When it comes to scaling an eCommerce business, meticulously tracking the store’s metrics and KPIs is essential for profitability and growth. With eCommerce revenue continuing to grow rapidly, this channel has come mission-critical for many businesses.
According to eMarketer, US retail eCommerce sales will top $1 trillion in 2022, a $960.44 billion increase (or 9.4%) compared to 2021. By 2026, it is projected that more than $1 out of every $5 spent on retail will come from eCommerce channels.
As marketers, it’s likely that you’ve tried many strategies for growth, but without closely tracking each campaign’s performance you won’t know when it’s time to take the next step in terms of scaling.
Aside from just executing marketing campaigns, often one small tweak in an eCommerce store—for example optimizing the checkout process and reducing cart abandonment rates—can lead to significantly higher margins and the ability to invest more in customer acquisition.
Taking a data-driven approach to growth enables marketers and eCommerce business owners to know exactly which eCommerce metrics and KPIs need more attention and when you’re ready to scale profitably.
After all, over half of US adults shop online at least weekly, and 16% do so every single day. With this steady increase in online shopping, particularly on mobile devices, there is too much at stake to not pay attention to the numbers.
With rapidly evolving eCommerce trends, having your finger on the pulse of what's happening is one crucial key to success. In this guide, we’ll discuss 15+ metrics and KPIs to measure the success of an eCommerce store
Below we’ll be focusing on metrics related to our Shopify integration, although keep in mind these metrics can all be applied to WooCommerce or any other eCommerce platform.
What are the most important eCommerce metrics? In particular, we’ve broken each of these metrics down based on where they fit in the eCommerce sales funnel, including:
But first, let's tackle a few key concepts to set the stage.
How to Determine Which Ecommerce Metrics & KPIs Are Important for Your Client
Monitoring hundreds of eCommerce analytics, metrics and KPIs has little to no value for your clients, if they don't have a significant influence on the long-term performance of your client's eCommerce site.
Here's what we recommend: determine the key performance indicators (KPIs) that regularly have the biggest influence on the overall company objectives from the bigger list of metrics you now measure.
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Helping Your Clients Understand the Difference Between Metrics & KPIs
To differentiate the metrics vs KPI's, metrics assess the progress of every business activity, whereas KPIs demonstrate how effective you are at accomplishing specific goals. For example, while traffic produced through paid ads is a standard metric to analyze, a KPI would focus on the number of qualified leads created from paid ads.
Question to Ask to Identify Which Ecommerce Metrics to Track
If you're still attempting to figure out which metrics are most essential for your agency to monitor, here are three questions to ask yourself to help narrow it down:
How much of an impact would a change in a metric have on your client’s eCommerce site? If a measurement point isn't important to the bottom line, it may not be worth the time and effort to track.
Will focusing on this metric help us achieve our strategic goals? Improvement for the sake of improvement is insufficient. Obviously, your clients want results and you’ll want to discuss and determine which metrics will have the most impact.
Are these metrics going to help other metrics? Many metrics are linked together. Improving one can have a cascading impact on others. Identifying essential traffic sources, for example, may enhance the quality of your visitors, which can ultimately raise sales conversions.
There are similar eCommerce metrics & KPIs across all industries, but each organization has its own set of eCommerce KPIs to measure and evaluate on a regular basis in order to enhance your client’s product, customer experience, etc.
Let’s get started.
Awareness & Consideration Metrics
Before even thinking about conversions, awareness and consideration metrics allow you to measure how effectively you’re attracting people to the top of the funnel. These metrics are key to understanding your highest value channels, campaigns, traffic, and engagement is coming from.
At the top of the eCommerce funnel, one of the most foundational metrics to track is total sessions. Google Analytics defines a session as a group of user interactions on the website that takes place within a given time frame, which by default lasts until there is 30 minutes of inactivity. Since each session represents a new potential customer, total sessions are key to evaluating both the short and long-term success of an eCommerce store.
