Guest Post: 8 E-Commerce Metrics That You Should Follow in 2022

May 31, 2022

Keeping an eye on your business performance is essential when running an online store. E-commerce metrics are an integral part of this. You can track your e-commerce business’ success through various key performance indicators (KPIs). 

These can help you learn how often your website visitors make purchases or how much it costs to acquire a new customer by looking at aspects like the average order value, the number of orders placed in a timeframe, and how much each customer spends per month. 

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This guide will walk you through 8 crucial metrics you should track for your e-commerce store and how to calculate them.

8 Critical E-Commerce Metrics to Track in 2022 

The following are some examples of crucial e-commerce KPIs watched closely by the best Shopify development companies and top online retailers. Metrics like these can be used to determine the success of most e-commerce businesses, regardless of how long they’ve been operating. 

As you read through, keep your business goals in mind, and you’ll find some KPIs to track. Without further ado, let’s begin with our list of the eight crucial e-commerce metrics for 2022. 

1) Conversion Rate 

Although we aren’t ranking these by importance, if there is one e-commerce metric you should always track, it is your sales conversion rate. We’re not alone in believing this — Databox polled marketers on the importance of e-commerce KPIs, and 40% agreed that the conversion rate is the most critical metric. 

You can calculate your conversion rate (CVR) by dividing the number of people who accessed your page by the number of people who made a purchase and multiplying the result by 100 to get a percentage. Here’s what the formula looks like: 

(Purchases / Sessions) x 100 = CVR 

Broadly speaking, the conversion rate tells you what percentage of your visitors are taking the desired action. In this case, that action is making a purchase. However, you can also measure things such as how many people choose to join your loyalty program, create an account, subscribe to your newsletter, etc. 

Other e-commerce metrics also tend to improve when the conversion rate increases, so it is a reliable indicator of overall performance. The same holds if you see your sales and revenue trending down.  

As long as you have a comprehensive set of conversion rate KPIs, you should be able to determine what the problem is quick. 

Conversion KPIs for your e-commerce website also provide valuable insights into how engaged your customers are. Using Google Analytics, you can see precisely where consumers are dropping off and moving through the sales funnel. 

You can access detailed data about your conversion funnel through various performance metric tracking solutions. Besides your website, these tools can show how well your audience is converting on retailer sites or marketplaces like Amazon. 

Whenever you change your website or third-party product listings, the conversion rate is a crucial factor to watch. It provides a clearer picture of content performance, untainted by traffic spikes or dips. 

In the context of launching a new product range, for example, conversion KPIs can assist you in identifying instances of product cannibalization.  

2) Customer Lifetime Value (CLTV) 

Customer lifetime value is the total revenue a customer could generate throughout their lifetime (or at least during the entire period of their relationship with your organization). 

Your industry and the product(s) you sell will also affect this number. Let’s say that you run a SaaS business and that your average customer will stick with you for three years. In that case, a $20/month service could have a customer lifetime value of $720. 

On the other hand, a well-loved organic cosmetics shop could have a far superior customer lifetime value if customers keep coming back to refill their collections month after month. 

Here is the formula for calculating CLTV: 

Average Length of the Customer Relationship x Number of Purchases Per Period of Measurement x Average Purchase Value = CLTV 

Let’s go back to our cosmetics store for a moment. If your average customer buys one product each month at $25 per purchase and sticks with your business for five years, the CLTV = 12 months x 5 years x $25 = $1500. 

This metric is typically not shown in your average analytics dashboard because it takes more exhaustive analysis to figure out. Nevertheless, it provides vital information. 

Perhaps most crucially, through customer lifetime value, you can figure out how much you can comfortably spend on customer acquisition while still making a profit. It essentially shows the monetary value of the average customer to your business. 

Additionally, it can reveal which products are most valuable to your bottom line — for example, which premium products are most popular, and how you can adjust your strategy to draw more customers to these products. 

