There are many ways to launch, grow, and scale an eCommerce business. But, if you don’t measure the results of your efforts, you’ll never know how to improve upon them.
In this post, I’ll cover the importance of tracking metrics, how you can use them to measure success and test new strategies, and the key metrics to track throughout the customer journey.
What are Performance Metrics?
Performance Metrics are measurements of different business factors used by management to track and analyze the success of an organization.
Effective metrics focus on the business processes and functions that are most important for measuring progress toward strategic goals and performance targets.
Metrics can be used at various stages in the customer acquisition process to determine where customers fall off and where they convert.
Typically, eCommerce stores will set goals related to key metrics that they deem important to the overall goals of the business. These metrics are then tracked and analyzed to ensure that the business is moving towards its goals.
Metrics for Each Phase of the Customer Journey
As an eCommerce company, it’s crucial to know how well you are tracking towards your goals at all stages of the customer journey.
What is the Customer Journey?
The customer journey is the path that a consumer will take to first become aware of your business and/or products, become a customer through a purchase, and eventually become a loyal supporter.
The goal of tracking metrics along the customer journey is to know how the majority of consumers react to your brand or products at each phase of this journey.
There are specific metrics that can help you understand the behavior of your customers all along the path. With an understanding of these metrics, you can improve the likelihood that each consumer will progress along the journey and eventually become a loyal customer.
The three phases of the customer journey are:
Below are Key Metrics you should be tracking for each phase of the customer journey. While these lists are not exhaustive, they cover the most critical metrics for each phase and should be used by every eCommerce business.
I hope you find them helpful in managing and growing your own eCommerce business.
Testing eCommerce Metrics
Along with the long list of potential metrics you could employ, there is a never-ending list of methods you could use to grow your eCommerce store. You need to be careful not to put all of your efforts into one particular method.
Instead, you should test a number of different methods on a small scale, track the results, and ramp up your efforts/spending on the methods that are showing good results.
This is exactly where metrics can be used to improve the performance of your eCommerce store.
How do you do test different marketing channels?
Step 1: Begin with a channel you think will be effective (e.g., Facebook advertising).
Step 2: Determine what you will try and how long you will try it. Usually a test period of 7-14 days is appropriate.
Step 3: Run your marketing through your chosen channel and measure the results.
With these metrics, you can determine which methods are most effective. You can continue to test and drill down until your marketing efforts have been transformed into a well-oiled machine.
When you have a deep understanding of your metrics, you can actually begin to predict the outcome of your efforts. You’ll know exactly what you need to spend in order to get the results you’re looking for.
Key Awareness Metrics
The Awareness phase of the Customer Journey correlates with the marketing efforts for your business. This is the stage where the consumer is first learning about your brand, company, and products.
As this is your first interactions with potential customers, it’s vitally important that you focus your efforts on the right customers.
These are customers who will connect with your brand, make multiple purchases over their lifetime, and tell their friends and family about your eCommerce business.
Spending time and money on consumers who are not your ideal customer, will be expensive and ineffective, and will also throw off the results of your metrics.
Once you’ve determined your ideal customer and how you want to connect with them (which channels and what ad copy), you can begin to track metrics related to your efforts.
If you need help with marketing your eCommerce store, check out this post from Mochi – 10 Marketing Channels for Your eCommerce Store.
Reach is a measure of all the consumers who encounter your eCommerce brand in any way. It includes your total email database, all of your social media followers, those who have subscribed to your blog, and of course your existing customers.
Reach is the top of your marketing funnel and the first metric for the Awareness phase of the customer journey. The more ideal customers you can reach, the more conversions you will eventually have.
Percent Click-through Rate
The percent click-through rate is the percentage of people who see any of your online content (ads, social posts, blog posts) and click through to visit your site.
High click-through rates are evidence that you are (1) reaching the right potential customers and (2) offering them something they find interesting. If your click-through rate is poor, it may mean that either of these things is off. Either you aren’t targeting your ideal customer or your content (copy and images) is not appealing to them.
Tracking your Traffic sources will help you to see where your marketing efforts are having the greatest effect on driving traffic to your site.
You may be using Google and Facebook Ads, posting to Instagram and Facebook Pages, or partnering with affiliates. Tracking the sources of your store traffic and comparing the varying results with your effort/expenses will help you hone your efforts. Drop the channels that aren’t producing and focus more on the ones that are.
Dwell time is a measure of how long a visitor to your site spends on the page they first entered through. Long dwell times are indicators that your customer is interested in the product or information your providing on the page.
They are also a good indicator that your marketing matches what you actually list on your site.
Short dwell times are indications that your marketing oversold what the customer saw on your site. When people arrive on your page they want to see exactly what they clicked through for, they want the page to load quickly (under 3 seconds), they don’t want to be overwhelmed with content, they want to see 3–5 images of the product (preferably in a clickable carousel), and they want all of their questions answered right away.
Each of these things can help improve dwell time and conversions.
Bounce rate is the percentage of people who landed on one of your pages then left immediately without interacting with the page (scrolling, clicking buttons) and without visiting another page. Bounce rate is the antithesis of dwell time and can be improved by really giving the visitor something to be interested in when they land on the page.
