When you think about what qualifies as “success” for e-commerce businesses, the metric that probably comes to mind first is sales. While revenue is undoubtedly a key indicator that your business is doing something right, there is a plentitude of additional data points available to help determine exactly what you’re doing right. Tracking these four basic key metrics over time will provide you and your team with an in-depth understanding of consumer behavior, industry trends and your anticipated ROI.
1. Sales
Again, one of the most obvious metrics for e-commerce businesses to keep a close eye on is sales, both in terms of the dollars brought in and the number of products moved out. However, this goes much deeper than the surface-level assessment of “We sold X units and made X dollars last month.”
Evaluating the metrics behind your biggest sales days each month will provide a wealth of insight your business can use to replicate this same success in the months ahead. Ask yourself the following questions while assessing your sales metrics:
• Which week generated the most sales last month? How about which days?
• Were any promotions running on these days?
• Which specific products were purchased the most frequently?
• Did most of your sales come in on weekdays or weekends? Morning, afternoon or night?
Keeping track of your sales metrics over time will provide your team with a statistically supported snapshot of your business not only by the month, but by quarter, season, year and so on. This will help you create a logical and intelligent sales schedule when planning out next year’s marketing strategy.
2. Web Traffic
Simply put, web traffic is important because an e-commerce business cannot grow without new customers. Taking it a step further, web traffic is important because it is indicative of the health of your search engine optimization (SEO) campaign. If you haven’t already, set up a Google Analytics account to begin monitoring your website’s number of users, page views and sessions. For a deeper overview of your web traffic, track additional metrics, such as average session duration, percentage of new sessions and bounce rate from the same Google Analytics interface.
Then, compare these analytics from month to month. Is your web traffic up or down? How many of your sessions were new users? Did your number of users stay consistent, but their average session duration increase? If your web traffic is slipping or your numbers aren’t where you’d like them to be, it might be time to reevaluate your SEO strategy.
3. Conversion Rate
It’s important to note that an increase in web traffic doesn’t necessarily indicate more customers, nor does a drop in web traffic necessarily indicate fewer customers. In order to determine how many of your website visitors become customers, you’ll need to track your conversions. Your conversion rate is determined by the average percentage of website sessions that result in a purchase by dividing your number of transactions by your number of sessions (don’t worry — Google Analytics makes these calculations for you).
If your conversions aren’t as high as you’d like them to be, it might be time to optimize your website with sales in mind. One effective form of conversion rate optimization (CRO) is by A/B testing different elements on your website. A/B testing is a randomized experiment in which half of website users are shown one variation of a webpage, and the other half are shown a slightly different variation — for example, a green checkout button on webpage A and a black checkout button on webpage B. The variant that yields more conversions will provide your marketing team with the insights needed to improve your CRO strategy based on consumer preferences.
4. Average Order Value
Your average order value (AOV) is your total revenue divided by your total number of transactions. For example, if your company made 100 sales last month worth a total value of $4,500, your AOV is $45.
While it is beneficial for your business to know the current spending habits of your average customer, your AOV also provides your business with crucial insights needed in order to increase this number even further. For example, let’s say your AOV is $45 and your goal is to raise it to $50. Creating a “free shipping for orders over $50” offer will likely entice your customers to hit or surpass that $50 threshold in order to receive that perk. It’s no secret that most if not all businesses would like their customers to increase their purchase size as much as possible, and knowing your AOV provides a logical and strategic path from which to accomplish this goal.
Tracking your e-commerce performance through these four metrics will enable your team to make intelligent decisions regarding the future of your marketing strategy. That being said, it’s worth noting that this data only offers a snapshot of your business and is not indicative of your overall website performance. Treat these metrics as a starting point from which to measure your successes and shortcomings, then use that data to fine-tune the more intricate facets of your business model.
