Analysis + Analytics

Which Ecommerce Metrics You Should Measure (And Why They’re Important)

Darin Lynch / 12 min read
Key Ecommerce Metrics

Which Ecommerce Metrics You Should Measure (And Why They’re Important)

Get The Print Version

Tired of scrolling? Download a PDF version for easier offline reading and sharing with coworkers.

Add your info below to have the PDF sent to your inbox.
A link to download the PDF will arrive in your inbox shortly.

Metrics. Everyone wants them, everyone needs them. Whether you’re a high school math teacher, an NFL scout, or a digital marketer, metrics are how we all observe performance and make decisions.

And that leads us to one of the beauties of the digital world… it’s not magical, it’s measurable.

In comparison to other marketing efforts, digital offers far more visibility to behaviors and actions. You can’t tell how many people see your billboard along the road, but you can see how the number of people coming to your website. You can’t tell how many people came to your restaurant after seeing an ad in the community newspaper, but you can tell how many people came to your site by clicking on a banner ad.

This visibility into your digital comings and goings has long been an industry unto itself,

practically from the beginning of digital itself. Measurements and terms such as Google Analytics, visitors, pages per visit, bounce rate, time on site, and conversion rate are as common as Gene, Paul, Peter and Ace.

But those metrics don’t sing an ecommerce song, which has led to the development of insightful, actionable, ecommerce-focused metrics.

But before we get to the metrics that can improve your store’s performance, what ARE metrics? And why do some people say KPIs? Are they the same thing, or do they just rhyme?

What is a Metric?

Artboard 2@0.5x

A metric is any quantifiable, consistently defined measurement of website performance. Examples of relevant ecommerce metrics range from conversion rate to average order value, from cart abandonment rate to traffic sources.

The list of ecommerce metrics is long, and for good reason. Google Analytics, social media, your online store, product pages, homepages, checkout and shopping carts — all of these are rich data sources that capture quantifiable data, ripe for your interpretation and trend measurement over time.

What is a KPI?

KPI stands for key performance indicator. While a metric is any quantified measurement, a KPI is an important metric. These are the numbers that you track for growth.

While site visits may be important, orders could be your KPI. Usually a handful of critically important numbers is how you’re being evaluated. These are your KPIs.

What’s the Difference Between a Metric and a KPI?

So what’s the difference between a metric and a KPI, especially since they’re often interchanged? Let’s start with the fact that metrics measure process, while KPIs measure the performance of those processes. Said differently, key performance indicators are subjective, specific targets you want YOUR store to achieve.

So, for example, average order value is definitely a metric, but it’s not a KPI. On the other hand, an AOV target of $40 is a KPI. If we were to apply these examples to the sports world, points-per-game would be a metric, and 30 PPG would be a KPI.

This is spoken about ad nauseum when metrics are discussed, but it’s worth repeating…metrics should be PREDICTIVE, not reactive.

You should be able to use your metrics (and the KPIs you define for them) to shape the future of your store in the way you want.

And finally, your metrics need to be RELEVANT to YOUR business. If email marketing is a critical part of your strategy, then email CTR (click-through-rate) warrants serious consideration. Alternatively, if increasing your average customer lifetime value is a critical part of your strategy, then AOV warrants serious consideration.

How to Measure Ecommerce Success

Artboard 3@0.5x

One last thing before we get to the metrics to help you grow your business: We’ve found at Irish Titan that it’s been helpful to create an index summarizing your performance across selected marketing activities.

So, as the owner of an ecommerce site, you might select four metrics from those below, and determine the KPIs for each of those metrics. If two of those metrics are performing at 90% of your KPI goal, and the other two metrics are performing at 100% of your KPI goal, your index would be .95.

This could be further enhanced (complicated?) by weighting your metrics (maybe one of the four is more important?). We’d recommend not doing that, at least not to start.

Depending on your size, your teams or team members can manage to the specifics of the activities that comprise your metrics, but this index can be a helpful way to measure your performance at an enterprise level.

How Often Should I Check My Ecommerce Metrics?

As we move into our list of recommended ecommerce metrics, you might be wondering how often you should check your metrics? The answer is the same answer when asked, “How much does a red car cost?” and that answer is: “It depends.”

1. Weekly.

Some metrics should be checked on a weekly basis to ensure that the state of your business is healthy. Examples might include website traffic, social media engagement, and impressions.

2. Bi-weekly.

Zooming out from your weekly metrics, bi-weekly metrics are those best suited for a larger sample size, less influenced by any variations that may occur within a given week. These bi-weekly metrics might include average order value (AOV), cost per acquisition (CPA), and shopping cart abandonment.