Sessions by Source
Since not all traffic is created equal, it’s important to break each session down by source. When it comes to the eCommerce sales funnel, often top-of-funnel traffic will come from one source—for example, social media—and conversions will come later through an email or retargeting campaign. Whatever the case, knowing your highest-performing sources is key to scaling your organic and paid traffic. Both total sessions and sessions by source can easily be tracked with our Google Analytics integration:
New vs. Returning Visitors
The vast majority of conversions will not occur on the first visit, which is why tracking new vs. returning visitors is so important. Often potential buyers just need a reminder about your client’s store, so this metric can provide a gauge for how effective your retargeting or email marketing campaigns are at bringing people back. This can be again be tracked with Google Analytics using the "% of New Sessions" metric:
Social Media Engagement
Tracking social media engagement across each platform can provide your agency with insight into the type of content that performs with the client’s audience. There are many individual metrics to monitor engagement, so if social media is the main traffic source of the store, it’s recommended to use a dedicated social media dashboard.
For example, in our social media dashboard template, we’ve included 9 metrics to track:
Top Organic Keywords
Although many eCommerce businesses focus on paid traffic for growth, ranking for organic keywords in search engines can also generate a significant ROI. Since SEO is a much longer-term investment than paid traffic, monitoring traffic from organic keywords with a rank tracker is key to evaluating its performance.
In terms of ROI, email marketing is often one of the most valuable channels for both first-time and repeat purchases. In fact, a study by Campaign Monitor found that email can generate an ROI of 4400%, or $44 for every $1 spent on an email campaign. In order to track email opt-ins, you can either use the built-in analytics from your email provider in an email marketing report template or use a conversion goal in Google Analytics to track the opt-in’s “thank you” page.
Ecommerce Conversion Metrics
After you’ve built brand awareness and traffic to the site, the next step is to optimize your eCommerce conversion funnel. With enough traffic, even small improvements to your conversion funnel can make a huge difference in terms of profitability and scalability.
Conversion rate is one of the most important metrics to track in your conversion funnel. Although average conversion rates will vary widely based on the product price, industry, and so on, Little Data highlights that a good benchmark to aim for is at least 1.75%. Conversion rate optimization is a very in-depth topic so we won’t cover it in this article, although check out Shopify's blog section dedicated to the subject here.
Sales By Referrer
Just as knowing where your traffic came from is essential, tracking sales by referrer is equally important. In our eCommerce dashboard, sales are broken down by referrer in a pie chart alongside the exact revenue from each source:
Average Order Value (AOV)
Average order value is another essential metric to track for any eCommerce business. One of the main reasons why it’s so important to track AOV is that it tells you exactly how much you can spend to profitably acquire a customer. Keep in mind, however, that there are a number of strategies to increase AOV over time, for example, Shopify suggests these top five ways:
Create an order minimum for ‘free shipping’
Bundle products or create packages
Upsell or cross-sell complementary products
Set up a customer loyalty program
Provide live chat support for quick questions
Aside from AOV, in our eCommerce dashboard you can also set an average order goal to ensure you’re hitting your KPIs each month:
Cart Abandonment Rate
Cart abandonment rate is defined as the rate at which users add a product to the cart and leave without completing their purchase. The research company Baymard estimates the average online shopping cart abandonment rate is 69.80%, so there will always naturally be a portion of visitors that will abandon. That said, if you look at the chart below you can see a large number of checkout issues that can be resolved with certain design & strategic changes:
Cost Per Acquisition (CPA)
Regardless of the marketing channel you’re using, knowing your cost per acquisition is crucial to scaling ad budgets. Aside from the overall CPA of each channel, it’s useful to get more granular with this metric and look at it at the campaign, landing page, and individual product level to know what’s working best. As mentioned, looking at CPA alongside other ROI metrics such as customer lifetime value and AOV provide a much more complete picture. BigCommerce highlights the importance of tracking your CPA below :
Armed with AOV (average order value) and CLV (Customer Lifetime Value), online businesses can determine an acceptable CPA for ecommerce acquisition. Conversion rates are a primary indicator of marketing success, but CPA provides the business perspective by which to gauge campaign success.
