8 Critical Ecommerce Metrics You Must Track In 2023
By Sadaf Batool
29 Dec 2022
E-commerce industry will boom in 2023 but it will come bearing many challenges as you will be competing with 24 million other users for the same customers. It is easy to get lost in the crowd when you don’t keep track of your important e-commerce metrics that determine if your business will be in profit or loss.
Tracking eCommerce metrics have the most impact on your store’s revenue. Keeping your fingers crossed and merely checking the total sales at the end of the month isn’t a great way to measure your store’s success
What are eCommerce metrics and KPIs?
E-commerce metrics are quantifiable measurements used to track the performance and progress of a specific business activity. It’ll help you define your website's performance, and by analyzing them, you can understand the scope of improvement of your business.
eCommerce KPIs (Key Performance Indicators) are key metrics that help you to understand where your eCommerce business's success and failures are coming from. They help you get a bird’s eye view of its success. These are milestones on the road to online retail success. Monitoring them will help you identify progress toward sales, marketing, and customer service goals.
Are Metrics and KPIs the same?
Metrics track your business progress while KPIs show how effective you are at achieving your goals, they use metrics to measure how close or far away you are from reaching those goals.
How to decide which metrics or KPIs matter for your business?
Monitoring dozens of metrics can be a daunting process. If you want to monitor only those metrics that have a meaningful impact on the success of your eCommerce store, then here are the 3 questions you should ask yourself to narrow it down:
Q1; How big a change will the metric have on my business?
The bigger the change, the better. If a change isn't significant to the bottom line, it may not be worth the effort to monitor.
Q2: Will optimizing the metric have a significant impact on my business’s revenue and strategic goals?
You should track metrics that help you increase revenue. Determine which metric will make the biggest dent in your company’s current goals.
Q3: Will working on the metric help me improve others as well?
Metrics are interconnected. Tweaking one might create a domino effect.
Top E-commerce metrics:
1. Customer Acquisition Cost (CAC)
It shows how much it costs to gain a new customer. It caters to all organic and paid marketing channels and everything else it costs to make a sale
Formula: CAC=cost of marketing/number of new customers acquired.
It is the average amount customers spend each time they place an order in your store. It helps compare marketing spending against the cost of acquiring new customers.
Formula: AOV= Revenue/ Number of orders
3. Customer lifetime value (CLV)
It is the average amount customer spends over their life with a business. It helps in estimating a business’s viability, brand loyalty, and customer satisfaction
Formula: CLV = average order value (AOV) x average purchase frequency x average customer lifespan
It measures the number of people who bought a product from your store after visiting.. It helps in estimating the amount of traffic your store needs to generate target revenue.
Formula: CR = (number of purchases/number of sessions) x 100
5. Shopping cart abandonment rate
It is the percentage of the number of people who add a product to their cart by leaving without checking out.
Formula: Shopping Cart Abandonment Rate = (number of completed checkouts/number of shopping carts created within the same period) x 100
6. Bounce rate
It is the percentage of the number of visitors who exit a website without taking any action after only visiting one page.
7. Customer retention rate (CRR)
It is the percentage of existing customers who repeatedly purchase from your store. It helps you sustain customer relationships as more repeat customers s equal higher brand loyalty.
CRR = ((Number of customers at the end of the period-Number of new customers acquired during the period)/Existing number of customers at the start of the period) X 100
8. Refund and return rate (RRR)
It measures the percentage of orders returned or refunded compared with the total number of orders within the same period
Formula: Refund rate = (number of orders refunded / total number of orders returned) x 100
Best ways to measure metrics
You can use Google Analytics to track these eCommerce metrics.
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