Seven crucial metrics for e-commerce businesses are:
- Conversion rate for acquiring new customers
- Customer acquisition cost (CAC) for marketing campaigns
- Customer lifetime value (CLV) for customer satisfaction
- Average order value (AOV) for sales revenue
- Cart abandonment rate for user experience
- Click-through rate (CTR) for marketing campaigns
- Net Promoter Score (NPS) for customer loyalty
Whether you're a small e-commerce website or a massive retailer, you should be continually working to optimize your business processes and decisions and improve your bottom line. But how can e-commerce businesses decide where to focus their efforts and which choices to make?
The answer lies in the right metrics and KPIs (key performance indicators). E-commerce metrics are measures of an online store's performance that allow you to quantifiably track your company's progress toward specific goals.
But which are the important e-commerce metrics you should know about, and how can they help you with better decision-making? In this article, we'll discuss seven e-commerce metrics that every company should be aware of.
Looking for a powerful, user-friendly e-commerce data integration platform that makes it easy to crunch the numbers? Try Integrate.io today with a 7-day pilot.
Table of Contents
- Conversion Rate
- Customer Acquisition Cost (CAC)
- Customer Lifetime Value (CLV)
- Average Order Value (AOV)
- Cart Abandonment Rate
- Click-Through Rate (CTR)
- Net Promoter Score (NPS)
1. Conversion Rate
An e-commerce company's conversion rate is the percentage of website visitors who become paying customers of your business. The e-commerce conversion rate can be calculated by dividing the number of customers by the total number of visitors to your website.
Conversion rate is a crucial e-commerce metric because companies rely on acquiring new customers as a strategy for business growth. (Of course, retaining existing customers who make repeat purchases is also essential, as we'll discuss later.)
Another important related metric is the website's "bounce rate," i.e., the number of visitors who immediately leave your website after reaching a home page or landing page. Having a high bounce rate is a clear sign that something about your site is repelling or disappointing new visitors.
2. Customer Acquisition Cost (CAC)
A high conversion rate is a good sign that your business is doing something right — but what if you're spending too much money to convert those customers? The customer acquisition cost (CAC) is an e-commerce metric that measures the price of converting the average customer. You can calculate CAC by dividing your total marketing expenses over a period of time by the total number of customers acquired during that time.
CAC helps you measure the return on investment (ROI) of your digital marketing strategy, such as email campaigns, content marketing, and social media posts. Having a CAC that is too high could mean that your marketing efforts aren't having the desired effect, and your business may even struggle to be profitable.
3. Customer Lifetime Value (CLV)
The good news is that a high CAC may be balanced out by repeat customers who make many purchases on your website. The customer lifetime value (CLV) is an e-commerce metric that estimates how much the average customer will be worth to your business (i.e., the total revenue) throughout the entire future relationship.
CLV can be measured with the following formula: average order value X number of orders per year X number of years as a customer. Because retaining existing customers costs less than acquiring new ones, increasing your company's CLV is a good way to grow the business relatively inexpensively.
Conversion rate, CAC, CLV, and more: Get started calculating these e-commerce metrics now with a 7-day pilot of the Integrate.io data integration platform.
4. Average Order Value (AOV)
Average order value (AOV) is an e-commerce metric that calculates the average amount in dollars that a customer spends when making an order on your website. Measuring the AOV is simple: You divide the total amount of revenue over a given period by the number of orders in that period.
Keeping an eye on your company's AOV helps you understand the effectiveness of your pricing and marketing strategies. Improving your AOV metric (for example, by recommending other products a customer may like) can be a quick win for profitability and growth.
5. Cart Abandonment Rate
Cart abandonment rate is an e-commerce metric of the percentage of shoppers who place an item in their cart without completing the checkout process. To calculate cart abandonment rate, divide the number of orders in a given period by the total number of shopping carts created during that time.
A meta-analysis of studies has shown that the average e-commerce cart abandonment rate is just under 70 percent. Businesses that can improve their cart abandonment rate by even a few percentage points can thus significantly increase their profits and customer satisfaction.
6. Click-Through Rate (CTR)
Click-through rate (CTR) is an e-commerce metric that measures the percentage of people who click on a particular link (e.g., in an email or on social media). You can calculate CTR by dividing the number of people who click on the link by the total number of people on your email list (or the total number of people who viewed the link on social media or who subscribe to your social media account).
CTR is useful because it helps you understand how compelling your email marketing and social media marketing efforts are. Other metrics such as open rate and unsubscribe rate are also highly informative in this regard.
7. Net Promoter Score (NPS)
The Net Promoter Score (NPS) is an e-commerce metric that measures how likely your customers are to give a referral of your business to friends and family. NPS is a solid way to measure customer loyalty and satisfaction rates.
NPS is typically assessed by providing surveys to your customers. These customers are then separated into three categories based on their response: "promoters" who gave a high score, "detractors" who gave a low score, and "passives" who gave a lukewarm response. You then subtract the percentage of detractors from the percentage of promoters. For example, if 80 percent of people are likely to promote your business and 10 percent are unlikely, your NPS is 80 - 10 = 70.
How Integrate.io Can Help With E-Commerce Metrics
From conversion rate to NPS, there are dozens of e-commerce metrics that your business can analyze — and this article has only scratched the surface. Once you've decided on the right metrics and KPIs to analyze, a new question emerges: How are you going to efficiently collect and process all the data necessary to generate these e-commerce metrics? The answer lies in a dedicated ETL (extract, transform, load) and data integration platform like Integrate.io.
Integrate.io is a new ETL platform that has been built from the ground up for your e-commerce needs. The Integrate.io visual user interface enables anyone to get started right away building automated data pipelines to a centralized data warehouse. With simple drag-and-drop functionality and more than 140 pre-built connectors and integrations, it's never been simpler to build robust data workflows for your business intelligence needs.
The benefits of Integrate.io don't stop there. With our FlyData CDC (change data capture) tool, you can easily identify which of the data in your tables and databases has changed since the previous ETL job and then extract only that data for greater speed and efficiency. What's more, Integrate.io includes reverse ETL capabilities so that you can not only transfer data into your warehouse but also out of it into third-party applications.
Get in touch with our team of e-commerce data experts today for a chat about your business situation or to start your 7-day pilot of the Integrate.io platform.