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7 essential customer metrics you should track for eCommerce

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Nicholas Woodward

Country Manager at PACK & SEND

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Customer insights help you understand how people behave on your eCommerce website. In a way, this data reveals the psychology of your customers. These insights are crucial for making informed business decisions.

If you understand your customers, you can better cater to their needs. Customer insights will also help you identify the ideal customer type for your eCommerce. With the help of this information, you can develop better-performing marketing strategies, website designs, user interfaces, and purchase journeys.

Traffic sources

The first thing you need to understand about your customers is their origins. Analyzing traffic sources will tell you where the majority of eCommerce customers are coming from. 

top ecommerce traffic sourcesSource

Understanding traffic sources will help identify the best-performing marketing channels for your eCommerce business. Based on this data, you can allocate your marketing resources.

For instance, if you aren’t getting enough search traffic, you can focus on SEO activities. Similarly, if your paid channels aren’t generating enough traffic from the desktop audience, you can divert the ads to mobile users to get better results for your eCommerce website. Analysis of traffic sources gives you key insights into the behavior and preferences of your customers.

Bounce rate

The bounce rate tells you how many of your visitors have left the website without taking any action. This happens when someone visits your website and closes it without scrolling, clicking on links, or checking out any products. 

Bounce rate by sourceSource

A high bounce rate signifies a lack of interest, such as the visitor didn’t find anything of value on your website. It can also result from a variety of reasons, such as unappealing products, thin content, unattractive design, poor user interface, slow loading time, etc. According to the eCommerce Benchmark study, the average bounce rate for eCommerce websites is 33%.

Focusing on a better user experience and first impression of the website will help you reduce the bounce rate. The first thing you should focus on is the website’s loading time. After that, you need to improve the navigation, user interface, website content, and design. 

After each improvement, you should track the change in bounce rate. This will tell you whether the changes are appealing to the audience or not.

Cart abandonment rate

The cart abandonment rate shows the percentage of shoppers that have created a cart on your eCommerce site but have left without making a purchase. A high cart abandonment rate is one of the biggest challenges for eCommerce businesses. About 70% of shoppers abandon the purchase at checkout.

Formula to calculate cart abandonment rate:
The number of completed purchases divided by the number of shopping carts created times 100.
 
reasons for abandonments during checkout

Source

You’ll have to identify the common causes for cart abandonment on your eCommerce site and fix them to bring down this metric. 

If shoppers are leaving your website due to hidden costs, you can present all charges upfront with the product description. On the other hand, if people aren’t buying from you because of slow delivery, you can incorporate eCommerce micro-fulfillment for quick delivery to ensure conversion.

By tracking the cart abandonment rate, you can pinpoint the issues that are preventing purchases on your website. By resolving these issues, you’ll be able to increase the conversion rate.

Conversion rate

Conversion rate is one of the most important sales metrics. It shows how many people made a purchase out of all the visitors. The average conversion rate for eCommerce websites is 5.2%. This means that for every 100 people visiting an eCommerce website, about five people make a purchase.

Formula to calculate conversion rate:
The number of purchases divided by the number of sessions times 100.

 

The conversion rate is intricately linked to various stages of a customer’s journey. You need to measure it at each stage.

This will help you identify the problem areas in your sales process. For instance, if your conversion rate drops on the product details page, you need to improve product descriptions, copywriting, images, etc. On the other hand, if your conversion rate drops at the checkout page, you need to address cart abandonment issues.

You should also track conversion rates for different products, audience types, traffic sources, and marketing campaigns. It’s the greatest measure of sales performance for an eCommerce website.

Average order value

Average order value (AOV) tells you how much your customers usually spend with each purchase. This metric is crucial for deciding marketing budgets and targets. For instance, if the average order value for your eCommerce website is $12 and you want to achieve revenue of $12,000, you’ll need 1,000 customers to achieve this target.

Formula to calculate average order value:
Total revenue divided by the total number of orders.
 
 

average ecommerce order valueSource

If you measure AOV for different months, you’ll know when your customers are most likely to buy more. You can also track AOV for audiences coming from different traffic sources to determine which marketing channels yield quality audiences. You can use AOV to understand the purchase behavior of your customers in different scenarios and optimize your strategies accordingly to increase revenue.

Customer lifetime value

Customer lifetime value (CLV) is the average revenue you can expect from each customer. Unlike average order value, this metric focuses on revenue generated over multiple purchases.

With this metric, each variable is as important as the result. The relative difference of each variable tells a different story about your customers. It also tells you where to focus your efforts and resources.

For instance, if average purchase frequency contributes the most to your CLV, you should give more importance to customer retention. On the other hand, if your CLV is higher because of the average order value than the other two variables, you should focus more on getting new customers.

Formula to calculate customer lifetime value:
Average order value times average purchase frequency per year times average length of the customer relationship.
 
 

Customer acquisition cost

Customer acquisition cost (CAC) shows how much you’re spending to bring in new customers. This insight will help you manage and improve your marketing efforts.

average customer acquisition cost by industrySource

CAC is usually calculated in deference to the time period. For example, if you’ve spent $5,000 on marketing in 2022 and acquired 800 new customers during the year, your CAC will be $6.25. You can also measure the lifetime CAC by dividing your lifetime marketing expenses by the total number of customers you’ve acquired.

Ideally, your CAC should be less than the AOV. If AOV is lower than CAC or the CAC is bigger than the CLV, then you need to seriously reconsider your business strategies.

Formula to calculate customer acquisition cost:
Total marketing expenses divided by the number of new customers acquired. 
 
 

Use customer metrics for eCommerce business growth

Based on the analysis of customer behavior, preferences, and buying patterns, you can improve your user interface, marketing campaigns, product pages, purchase journey, and more. Instead of educated guesses, you can use data to guide your eCommerce strategy so that you can bring in more visitors and convert more of them into customers.

Key takeaways:

  1. Use data from traffic sources to identify the best audience for your website.
  2. Improve the user interface to reduce the bounce rate.
  3. Address cart abandonment issues to convert more customers.
  4. Use conversion rate insights to optimize the purchase journey.
  5. Sales tactics like upselling and cross-selling can improve AOV.
  6. Use data from CLV and CAC to guide your marketing budgets.

Published January 10, 2023