3. Monthly.

Monthly metrics require a longer data window due to traffic patterns or, more likely, your own marketing patterns. So these monthly metrics might include email open rate, multichannel engagement, reach, and add-to-cart abandonment (or other micro-conversions).

4. Quarterly.

Quarterly metrics are the most strategic, at least as defined by these time periods. Because your weekly and bi-weekly metrics have proven that your business is healthy and surviving, these quarterly metrics will be the long-tail activities that prove that your business is flourishing and growing. These might include email click-through, customer lifetime value, and subscription rate.

Understanding Customer Stages

Artboard 6@0.5x

We’re going to shape this dialogue in a way that the highest performing ecommerce businesses tend to think about their store’s performance — the ecommerce funnel, shown in the diagram above.

Each step of this funnel has different metrics that are more relevant. Contrary to popular opinion, none of these stages is inherently more important than any other. Their relative importance is really defined by your personal preference, enterprise strategies, and where you are in your enterprise lifecycle (since, for example, creating advocacy is inherently difficult in the early stages of your business).

But we can bet, dollars to donuts, that these are the most important metrics for you to run a successful ecommerce store:

  1. Impressions.
  2. Reach.
  3. Engagement.
  4. Email click-through-rate.
  5. Cost per acquisition (CPA).
  6. Organic acquisition traffic.
  7. Social media engagement.
  8. Abandonment.
  9. Micro to macro conversion rates.
  10. Average order value (AOV).
  11. Sales conversion rates.
  12. Customer Retention rate.
  13. Customer lifetime value (CLV).
  14. Repeat customer rate.
  15. Refund and return rate.
  16. Ecommerce churn rate.
  17. Net promoter score (NPS)
  18. Subscription rate
  19. Program participation rate.

1. Product discovery metrics.

Artboard 9 copy1

It seems pretty elementary, but you can’t attract visitors to your site if you don’t create the awareness that leads to their discovery of your brand. These metrics will help you measure your activities that help create awareness and discovery.

Impressions

Simply put, impressions are the number of times your ad or piece of content is presented to someone. Those impressions can occur via paid ads on third-party sites, search results, social platforms, etc. (anywhere, really).

It’s important to remember that an impression does NOT necessarily equate to a click (we’ll cover that later). Your impressions will be available from any platform on which you’re sharing content — Google paid ads, Facebook or Instagram, third-party platforms.

Impressions are one of the most controllable metrics you can have, as they’re almost entirely based on the budget you allocate to your various activities.

Reach

Put plainly, reach is the total number of your followers and subscribers — basically, the sum of all of those who will see your content. This might include your email opt-in subscribers, your Facebook followers, and your loyalty program subscribers.

Reach is best improved by consistent campaigns (social media, email, or otherwise) to encourage subscribers, followers, etc. The better defined your brand and voice are, the more effective your campaigns will be to improve reach.

Engagement

Engagement is the intersection of your Impressions and your reach. Essentially: how many of your followers and and subscribers (your reach) are engaging with your content (your impressions). This may include acquisition-related activities like click-through, but it may also include non-acquisition-related activities such as likes and shares.

Engagement will most benefit from CONTINUED activities to promote your brand and product. It’s important to make these efforts in a continuous fashion. These efforts are much more like farming (ongoing), than they are hunting (one-off).

2. Consideration metrics (or acquisition).

Artboard 10 copy1

You can’t have a buyer if they don’t get to your site. Now that they’re aware of your brand, let’s define some metrics that measure getting them to your site. There are many, many metrics in this phase of the funnel, so we’ll only focus on a few.

Email click-through

Email click-through rate is how many of your email subscribers (who’ve received the email AND opened it, which are other metrics) clicked through to your site.

You can positively impact this by creating well-designed emails (including mobile-friendly design), strong calls-to-action, and good subject lines.

Cost per acquisition (CPA)

Do you think it’d be helpful to know how much you’re paying for acquiring your customers (or your CAC, customer acquisition cost)? We’ll take that as a yes, which is why it’s important to make sure that you’re not launching exorbitant campaigns that produce only a small number of customers.

As a store owner, you know you’re going to have to invest in email campaigns, paid search campaigns, and other marketing investments in order to drive traffic and, ultimately, sales. But if the cost of those campaigns outweighs the total revenue they’re generating, then you’re making a poor use of your all-important dollars.

It’s VITAL to keep in mind that CPA GREATLY benefits from the context of your AOV. If your CPA is $25 and your AOV is $100, that’s a good sign. If, on the other hand, your AOV is $30, then a CPA of $25 doesn’t look so good.

Your CPA can be improved by segmenting your campaigns to better target customers who will best respond to your campaigns’ call-to-actions, landing pages that will help reinforce your call-to-actions, and managing your campaign budgets carefully.