3) Order Value 

Your AOV, or average order value, tells you how much customers are spending on your online store on average at one time. Follow this formula to calculate AOV: 

Revenue / Number of Orders = AOV 

You can measure your AOV to gauge revenue and develop realistic new customer goals. For instance, if your average order value is $50, and you’re aiming for $5,000 in sales this month, you know you need at least 100 new customers to reach your goal. 

4) Abandonment Rate 

There will always be consumers who fail to purchase your products, no matter how high your conversion rate or how popular your store is. The term “shopping cart abandonment” refers to a customer who adds an item to their online shopping cart but does not complete the checkout process, essentially abandoning the items. 

Unfortunately, this is part and parcel of e-commerce. However, it would be best if you still kept a close eye on your overall shopping cart abandonment rate since it can alert you to potential checkout issues.  

You can calculate your shopping cart abandonment rate by using the following formula: 

(Completed Purchases / Created Shopping Carts) x 100 = Shopping Cart Abandonment Rate 

According to the Baymard Institute, the average SCAR currently sits just below 70%, so you should aim to keep the percentage below that if possible.  

That said, you shouldn’t be too concerned if your shopping cart abandonment rate is a bit high. You should think of it as an invitation to look into possible issues since this indicates people are having trouble completing their purchases due to errors in the checkout process. 

5) Customer Acquisition Cost 

You can determine how much it costs to acquire a new customer based on the customer acquisition cost (CAC). Your marketing budget for customer generation primarily determines this metric. 

Customer acquisition cost is calculated as follows: 

Total Marketing Spend / New Customer Number = CAC 

Let’s say you spent $500 on a monthly ad campaign and brought in $50 customers. That would place your CAC at $10 per customer.  

Check this metric regularly to ensure it does not exceed your CLTV or even approach it beyond what you are comfortable with. You might need to reconsider your customer acquisition strategy if this is the case to maximize results while minimizing costs.

6) Bounce Rate 

Anyone who runs a website, not just e-commerce sites, should pay attention to the bounce rate. It’s a measure of how many people landed on your website and left without taking any action, whether it was clicking to another page, filling out a form, browsing your products, etc. 

An e-commerce website’s bounce rate typically ranges between 20% and 45%, so try to stay around that number (or even lower if you can). When it comes to reducing the bounce rate, make sure your website is attractive and easy for visitors to navigate. People should also be able to tell what you sell the moment they land on your site. 

7) Returning Customer Rate 

The returning (or repeat) customer rate is the percentage of customers who have made multiple purchases from your store. 

A typical e-commerce store probably sees a return customer rate between 20% and 30%. As a rule of thumb, whenever the rate exceeds 30%, you should focus on attracting new customers. Whenever it is below 20%, you might want to try retargeting ads to entice past customers to return. 

Keeping in mind that new customers are usually 5x more expensive to get in the door than returning ones, you want to make sure that you’re working just as hard bringing back clients as you are finding new ones. 

Here is the formula for calculating your returning customer rate: 

(Return Customers / Total Customers) x 100 = RCR 

Getting a lot of repeat business indicates you are doing a good job. On the other hand, consider improving the customer experience if you’re having difficulty raising your return customer rate.  

8) Click-Through Rate 

Click-through rate (CTR) refers to the rate at which people land on your website after clicking on an email campaign, ad, social media post, etc. The formula for calculating the click-through rate is: 

(Clicks / Impressions) x 100 = CTR 

You should be able to access this from your analytics or reporting dashboard within your email marketing platform or ad platform. Your digital marketing campaigns can then be easily measured by gauging their overall effectiveness. 

The CTR on Google Ads for e-commerce companies’ search ads is 1.66%, and for display ads, it is 0.45%. Email campaigns, however, tend to see a CTR of 2.01%.  

Overall, your click-through rates are likely to be very low, so anything above 1.5% should be considered a success, and anything above 2% is a miracle. 

Conclusion 

Now it’s time to breathe a sigh of relief. You do not need to monitor every number under the sun to grow your store, and you now have eight metrics to track that will help you put together a plan and measure its success. 

As you become comfortable with these metrics, you can move into more nuanced, detailed numbers for your business. If you’re still confused about the importance and meaning of these metrics and would like to enlist the help of web design professionals, hop here. 

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