8 E-commerce Metrics Every Business Should Measure

With a wealth of reporting tools and the simplified follower counts of social media, it can be tempting to measure the progress and success of your online business by headline e-commerce metrics alone. However, while these numbers can be helpful and even indicative of a company moving in the right direction, they rarely tell the whole story. Worse yet, some are simply vanity metrics that are often and almost always misleading. To find out how your online business is really performing (or not), you'll need to dig a bit deeper.

8 E-commerce Metrics to Measure

For an online business, the humble website tends to be the hub of all activity. Sales can certainly happen on other platforms - and a lot of your traffic originates on social networks or the customer's inbox - but most of the action happens when they hit your site. Thankfully, this is also where you can track their actions and make the most of your measurement. Assuming, that is, you understand your user objectives and how to quantify them.  Below we discuss eight vital e-commerce metrics that every owner or marketer should measure and understand in the context of your business.   Organic Search Traffic The number of visitors who land on your site from unpaid, aka “organic,”  search results. This is an important e-commerce metric, because the traffic is free and often highly targeted to the products or services that you sell. Organic search visitors have typed in a keyword that's relevant to what you sell. Search engines like Google and Bing should ideally serve up only the best most relevant pages, meaning that those who find your site via search results are highly engaged and interested in what you offer. Optimizing your site for quality, relevant content is the best way to drive organic search traffic. This metric should be checked regularly so that you can understand how well your site pages and content marketing plan are performing. If your numbers from this source start to drop, it's vital to spot the trend early so that you can take action to win back this valuable source of site traffic.   Conversion Rate Calculated by dividing the number of site visitors who convert to paying customers, this metric is obviously key for any online business. Without conversions, an e-commerce site is just a research stop on the road for customers who end up buying from your competitors. Conversion rate  rates from sources like email campaigns, promotions and other advertising resources to determined which methods are most effective in converting visitors. However, it's important to remember that your conversion rate isn’t limited to sales alone. Your business should also include conversions on the road to an eventual purchase, such as viewing a key product page, signing up for your e-mail list, submitting a contact form, or placing a phone call. All of which brings us to...   Sales Channel Contribution So you know when visitors to your site convert, but do you know where they came from? If not, you can spend a lot of money on channels that aren't working. These are marketing dollars that could be better spent on established channels that are pulling their weight, or exploring new platforms that you think have potential. Either way, it should start with monthly reporting on where your paying customers come from. This report can include:

• Visitors from different social networks,
• Paid search (Adwords, Bing Ads, etc),
• Banner ads and display network visitors,
• Referral traffic from key sites, such as affiliates, partners, andbusiness directories,
• Performance of different phone numbers, such as tracking number sets or different area codes,
• Any other significant source of traffic that contributes to your conversions.

Subscriber growth rate Email is a tried-and-trusted marketing strategy for companies in almost every sector. It can be a great way to keep subscribers up-to-date on promotions, new products, and important company announcements. But if your list is stale, you could be wasting your time and energy on the wrong people who don't open your e-mail, ignore it, or possibly even flag it as spam. Ideally, your list size and conversion rate should both be growing. You can also measure active users by open rate, click through rate, and any other indicator that the recipient is a regular consumer of the content your sharing through their inbox. If subscriber rates are dropping or activity seems low, it may be time to freshen up the way you advertise your emails. Expand your audience reach to new social media outlets, implement more targeted keyword campaigns, or perhaps even host in-person events to attract new subscribers who are engaged with your company and excited to receive your e-mails.   Cart Abandonment Rate Cart abandonment is a must-watch metric for any e-commerce retailer. The rate is calculated by the number of people who come to your site and place items in their shopping baskets, only to leave without making a purchase. Fortunately, cart abandonment is one of the e-commerce metrics that has many ways to improve performance. You can further incentivize sales by offering coupons, flash sales, and limited-time free shipping, among other strategies. According to BigCommerce, 41 percent of customers abandon their carts but begin the checkout flow by entering their email addresses. With this key piece of data, you can try to attract these customers back to your site by reminding them what they placed in their cart. This can be e-mailed or set as part of a retargeting campaign in Adwords or Facebook, with the goal to tempt that customer back and finally make the sale.   Cost per Acquisition This e-commerce metric, usually shortened to CPA, measures how much it costs you to acquire each new customer. The calculation may vary, but it usually comprises marketing and any related operational expenses. When you’re just starting out, this cost is likely to be high. You need to make a name for your brand and that can take a lot of advertising. As you grow, however, this cost should start to come down as economies of scales kick in. Automating as much as possible using tools like e-mail marketing, chatbots, and accounting software will help reduce your overhead costs and increase revenue. This will, in time, reduce the costs of acquiring each new customer and add to your profit margin on each online sale.   Average Value of Order Understanding the value of each sale, also called AVO or AOV,  goes hand-in-hand with calculating your CPA. The more you include in each sale, the more you are making, on average, from each conversion. To reach this number, work out the sum of the value of all orders and divide that number by order quantity in the same period. AVO can be boosted by offering your site visitors incentives like free shipping for a given order amount or size, adding discounts for multiple purchases, and placing related items carousels like "customers also bought..." next to the product they're considering. You can also take a cue from physical retail stores by adding "impulse buy" items just prior to checkout. These can be small ticket items or additional services that add value to the main product, such as a warranty or assistance with set-up. Anything that plays on the desire to make more of the main purchase is likely to help improve the average value of your orders.   Time On Site Although the amount of time a visitor spends on your site isn't a direct conversion, it has a significantly positive correlation with how interested they are in what you have to offer. Naturally, this translates to how likely they are to buy something (and the metrics you really care about!) Time-on-site is calculated as the difference between the request time of their last page request and their first page request. It is usually front and center on analytics package dashboards, such as Google Analytics default summary page, so you should have no trouble finding it. This metric is important but can also be misleading. It doesn't account for a person engaging in any number of activities that register as “interest”. Time-on-site can be used to compare the effectiveness of different campaigns but as an absolute value, it should be treated with caution as it is easily skewed by unnaturally long visitor session or bot traffic that bounces off your site in seconds. Try to segment out different interest groups, such as paid traffic or mobile users, then filter out any bot traffic before analyzing time-on-site in greater detail.   Desktop vs. Mobile Device Use With mobile devices now ubiquitous - and indeed taking over from desktop use in many sectors - every e-commerce retailer needs to know how much traffic and revenue is coming from mobile visitors. Most analytics packages, including Google Analytics, allow you to segment users by either device type or operating system. Which you choose depends on how much you intend to customize each user's experience. In most cases, making the distinction between mobile and desktop users is sufficient.  Invest the time and resources to make the mobile version of your site a user-friendly experience. As well as attempting to grow mobile device use, look for differences in behavior such as lower time on-site and where mobile users exit your site. If you find a page that converts well for desktop but has a high exit rate with mobile users, for example, you may need to change elements on that page to make it more mobile-friendly. Mobile users are just as important as your desktop site, but each has a distinct mindset and the user experience can vary significantly between the two groups. Make sure that your site caters to both categories and be sure to implement metrics for your mobile segment to track your progress. There are many moving pieces that make up any e-commerce business. To keep track of them all, and how they affect your company can be challenging but it's always worth the time investment. Understanding which e-commerce metrics are truly important will help you focus time and resources on only those initiatives that move your business towards defined goals and on to the next level of success.