one of the oldest motivators of human behavior in the book. Including reviews on product pages, along with a star rating next to products on category and search pages, ties into this basic need for confirmation from others, while providing further information from real users, thus allaying doubts.
  • Make your site mobile friendly – Mobile sales are expected to overtake desktop sales as a percentage of total ecommerce revenue by 2021. It’s vital for retailers to provide visitors with customer-centric mobile experiences, and this requires a desktop-independent approach to optimization and user experience. There are many site-wide changes you can make to boost mobile conversions, from creating screen-wide CTAs and mobile-interactive images (based on habits picked up from platforms like Instagram) to streamlining navigation on search and category pages. The key is to ensure you’re dedicating as many resources to optimizing for mobile as for desktop. See our guide about tripling mobile commerce revenue for more optimization advice.

Check out our in-depth post on product page design optimization for some specific tips in that area. We’ve also compiled a roundup of high-converting product page templates and covered the biggest mistakes retailers make that users don’t add to cart on product pages.

3. Average Order Value (AOV)

Average order value is the average value of a single purchase (of one or more items) made through your site.
alculate average order value by dividing total revenue by number of orders takenCalculate average order value by dividing total revenue by number of orders taken. Source
Average order value is calculated by dividing the total revenue over a given period of time by the total number of orders made in the same period.

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    No explanation is needed as to why boosting average order value will also increase your sales. What a lot of retailers don’t realize, however, is that AOV optimization often represents one of the quickest and most straightforward areas for revenue growth, even more so than conversion rate optimization. Small additions to product pages, cart pages, and post-checkout pages, can have significant impacts.

    How to Optimize your Average Order Value

    Here’s what you can do to increase your average order value:

    • Offer product bundles – If a customer is interested in a product, offer a discounted bundle that includes accessories and add-ons. This bundle should constitute a saving for the customer compared to buying the products separately.
    • Offer discounts for bulk orders – If possible, offer discounts for bulk orders. Simple offers like “Buy Two Get One Free” and “Buy Two and Get 50% Off the Second Item” work really well.
    • Offer free delivery for orders over a certain amount – If you offer free delivery for orders over a certain price then make sure you advertise this clearly on product pages and in the site header. If you don’t offer free delivery, then consider doing so. For most retailers, the revenue increases far outweigh the costs of having to cover shipping.
    • Offer cross-sells and up-sells – Do you show related items, add-ons and accessories on product pages and cart pages? If you don’t, you’re likely leaving money on the table. Offering both upsells and cross-sells is one of the best ways to encourage customers that are already interested in an item to part with more cash.
    • Offer financing options for high-ticket items – Many customers will not want to pay for an expensive item up-front. Offering financing options means they can spread out the cost out over months and even years. Customers will be more likely to buy if they only have to part with a fraction of the item price.
    • Offer “sweeteners” for select items – Sometimes it’s appropriate to include “sweetener deals” with some items, such as discounted warranties or dedicated customer support for several months after purchase. These work well with high-ticket products

    4. Purchase Frequency

    Purchase frequency is the number of purchases an average customer makes over a given period of time, usually a year.
    To calculate purchase frequency divide your total number of orders by number of unique customersTo calculate purchase frequency divide your total number of orders by number of unique customers. Source
    It’s calculated by dividing the total number of orders over the previous 365 days by the number of unique customers over the same period.

    Purchase frequency optimization is unusual in the sense that it mostly involves off-site activities. It’s about fostering relationships with customers after they’ve made a purchase, through marketing channels like email, remarketing, and social media.

    How to Optimize Your Purchase Frequency

    Optimizing purchase frequency is all about offering incentives to existing customers. To do this, you need to have a thorough understanding of your customer base’s needs, wants, and behaviors. Amazon, supposedly the most customer-centric company on the planet, reports that half of its customers make a purchase every week.