The Conversion Rate is the percentage of visitors to your site that take action. Ideally, this action is to purchase a product, but that does not always have to be the case.
For more robust Customer Journeys, this action may include subscribing to a newsletter, sharing a link to your products on social media, downloading free content, participating in a contest or giveaway, or simply making an inquiry.
You can map out these types of conversion in your customer journey to help educate your customers, build trust in your brand/business, and eventually convert them into paid customers.
Key Conversion Metrics
Conversion Metrics are designed to inform you about the success of your store once visitors have arrived and browsed your product offering. Marketing and awareness bring potential customers to your store, conversion metrics help you determine how well they convert to customers once they have arrived.
Shopping Cart Abandonment Rate
This is the percentage of customers who fail to convert, despite adding products to their online cart. If people are abandoning their cart after having put a product in it, you may want to simplify the check-out process. Customers don’t want to be surprised during check-out, so communicate all of the costs (i.e., price, shipping, credit card fees, etc…) early on in the process.
You can use retargeting ads to bring people back to their shopping cart. Some integrations, such as between Shopify and Facebook, will let you display an ad to the consumer of the very product they abandoned. You can also use email and text reminders to bring them back to their cart.
Sales Conversion Rate
The percentage of site visitors that make a purchase. The average conversion rate for an eCommerce store is around 2%. Anything above this percent is gravy.
While I also included conversion rates in the Awareness phase of the Customer Journey, this measurement is tied directly to cash money. It’s important to track both conversion metrics because you want to know if the non-sales conversion metrics are effectively driving visitors to convert to paid customers.
Customer Acquisition Cost
This is the average amount it costs you to acquire a new customer. It’s important to segment this information across the various channels and partners you may use to acquire customers. This will help you determine where to spend your time and money.
It’s vital to track these metrics, as a customer acquisition cost that becomes too high to cover your business expenses is going drive you out of business. The last thing you want to try to do is to scale an eCommerce business that is burning cash on every sale.
Revenue by Channel
This is a breakdown of your revenue from the various marketing channels or sales channels you employ. You may be doing great, but what channel is actually driving your success? And, what are the comparable costs associated with those channels?
This information will help you focus on the most effective channels and ensure that your efforts are optimized.
Average Order Value
This is the average amount a customer spends when checking out on your site.
It’s important to track this in order to see how you can increase the value of each order. Try bundling products, upselling adjacent products, or offering reduced or free shipping for higher cart values.
Average Customer Lifetime Value
This is the Average Total Revenue you earn from a customer over the course of their life. This metric is important when compared to the Customer Acquisition Cost because it tells you the profit you can expect to earn from each customer you acquire.
This metric also lets you know how many customers you need to acquire to hit revenue milestones. If you understand your Awareness metrics and your Conversion metrics, you can become a growth machine.
Key Loyalty Metrics
Loyalty metrics are intended to help you understand how well you remain connected with your customers after they have made a purchase. The goal here brings them back time and again – to make them true believers and loyal fans.
It is far cheaper and easier to resell an existing happy customer, then it is to consistently bring in new customers. Successful eCommerce businesses learn this lesson and leverage it to reach their potential.
Below are a number of loyalty related metrics that you can use to track the effectiveness of your ongoing marketing and customer success efforts.
Marketing Content Opt-in
This is the percentage of customers who opt-in to receive ongoing marketing material (usually through email or text) after they’ve made a purchase.
This is a good metric to track, as it demonstrates a customers willingness to consider future purchases.
If customers are opting out of marketing messages, you may consider changing the content or including an enticing discount to keep them engaged.
Push Notification Opt-in
This is the percentage of customers who allow your app or mobile site to send them notifications on their mobile device. Again, this metric demonstrates a customers willingness to continue a relationship with your brand.
Push notifications are a great way to entice customers back to your app or mobile store. You can use them to offer discounts or suggest products.
Repeat Purchase Rate
This is the percentage of people who return to your store to make an additional purchase. This metric helps you see who your lifelong customers will be and should be one of your guiding metrics in determining your ideal customer profile.
Developing incentives to bring people back (i.e., sales, promotional offers, discount codes, new product launches, etc…) to your eCommerce store is crucial for improving retention.
This one is not so much a metric (although you could create one) but more of a goal. What you want is for your customers to be willing to promote your brand or products on your behalf.
You may offer them a discount if they were willing to film a short testimonial video, provide a written testimonial, or promote your products on social media.
Word of mouth is the most powerful and the cheapest form of marketing available. If you can convert your customers into evangelists for your brand, they’ll act as a superpower for the growth of your business.
Over to You
Here’s a quick summary of what we’ve covered:
Metrics allow you to track progress towards your business goals. They let you see the points in your customer journey where you are performing well and where you need to make improvements.
Test different strategies to see how you can improve metrics. Start small and as you see something that is effective, focus more time/money on that strategy.
Track your metrics across the three phases of the customer journey: (1) Awareness, (2) Conversion, and (3) Loyalty.
Now, I’ll send it over to you. Take what I’ve shared here and incorporate it into your eCommerce business. If you have any questions or comments, please leave us a note below. Thanks!