By Diana Palau, on 22 July 2021
Whether you have just entered into the world of ecommerce, or you have been selling online for a long time, one thing is certain: you need to know how to measure the profitability of your online store.
To get a complete picture of your ecommerce and learn how to improve your results, you need to keep track of the data of your online business. To help you do that, here are 20 ecommerce metrics you need to keep track of in order to measure the profitability of your store.
The 20 Most Important Metrics to Measure Ecommerce Profitability
1. Traffic by Device
For customers to have a great experience on your online store, it is important to know which types of devices they they use to visit your site. This helps you ensure that your website is optimized for any and all devices that customers use when they buy from you. When you are looking at your ecommerce metrics, don't forget to segment your traffic by device.
In today's market, it's crucial that your site is optimized for all types of mobile devices, including tablets. It is also essential that it loads quickly and that the browsing experience is smooth in all circumstances.
2. Bounce Rate
Bounce rate is the percentage of visitors who leave your website after viewing just one page. Usually, a high bounce rate indicates either that the content is not interesting to them or that there is a user experience problem, such as excessive page load time or poor design.
3. Mailing List Subscriptions
Email is one of the most powerful tools to promote your ecommerce and nurture the relationship with your customers. Email marketing has a very high ROI and allows you to organize your campaigns without relying on third party platforms such as Google or Facebook.
For email marketing to be effective, the first step is to get users to subscribe to your mailing list. To facilitate this, your ecommerce metrics should include the net subscriber rate (subscribers minus unsubscribes).
4. Email Click-Through Rate
This metric will help you to assess the effectiveness of your email marketing campaigns. It is the percentage of users who click on any of the links in your emails and thereby end up visiting your ecommerce. If this metric is very low, you will have to review the content and user friendliness of your emails.
5. Return on Ad Spend (ROAS)
The return on ad spend (ROAS) helps you measure the effectiveness of different advertising campaigns. This way, you'll know which channels or platforms are the most profitable for your ecommerce and allocate your budget accordingly to maximize results.
6. Sales Conversion Rate
The conversion rate to sale is the percentage of visitors who make a purchase in your online store. It is considered one of the most important ecommerce metrics.
According to Marketing Sherpa, most ecommerce sites have a conversion rate between 1% and 5%. This can help you get an idea of what a realistic conversion rate is.
Most analytics tools will tell you the conversion rate, but you can also get it manually by dividing the number of users who have purchased a product by the total number of visitors.
7. Average Order Value
This metric is the average amount a customer spends each time they buy something from your ecommerce. Logically, you want this number to be as high as possible. To improve it, you can incentivize the purchase of additional products through cross-selling strategies and product recommendations.
8. Average Lifetime Value
The average lifetime value is what a user spends at your store during the entire time that they are a customer. For example, if they make two purchases on average per year for 5 years and the average value of each purchase is 30$, the lifetime value of that customer will be 300$. You can improve this indicator through loyalty strategies that encourage repeat purchases.
9. Customer Acquisition Costs
To calculate how much it costs you to acquire a new customer, you must divide the total marketing spend by the number of new customers during a given period. It is also useful to calculate this metric for each marketing channel you regularly use.
Ideally, the cost of acquiring each customer should be less than the average order amount. In some cases, it may be worthwhile to make the first purchase at a loss if you are able to build customer loyalty and the average lifetime value of the customer ends up being high.
10. Revenue by Traffic Source
Not all traffic to your ecommerce brings the same profitability. Some traffic sources bring visitors to your site who are more likely to become customers, and it is important to know this in order to manage your marketing budgets properly. Therefore, revenue per traffic source should be among the top metrics of your ecommerce.
11. Profit Margin
Earlier we talked about the cost of acquisition and the average order value, but if you want your ecommerce to be really profitable, you will have to accurately calculate the real profit margin. To do this, you will have to subtract the cost of products and shipping from the total amount of the purchase.
12. Top Performing Products and Categories
Filtering your ecommerce metrics will help you to understand the financial situation of your online store and see where you can improve. In particular, take a look at the following:
Products with very good conversion-to-sale ratios that are not on the first pages of your website.
Products that are trending.
Products that have gone out of fashion and your customers are no longer looking for.
Products that are frequently ordered together.
Products with a high return rate.
13. Cart Abandonment Rate
On average, 2 out of 3 ecommerce customers leave their cart abandoned. This is one of the main reasons why brands stop making money.
The most frequent causes of cart abandonment are unexpected shipping costs and uncompetitive rates. Other common causes are complications in the checkout and registration process, slow shipping times, and a lack of payment options.
14 Retention Rate and Repeat Customers
Acquiring new customers is always more expensive than keeping existing ones, so it is important to know what the retention rate of your online store is and then work to improve it. To increase it, you need to work on customer experience, product satisfaction, and long-term loyalty strategies.
15. Churn Rate
The churn rate measures the number of customers lost over a given period of time. The optimal percentage depends a lot on the sector you are in. Nonetheless, it is important to keep track of this ecommerce metric and work on the customer experience in order to keep people coming back.
16. Return and Refund Rate
Frequent returns and refunds can become a serious problem for ecommerce.
Permissive refund and return policies are a strong incentive to encourage customers to buy, but you need to make sure that you can manage them without affecting the profitability of your ecommerce.
Keep an eye on this metric and take action if the percentage of returns and refunds is too high. It is always a good idea to filter by product to see if there are any products that are particularly problematic.
17. Attendance Rate
It's a good idea to track the percentage of ecommerce users who contact customer service. If it is very high, this usually indicates that the information on shipping policies, returns, payment methods, etc. is not clear enough. Remember that your ecommerce should always include a FAQ section so that users can get the answers they need without having to contact you.
18. Average Incident Resolution Time
Closely related to the previous point, this metric helps evaluate the quality of customer service and ensure that you are providing a good experience that will help generate repeat customers.
19 Net Promoter Score
The Net Promoter Score is a standard measure of customer satisfaction. It is calculated based on the likelihood that a user will recommend you to friends and family. If the Net Promoter Score is negative, focus on improving the user experience of the products and the buying process.
20. Loyalty Program Participation Rate
Loyalty programs are a popular strategy to incentivize repeat purchases, increase average spending per purchase, and encourage referrals. If you have designed a loyalty program and it is not delivering the results you expected, you need to review if the incentives are enough for your buyer persona and if users find it easy to join.