    Optimizing purchase frequency is all about offering incentives to existing customers. To do this, you need to have a thorough understanding of your customer base's needs, wants, and behaviors #metrics Click To Tweet

    Here’s how to boost your customer purchase frequency:

    • Send follow-up emails after purchases – Send emails at three stages: immediately after purchase asking how customers are getting on, once customers have had a chance to use the product properly for the first time with suggestions about accessories, and after the usual use period for consumable products, reminding customers that it’s time to re-buy. In every case, you’re pre-empting customer actions before they have a chance to go to another store.
    • Encourage subscriptions – For consumable products that customers use on a regular basis, like supplements or beauty products, highlight subscription options on your product pages. If customers don’t sign up to a subscription when they first make a purchase, email them at a later stage.
    • Remarket related products – Remarketing campaigns tend to target visitors that have abandoned their cart. But they also work for customers that have successfully completed a purchase. You should remarket related products along with abandoned products.
    • Send seasonal offers to customers – Take advantage of a heightened willingness to buy during holiday periods. Send customers discounts and promotions during Christmas, Easter, summer, etc. and on special days like Mother’s Day, Black Friday, and even customer birthdays.
    • Segment customers by their interests – Personalization ratchets up the effectiveness of offers, reminders, and product suggestions. Segment your customer base by interests and previous purchase history and then tailor your outreach accordingly. Most sales marketing tools make this a doddle by integrating with analytics platforms and CRMs that house customer information.

    5. Retention Period (and Retention Rate and Churn Rate)

    Your retention period is the length of time an average customer stays active. Customers are generally considered inactive if they have not made a purchase for more than six to twelve months.

    Retention period, or “customer lifespan”, can be tricky to calculate. It is essentially a measure of the time between a customer’s first and last purchases, and retailers need historical data in order to be able to calculate this number. Generally speaking, one to three years is a good estimate.

    Retention and churn rate are also useful metrics, both closely linked to retention period.

    Your customer retention rate measures how many customers you retain on average over a given period. You can use it to measure how effectively you’re boosting your customer retention period over the short-term. If you’re improving your customer retention rate or lowering your churn rate, your retention period will increase.

    To measure your customer retention rate over a length of time (twelve months is usually a good starting point), use the following formula:
    retention rate calculation sales metricsSource

    How to Grow Your Retention Period

    Retention period is very closely linked to purchase frequency. If you’re sending offers to customers and remarketing them via email, they’re more likely to make a purchase, and thus remain active as customers. But the two shouldn’t be confused.

    Retention period techniques are geared towards building loyalty as opposed to encouraging purchases.

    Here are some tips for ensuring long-lasting relationships with your customers:

    • Create a competitive loyalty program – There’s been a lot of talk about how loyalty programs are declining in popularity. But the stats show that customers still love loyalty programs, especially when it comes to ecommerce. Amazon is a standout example in this regard, and Amazon Prime – which is essentially a paid loyalty program – is a great standard to replicate. What’s more, it’s now easier than ever for customers to engage with your loyalty program through their mobile devices. Many stores have dedicated apps for their loyalty schemes.
    • Excel when it comes to customer service – Customer service is a major factor affecting brand loyalty. If you can guarantee superb customer service, customers will keep returning.
    • Engage with customers on social media – Interacting with customers on social media is one of the best ways of ensuring that they don’t forget about you. It’s also an excellent way of breaking the “business facade”, allowing customers to see you as a company made up of real people and values and not some distant corporate entity.
    • Take a customer-centric approach – Don’t fall into the trap of optimizing exclusively for conversions. You need to tread the line between high conversions and positive user experience (UX). You should continuously be gathering feedback and seeking to improve your on-site (and off-site) experience.

    6. Customer Lifetime Value (CLV)

    Customer lifetime is calculated by multiplying three metrics: average order value, purchase frequency, and retention period.
    CLV is a good catch all metricCLV is a good “catch-all” metric. Source
    Let’s take an example: let’s say the average value of a purchase on your store is $100. And on average customers make five purchases per year. Your retention period is two years. To calculate your CLV: $100 x 5 x 2 = $1000.