Organic acquisition traffic

In the long run and in a blue sky, you hope to attract people to your site without paying for them. It follows that it’s important to measure how many of your visitors reach the site organically, which is commonly available in all analytics platforms.

You can improve your organic traffic by ensuring that your on-site/technical SEO remains true to best practices (proper tagging, good response time, etc.) and that your off-page SEO performs well (which rings back to some of the concepts in the discovery section of this blog).

Social media engagement

Social media metrics can provide a lot of value to your ecommerce company. These are the top social media engagement KPIs you should track on a regular basis:

  • Likes per post: “Likes” is a catch-all metric I am using for people that have upvoted your social media posts. These will come in the form of Likes, thumbs ups, favorites or +1’s. To calculate it, you will need to collate likes on each social media platform and divide it by the number of posts on the individual platform.
  • Shares per post: “Shares” is a catch-all metric for “shares,” “retweets” and “repins.” This metric is indicative of the average number of times posts are shared over a given amount of time.
  • Comments per post: “Comments” is a catch-all metric for mentions and comments to your social media posts. This metric is a gauge of how much of a community your brand is garnering on social media.
  • Clicks per post: The clicks per post metric measures link click-throughs from social media posts over a given period of time. To calculate this metric, collate the number of clicks from your social media posts over a specific period (typically over a month) and then divide it by the number of published social media posts over the same time period.

3. Conversion metrics.

Artboard 11 copy1

Now that you’re lucky enough to have a visitor to your store, how can you measure your performance in converting them from a store visitor to a paying customer, adding products to their shopping cart and actually checking out? These metrics should help you do just that.

Shopping cart abandonment rate

Abandonment can be measured in a few different ways, which is helpful to measure site behaviors. Shopping cart abandonment is a measure of how many people add something to their cart but LEAVE your site WITHOUT making a purchase. This measure is important to see if there are hitches in the site or cart process before they get to the checkout process.

Checkout abandonment

Separately, checkout abandonment is a critical metric of how many people leave your site WITHOUT making a purchase BUT ONLY AFTER they begin the checkout process. While similar to shopping cart abandonment, it’s important to measure them separately to see if the checkout process is the root cause of abandonments or if the problem is something else entirely.

Your abandonment rates can be improved primarily by intuitive cart management, which includes persistent pages, urgency messaging, saving customers carts, etc.

Micro to macro conversion rates

This is an interesting approach to identifying activities of particular importance for measurement. Basically a micro and macro conversions are small (micro) activities that lead to bigger (macro) activities.

These are similar to the abandonment rates, but can give you an opportunity to measure activities you consider important to your funnel, such as the number of visitors who click to a product detail page, or the number of visitors who opt-in as an email subscriber.

Average order value (AOV)

Your AOV is the average price your customers are paying for the items in their cart when they check out. It can, and should, be measured over time, so you can determine how it evolves. It’s an important measurement to know as it relates to measurements of marketing effectiveness.

Your AOV can be increased by selling add-ons, loyalty programs, or other, more fundamental business model questions like pricing, product quality, etc.

Sales conversion rates

This is the total number of sales divided by the total number of sessions to your store.

Understanding this number is critical to determining how much traffic is required to generate your target sales.

That said, just like your sales data, you need to more granularly understand conversion rates.

Here are key ways to dissect your conversion rate metric:

  • Set conversion rate by channel: e.g. AdWords, SEO, Facebook, etc
  • Set conversion rate by category of products: Some categories may have higher conversions that others
  • Set conversion rate by campaign: As an example, if you are working with affiliates or influencers
  • Aim to optimize your sales conversion rates in your campaigns. If you have a channel or category performing well, think about putting more behind it, if something is underperforming, maybe there’s a fix that would boost the rates, or maybe the campaign should be terminated (sometimes it’s best to cut your losses). Conversion Rate Optimization (CRO) can really maximize growth for a campaign.

4. Retention metrics.

Artboard 12 copy1

Depending on the source, acquiring a new customer is anywhere from 5 to 25 times more expensive than retaining an existing one. Regardless of the exact amount, the data pretty strongly indicates the value in retaining those customers you’ve converted.

Note that each of these retention-focused metrics will benefit from a common theme — good customer service, loyalty programs, repeat purchase campaigns, and a true investment in customer satisfaction.

Customer Retention rate

Retention rate is best defined as the percentage of customers you maintain as customers over a period of time. The higher this number, the better you’re doing in servicing your customers. It’s important to remember to subtract your NEW customers from the customer count when calculating this. Those new customers are important, but this metric is focused on how well you’re retaining existing customers.

Customer lifetime value (CLV)

CLV is the total amount you earn from your customers over the length of their relationship with you, as measured by AOV, repeat transactions, and retention period. This is important to calculate, as it’s a number to measure to your AOV (hopefully with significant difference) and can unearth underperforming repeat and retention activities.

