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eCommerce

A Beginner’s Guide to eCommerce Analytics [With 7 Key Metrics to Monitor]

A Beginner’s Guide to eCommerce Analytics [With 7 Key Metrics to Monitor]

The world of selling online is one competitive place to be, but eCommerce analytics can help.

Yes, it’s heaven for shoppers because it just keeps getting easier and easier to shop online. 

For store owners like you, that means lots and lots of competition. 

The good news is there is a lot you can do to grow your eCommerce store. The tools and tech to support you get better almost every day. 

And retail experts are getting optimization down to a fine art. 

That’s why we’re going to take a look at eCommerce analytics in this article. We’ll take you through some of the key metrics to understand and we’ll hear what experts have to say about using them to improve your store’s performance. They’ll talk about:

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What are eCommerce analytics?

Analytics is all about data: finding them and understanding them. And eCommerce analytics covers all the important data that helps you understand how your online store is performing. Think quarterly and annual sales reports, conversion reports, and order fulfillment data. 

 

Why do eCommerce analytics matter? 

You’ve probably already guessed it. eCommerce analytics matter because they can help you get a fuller picture of where your store is crushing it, and where it’s got room to improve.

“The name of the game in eCommerce is to attract people to your website, keep them there, capture them as consumers and get them to return for future buys,” said James Sun, founder of BeautyTap, a review site for trending beauty products. 

In truth, there is an ever-expanding list of metrics that retailers can now explore to understand their store performance. For beginners, that can be a little overwhelming. So let’s keep it simple here and only focus on the top ones you should be paying attention to.

And don’t worry, if you get up to speed with just a handful of these metrics then you will be off to a great start. 

Read more: Retail Analytics: Your Guide to Data-Driven Commerce 

 

Top 7 eCommerce metrics for you to monitor

From average order value (AOV), through to customer retention rate (CRR) and cart abandonment rates, here’s what eCommerce experts say you should be paying attention to in 2021.

Customer acquisition cost (CAQ)

As the name suggests, CAQ is how much it costs to persuade someone to purchase your products. “We all want to make sure that this metric is low. We want to be able to earn more than we spend on customers,” said David Clelland, Director of Infiniti Tracking, a car and fleet tracker provider in the UK. 

Clelland said CAQ can show online store owners if advertising and marketing efforts are working. “We can constantly improve these aspects to get customers for less expensive amounts. The more able we are to get customers at a lower cost, the better the business will work,” he said.

Sales conversion rate (CR)

This is another useful metric. CR measures how many leads you have turned into sales (that’s the conversion part). Again, it can show how well your marketing and sales approaches are doing. 

“Marketing teams are responsible for finding the different kinds of leads: hot, warm, and cold,” said Solomon Thimothy, Co-Founder and Marketing Head of Clickx, a sales and fulfillment partner for agencies. “The hot leads are usually the customers who are very likely to pursue conversion, and the cold ones are generally the disinterested ones. Marketing teams typically segment these leads so that sales teams can put effort and seek the hot and warm leads,” he said. 

Tip: Leads turned into sales / qualified leads x 100 = your conversion rate percentage.

Revenue by traffic source 

Simply put, this is where people come to your online store from. This might be through a Google search, by clicking your paid search advert, or through social media, email, referral traffic and direct traffic.

“Revenue by traffic source is an insightful metric that highlights what types of marketing efforts yield the highest profit margins as well as where they originate from,” said Tracey Roulhac, Owner of Sensual Fashion, an LA-based clothing boutique for women. “This can help marketers make more strategic decisions with how they spend their resources,” she said. 

Average order value (AOV)

As CAQ showed us earlier, it’s expensive to get new customers. That’s why upselling and cross-selling to your existing customers can be so important. Doing this can help you boost how much people spend with you on each order. This is called Average Order Value (AOV). Lifting that average can help you increase your revenue and profitability. 