    When you optimize the three metrics described above (AOV, repeat transactions average or purchase frequency, and retention period), your customer lifetime value will increase.

    As has already been mentioned, traffic and store conversion rate are the other two crucial metrics, which together form the basis of a complete optimization strategy. When you optimize customer lifetime value (CLV), you increase the value of customers that you already have. When you boost your conversion rate, you increase the number of people becoming customers. And when you drive more traffic, you have more people to actually convert.

    What Are the Most Important Secondary Metrics in Ecommerce?

    Now that you’ve got a solid understanding of where to focus your attention when running optimization campaigns, let’s dig into some more specific metrics. These can be described as “micro” metrics, as opposed to the “macro” metrics above.

    You might not have heard this distinction before. So just what are macro-conversions and micro-conversion metrics on ecommerce sites?

    A macro-conversion represents a “big” goal – a purchase, for example.

    A micro-conversion is a smaller action that contributes towards a macro-conversion. Micro-conversions include clicking a CTA on a product page, filling out all the details on a checkout form, and sharing a product on social media after purchase. All of these have a direct impact on the “bigger” metrics outlined above.

    There are two important micro-conversion metrics from a sales perspective: cart abandonment rate and checkout abandonment rate. Cart abandonment is when a user puts items in their cart, then leaves your site. Checkout abandonment is when a user has already started the checkout process, but leaves the site before completing the purchase.

    Let’s take a look at each:

    7. Cart Abandonment Rate

    Your cart abandonment rate is the percentage of visitors that leave your site without making a purchase after adding a product to their shopping cart.

    Cart abandonment is a wide-ranging metric that is determined by a range of micro-conversions. Specifically, these are: clicking the “Proceed to Checkout” button, proceeding from the cart page to the checkout form, and successfully completing payment during checkout.

    How to Reduce Your Cart Abandonment

    Here’s a quick rundown of how to reduce cart abandonment:

    • Ensure that CTAs are visible on cart and checkout pages.
    • Include urgency-building elements (like a reminder of time-limited free shipping) on your cart page.
    • Enable customers to easily change the number of products in their cart (including deleting them altogether).
    • Ensure that your cart saves products for seven days (or indefinitely).
    • Include trust-building elements (like security seals) on product pages.

    8. Checkout Abandonment Rate

    Your checkout abandonment rate is the percentage of visitors that start the checkout process but leave without completing the purchase.

    The industry average for checkout abandonment is 25%.

    If a customer has reached the checkout stage, it’s likely they want to buy. For this reason, high checkout abandonment rates are usually indicative of poorly designed forms rather than the absence of elements that increase the desire to buy. Focusing on user experience (UX) issues is the best way to ensure conversions.

    How to Reduce Checkout Abandonment

    • Here’s how to reduce checkout abandonment:
    • Don’t require visitors to register an account to complete a purchase.
    • Collect customer emails as the first step of checkout so you can follow up if they abandon their cart.
    • Include floating labels (that appear in the corner of the input box) and instant validation with a small tick or cross.
    • Include only necessary fields in the checkout form.
    • If a customer makes a mistake, tell them how to correct it.
    • Allow customers to pre-fill their information, especially on mobile.
    • Minimize any distractions like the header and footer.

    Other Important Micro-Conversion Metrics for Boosting Sales

    Here are some other important micro-conversion metrics to be aware of:

    • Page-specific conversion rates – It’s useful to look at page-specific conversion rates such as product page conversions, category page conversions (like clicking through to a product page), and cart and checkout page conversions. Doing so will enable you to see exactly which pages to improve to best maximize your overall conversions.
    • Add-to-cart rate – Of all micro-conversions, your add-to-cart rate is perhaps the most important. Once a customer has added a product to their cart, they have indicated a strong willingness to purchase the chosen product. A good add-to-cart rate shows that you’re effectively persuading customers to buy on product pages.
    • Newsletter opt-in rate – Your newsletter opt-in rate is important from a sales perspective because every sign-up represents a marketing opportunity and potential sale. Many ecommerce retailers don’t focus enough on this key micro-conversion metric.