Below you can see an example of a Facebook Ads dashboard that tracks cost per website conversion over time along with the CPA of each publisher platform:
Return on Ad Spend (ROAS)
Similar to a business's overall ROI, ROAS tracks the amount of revenue generated for each dollar invested in advertising. There are many factors that go into determining what’s considered a “good” ROAS, although the most common benchmark used in a 4x or 400%, meaning for every dollar you invest in ads the store generates $4 in revenue.
The importance of ROAS for eCommerce stores is highlighted by Adespresso below:
ROAS provides a deeper insight into what is working for ads, ad groups, or ad campaigns so you can make informed decisions about what to keep doing and what strategies it is time to drop.
Customer Retention & Advocacy Metrics
It’s often said that it’s much cheaper to get your current customers to make another purchase than it is to acquire a new one, and this couldn’t be more true in eCommerce. Shopify defines customer retention as:
Customer retention is the collection of activities a business uses to increase the number of repeat customers and to increase the profitability of each existing customer.
In this section, we’ll look at several metrics and KPIs that every eCommerce business should track to increase its repeat customer rate and profitability.
Refund & Return Rate
In analyzing the performance of individual products, it's important to monitor the refund and return rate. Depending on the industry returns may be relatively common, for example in the fashion industry, and thus need to be a part of your financial models. This means a higher return rate for a particular product may not be the end of the world, as BigCommerce highlights:
Returns can also be a powerful driver to entice customers to hit ‘buy now’. If a customer knows your store offers free returns or exchanges, it can alleviate worries about buyers remorse. Use returns and refunds as fuel to drive your business, not to burn you.
That said, evaluating the refund and return rate of each product is key to monitoring the financial health of an eCommerce store.
Repeat Customer Rate
Customer retention and loyalty are all about increasing your repeat customer rate, which is calculated as the number of customers who bought more than once divided by the total number of customers, typically over a 365 day rolling period. One of the main reasons this metric is so important is that as ad costs steadily go up, this means you need to make the most of your existing customers. In most studies, the average repeat customer rate is between 20% to 40%.
A few tips that smile.io suggests in order to increase retention rate include:
Customer Lifetime Value (CLV)
Finally, when it comes to retention, knowing your customer lifetime value is key to planning ad budgets and understanding your timeline of profitability. The “lifetime” of an eCommerce customer is typically measured at 12 and 24 months and tells at what point your client will break even with new customers and reach profitability. As the performance advertising company Crealytics highlights:
Knowing the CLV of a customer will help you to strike the ideal balance between customer retention and acquisition. Knowing at what point a customer becomes profitable, is an essential part of knowing how much budget you can allocate to a particular channel or market.
In other words, CLV can be thought of as the single most important eCommerce metric to track in order to make informed marketing decisions and increase the bottom line.
Summary: Ecommerce Metrics to Track
Running a successful eCommerce business involves wearing many hats—from branding, marketing, managing suppliers, and customer support. As an agency, it’s important to track the metrics that drive profitability for your clients.
Each of the eCommerce metrics mentioned above can help you with this goal by helping you identify which strategies are performing and which need more attention.
Use our marketing dashboards to create fully customized reports for your clients. Just customize the template for each of your clients and their live metrics will populate on their own.
Read More: 15 Marketing Dashboards To Help Your Marketing Agency Scale
All that's left to your agency is the marketing creative, and writing up a simple executive summary before each report.
Either way, taking a data-driven approach to growth is a valuable endeavor for any eCommerce business. If you're ready to track these metrics, check out our prebuilt eCommerce dashboard template to start automating your client’s eCommerce analytics.