“Changes in the AOV can also be a useful red flag that something is amiss,” said Eli Ratansi, 

Director of Marketing at Vegano Foods, a vegan meal kit company and online marketplace for plant-based foods. “So tracking this closely can alert you to changes such as usability issues on your website, or dissatisfaction with pricing, offers, or product changes so you can take action before they take too much of a chunk out of your revenue.”

Customer retention rate (CRR)

But it’s going to be hard to boost your average order value if you can’t convince customers to buy from you more than once. This is where your customer retention rate (CRR) comes in.

CRR shows how ‘sticky’ your products or brands are, according to Bernard Meyer, an eCommerce marketing specialist at Omnisend.

“If the CRR is low, it could mean that your products or brand need improvement, or that you’re not communicating to your existing customers effectively. Remember that it’s five times cheaper to keep a customer than to acquire a new one. So focus on marketing to your existing base for better sales,” said Meyer.

Checkout abandonment rate

Ah, cart abandonment. 

Let’s be honest. 

It’s the bane of eCommerce business owners everywhere.  

This is when customers pop some products into their online cart but then decide against making those final few steps for the purchase. 

As much as 70% of products placed in eCommerce shopping carts don’t result in a purchase. Whether shoppers abandon carts because of high costs, slow shipping speeds, or poor checkout processes, one thing is clear: online store owners work hard to get shoppers over the line. 

Tomas Kacevicius is the co-founder of omnichannel marketing app Firepush and he describes checkout abandonment rate as a ‘tricky’ metric. Because it can point to many issues. 

Troubleshooting abandoned checkouts

“New Shopify store owners, for example, think that Shopify provides an optimized checkout — which it does — but what they often miss is payment errors, website errors and shipping charges,” said Kacevicius. He suggests store owners take a look at going step by step through the abandoned orders themselves, to try to solve checkout abandonment rates of 70% and higher.  

“This technique helps discover issues like a lack of shipping to a customer’s destination, payment method errors and store issues. If the rate is lower than 70%, the same strategy is also applicable, but it indicates a good checkout optimization,” he said.

Maria Vasserman, a Marketing Communications Specialist at Maropost, a B2B eCommerce platform suggests eCommerce merchants do the following to tackle cart abandonment: 

  • Offer alternative products
  • Use dynamic design with visually pleasing graphics
  • Use urgency and FOMO to encourage action. 

“With such a high percentage of abandoned carts, there’s a lot of potential for conversion,” said Vasserman. “That’s why it’s important to pay attention to this metric.” 

Email opt-ins

Lastly, consider looking at email opt-ins. They are a useful way to source leads who are actually interested in your offering, according to Solomon Thimothy of Clickx

“When you have an email campaign, your most important metric is their open rates and getting traffic into your website or product. By creating email opt-ins, you’re sure that you do not only get prospective customers, but you actually get viable leads who are inclined and drawn to your product or service,” he said.

“Email campaigns, especially drip campaigns usually have a dedicated page for their product featured in the email, this is called the opt-in page. This opt-in page is where customers consider and process their conversion. You can determine your opt-in rate by dividing the number of opt-in conversions by the total number of visits to your opt-in page,” he said.   

 

Using tests to improve your store performance

So what can you do if one or more of these metrics are a bit underwhelming? 

This is where testing comes in, according to Deren Tavgac, a co-founder of data analytics software company Cube Analytics. Tavgac has held past leadership roles at large eCommerce organizations and he recently oversaw a $4bn eCommerce business.

“The most important thing for companies to understand when measuring eCommerce metrics is that a well-structured A/B testing program is critical,” said Tavgac. That means isolating exactly what is driving revenue for your business to ensure long-term goals are hit, he added.

For example, you might consider running A/B tests on your product or category pages to see if a specific design or headline format performs best. When you run tests like these, your website visitors are randomly shown one of the available variations. This helps you determine which variation has the best conversion rate. 

 

Getting started with eCommerce analytics

We hope this article helped you get a better understanding of eCommerce analytics. Dive deeper by reading our guide to common analytics terms. And if you’re ready to start selling online, talk to one of our eCommerce experts today

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