    Important Traffic Metrics for Ecommerce

    Well done on getting this far. There probably isn’t enough room in your head for anymore metrics. But before you head off to make yourself a nice cup of tea, there are two more that need mentioning.

    Traffic metrics are essential because they enable you to cut costs associated with generating new customers. Optimizing for them can significantly boost your profits.

    Let’s take a look:

    9. Return on Advertising Spend (ROAS)

    ROAS is your return on advertisement investment measured as a percentage of the initial investment. There are two ways to increase it: by reducing ad spend or increasing ad revenue.

    Here are some ways to boost your ROAS:

    • Fully understand and leverage optimization tools available through advertisement platforms like AdWords (now Google Ads), Facebook, and others. Most advertisers offer powerful toolkits for optimizing campaigns.
    • Experiment with different audience targeting options and focus on the most successful. You should always be experimenting with new audiences.
    • Utilize different ad platforms, including Google Ads (AdWords), Google Shopping ads, Bing Shopping ads, LinkedIn, Facebook, Pinterest, etc. Finding new profitable channels is one of the best ways to increase your ROAS.

    10. Cost per Acquisition (CPA)

    Your cost per acquisition (CPA) is the amount of money you need to spend to gain one new customer. It can be a tricky metric to calculate because it requires you to put a figure on all your marketing activities, including search engine optimization.

    To calculate CPA divide your total marketing spend for a given period by the total amount of new orders. For example, if a company spends $1000 on marketing over a 30 day period, and generates 100 new customers, the average CPA is $10.

    Your average CPA needs to be lower than your customer lifetime value (CLV) for your marketing activities to be profitable, whether generally or in terms of specific campaigns.

    Where Are Ecommerce Metrics Housed in Google Analytics?

    You can track most of the key metrics in Google Analytics.

    Most importantly, you should familiarize yourself with the “Ecommerce Tracking” section of GA and 8 Must-Have Google Analytics Reports for Ecommerce Optimization. Unfortunately, you will have to use other tools to calculate CLV, retention period and purchase frequency.

    Google Analytics Goals” is a flexible feature that can be used to track a range of targets, including both macro and micro conversions (plus abandonments).

    It’s also essential to mention that metrics are best understood in the context of segments. Analyzing metrics that are specific to new vs. returning customers, device type, traffic source, country, and more, will enable you to pinpoint the best areas for sales growth.

    10 Best Ecommerce Metrics: Do You Need to Track Them All?

    Keeping track of so many metrics is difficult. But don’t despair. There are numerous ways to ease the burden of ecommerce optimization.

    First, it’s crucial to have a comprehensive strategy based on solid fundamentals. The “big four metrics” described at the beginning of this post – conversion rate, average order value, retention period, and purchase frequency – should form the bedrock of your campaigns.

    it's crucial to have a comprehensive strategy based on solid fundamentals. The big four metrics - conversion rate, average order value, retention period, and purchase frequency - should form the bedrock of your campaigns Click To Tweet

    Second, you should take advantage of software to streamline your optimization processes. Doing so will allow you to manage huge datasets and keep on top of optimization campaigns or “sprints” aimed at smaller parts of your website or specific audience segments.

    Download Your Free 115-Point Ecommerce Checklist!

    Want even more tips and tactics for boosting conversions and increasing customer lifetime value? Download your free 115-point ecommerce checklist. It’s comprehensive, clear, and practical. What’s more, it includes tips for every part of your site, from your homepage to your cart page.
    Ecommerce Optimization Checklist

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