E-commerce Metrics to Improve your Business

E-commerce metrics help online businesses grow and develop better marketing skills. The most successful e-commerce brands base their business decisions on data. The ability to organize and analyze e-commerce metrics is an essential part of managing a successful online store.

1.    Average Order Value (AOV)

To calculate, divide the total revenue by the total of all completed orders within that same period.

For example, suppose you sell products worth $50,000 in a day and that revenue was created by 250 customer orders. In such a case, your AOV is 50,000/250 or $200 per order.

2.   Customer Lifetime Value (CLV)

CLV is found by multiplying the average order value by the average purchase frequency rate and the average customer lifespan.

On average, your customers might spend $200 for every order and end up placing five of these orders in a single year. Additionally, this could happen for ten years. Here, your average CLV is 200 x 5 x 10 = $10,000.

3.   Customer Retention Rate (CRR)

The CRR e-commerce metric operates by tracking your customer holding ability, specifically after you gain them. To find the CRR of a period, the rate of new customers gained is first determined. Afterward, the result gotten is multiplied by 100.

This metric accurately defines customer satisfaction and loyalty. As a result, you should never underestimate it.

4.   Onsite Activity Metrics

There are several specific factors you must pay attention to and they are:

  • Number of pages visitors view
  • Amount of time spent on these pages
  • Their next destination after leaving

If you can carefully study their actions and monitor all these factors, you can understand why you’re losing visitors and potential customers. Hence, you can take the proper steps towards a solution.

5.   Customer Acquisition Cost (CAC)

To calculate this metric first a given period, you divide your total sales and marketing cost by the number of new customers you acquired. Note that you’re to consider all the sales and marketing costs.

If you notice a gradual increase in this metric over time, you should be cautious. It’s most probably a fault with your product or user experience.

6.  Conversion Rate (CR)

Determined by simply dividing the number of conversions by the total number of visitors allowed to take action. This number also includes those who took the action you wanted them to take.

While the average sales conversion rate for U.S. e-commerce businesses hovers at around 2.6 percent, it’s important to note that average conversion rates can vary based drastically by industry. The conversion rate for a website selling luxury watches will certainly not have the same conversion rate as a low-priced clothing retailer.

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