Repeat customer rate

This is easy to measure but important to do so. You want to know what percentage of your customers have made multiple purchases. This is another way to measure how well you’re servicing your customers, because if you’re servicing them well, they’ll be back.

Refund and return rate

Refund and return rates can be a plague for ecommerce websites. Even high revenue online stores can be ultimately be done in by high refund and returns. Depending on your industry, returns might be highly common and already baked into your financials models, or alternatively, they may be extremely rare.

Returns can also be a powerful driver to entice customers to hit ‘buy now’. If a customer knows your store offers free returns or exchanges, it can alleviate worries about buyers remorse. Use returns and refunds as fuel to drive your business, not to burn you.

Either way, tracking these metrics are important to the health of your store. Is your refund rate spiking on a specific section of your store? It might be time to investigate where that’s coming from.

Ecommerce churn rate

Churn rate is a metric to track the turnover of your customers. It measures the number of users lost over a given period of time. Depending on your industry and sales approach, you may have a long investment time into each user but they stay with you for years, or customers come in easily but they don’t seem to stay forever. Whatever your churn rate is, it’s important to measure and work on strategies to delight your customers when they’re around. It’s always easier to resell to a current customer than to gain a new one. 

5. Advocacy metrics.

Artboard 13 copy1

This part of the funnel is inarguably the most overlooked, which is unfortunate, because you better put on your white gloves. These customers are your goldmine, so you better treat them as such. These metrics will help you measure the efforts you take to show them you care.

Net promoter score (NPS)

As recent adoptees ourselves, we’re fans of this simple metric: how likely would your customers be to refer you? Based on their numeric answer, customers fall into one of three categories — detractors, passives, and promoters. The more promoters you have, the better (you guessed it).

It’s important to note that different industries have different scales of good and bad NPS scores.

Your NPS will benefit from the combination of everything in your business, from your product quality to your customer service quality, from the customer experience you provide to the quality of the employment experience you offer your employees. NPS measures everything and is incredibly valuable to measure.

Subscription rate

As email marketing remains high-value, it’s important to know what percentage of your visitors have opted-in for your email lists. This signals that your customers WANT to hear from you. And that’s obviously a good thing.

Your subscription rate can be improved by ensuring a good email communication experience (know your brand, be consistent in messaging, don’t “spam” your list with endless or unnecessary messages), an easy subscription experience, and strong calls-to-action.

On the flip side, unsubscribe rate is as important as new subscriptions. If you’re seeing huge swaths of users fleeing from your emails, it might be time to reconsider your approach. Unsubscribes will always be around, but it’s important to minimize it, aiming for less than 0.5% (and less than .25% is great).

Program participation rate

As ecommerce technologies and practices have matured, more and more merchants have turned to advocacy programs like loyalty programs or review platforms. There are numerous solutions in both of those realms, but let’s use loyalty programs as an example, which may be more pertinent to you if you are a more brand-intensive merchant.

If you have a customer loyalty program, what percentage of your customers are members of it? The higher that percentage, the greater your ability to treat them with care, make them feel special, and improve many other metrics we’ve discussed, such as CLV, repeat customers, etc.

Your program participation rate can improve by…first, starting one! Beyond that, do so in a way where there are ACTUAL benefits to inclusion. Remember that foregoing some margin in exchange for treating these customers well will pay off over time. Remember our earlier metric that it’s somewhere between 5 to 25 times more expensive to acquire a new customer? That’s especially important to keep in mind when thinking of program participation rate.

Conclusion

Artboard 1@0.5x

Operating a successful ecommerce store requires your attention in a number of ways — from building your store to defining your brand to creating your product to offering high quality customer service.

Familiarity with the ecommerce metrics mentioned above will help you identify how well you’re performing those activities, and highlight those areas in which you can fine-tune your strategies and tactics to improve your store’s performance and bottom line. Good luck, and remember to take care of those customers.

Table of Contents

    SHARE

    Darin Lynch

    Darin Lynch

    Darin Lynch is the Founder & CEO of Irish Titan, an ecommerce agency in business since 2004. Darin is a regular speaker and has been honored as a 40 Under 40 winner, one of the Real Power 50, and is a member of the Minneapolis Federal Reserve Board Small Business Council. Darin has also bought Clint Eastwood a beer and is a former presidential candidate. Honestly. But both of those stories are better shared in person.

    View all posts by Darin Lynch

    Less Development. More Marketing.

    Let us future-proof your backend. You focus on building your brand.

    Ecommerce Replatforming Guidebook

    Get your free step by step guide to walk you through your ecommerce replatform.