Most successful Shopify e-Commerce businesses are those that make their decisions based on eCommerce metrics. At all times, they know how their store is performing and know which levers need to be pushed for more growth.
There are endless eCommerce metrics which you can use to track business performance, but only a select few directly represent the true state of your online store. These are the ones that you can turn into actionable insights to help you grow.
1. Conversion Rate
It is important to keep tabs on your conversion rate because it informs you whether your visitors are converting to customers or not. On average, the conversion rate lies between 1% and 2%. It’s important to note that conversions don’t happen automatically; you need to work on optimizing for it.
Keeping a close eye on this vital business statistic helps you understand whether your eCommerce store is converting a significant percentage of site visitors into actual customers, or whether you need to optimize more.
2. Customer Acquisition Cost
Naturally, it costs your business something to acquire any new single customer. This is the monetary value you have to pay to get a new customer and is known as your customer acquisition cost (or cost-per-acquisition). In order to be profitable, your customer acquisition cost must be less than what is known as your customer lifetime value.
The acquisition cost should ideally be less than the value/cost of your average order. This ensures that so you make money or some profit off every new customer coming to your e-commerce store.
3. Segmented Revenue
Segmenting your business revenue gives you a peek into how your customers’ spending varies depending on the specific traffic source. Use that segmented revenue data to replicate what is working well with certain channels and identify where more resources and time investments are needed.
Weed out those sites or campaigns that aren’t really contributing anything substantial to your business bottom line.
4. Average Order Value (AOV)
Average Order Value (AOV) tells you how much is spent on your store by the average customer in a single transaction. AOV directly influences critical aspects of conducting business, such as your profit margins or the ability of your store to absorb the cost of shipping.
This is a powerful business metric because increasing your Average Order Value boosts your business revenue without having to find new traffic sources or new ways of boosting your conversion rates.
5. Lifetime Customer Value
In eCommerce, Customer Lifetime Value (LTV) is probably one of the most important business metrics to track. LVT is the overall revenue your store forecasts that a customer/client will bring during their lifetime as your customer.
Forecasting is important because it helps you understand better your store’s Customer Acquisition Cost as well as how much your store can afford to spend on both engagement/retention marketing and customer acquisition campaigns.
6. Cart Abandonment Rate
This is acknowledged by most as a key business performance indicator. Shopping cart abandonment rate informs your store on how many users or site visitors are actually adding your products to their shopping cart but are not following the process to checking out.
The lower your cart abandonment rate, the better because if it’s too high, it means your checkout process has too much friction. It tells you where to streamline your checking out process or where to focus your retargeting efforts.
7. Percentage of Returning Customers
Most businesses are too focused on getting new customers — neglecting those who are already in. These are vital because their journey doesn’t end once they have bought from you. After buying a product, they can buy countless more times. Track them!
Additionally, it’s better and often cheaper to focus on those who are already your customers. Data shows that it costs 5 times more to acquire a new customer compared to keeping an old one.
Final thoughts to share
Depending on the end goals of your website, there are endless eCommerce metrics to not only measure but to keenly analyze. You actually don’t need to religiously follow every business number to grow your store.
What is critical is to know which ones matter for your Shopify eCommerce store. The above 7 are generally good indicators of how your business is performing and keeping tabs on them comes with good ROI.
Happy online selling! Follow me@robertkind