Setting up an e-commerce store? Simple. Running a thriving business through said e-commerce store? That’s where it gets trickier. As any good business owner will tell you, the key to making informed decisions is through data. Cue the e-commerce metrics dashboard, a valuable tool for visualizing and interpreting data in real-time.
There’s no one-stop formula for what works. One company’s dashboard will look very different than that of another’s, depending on a variety of factors, including types of products, target audience, phase of development (new or established brand), and business goals. However, when building out your custom dashboard, there are a few critical “blanket” KPI metrics to consider.
What Matters Most To You?
Select your e-commerce KPI metrics wisely, because your ability to monitor business performance depends on it. Combine customer-centric data and common sense to choose metrics that’ll help you understand each step a customer takes before a sale, and how effective your efforts to achieve business goals are.
While there are many available metrics to track, there is a handful that’ll serve as a good starting point. Analyze each one to determine the components of your company’s dashboard:
Total sales: In addition to looking at the total sales number itself, you’ll want to gain a better understanding of what’s influencing your sales numbers and why. Pay attention to each of your sales channels and track how they perform over time. Break down a few months’ worth of sales data into a daily analysis to provide a deeper understanding of any patterns.
Pay attention to daily and weekly data trends — do sales spike at a particular time? If so, examine where that traffic comes from and see if anything different happens on those days. This information will help you focus on activities that optimize your marketing strategy.
Conversion rates (CR): CR shows whether or not your site visitors are converting to customers. Within conversion rates, there are three numbers to track closely for a more detailed view:
- How many people add items to their cart?
- How many people reach the checkout?
- How many people purchase?
By breaking conversion rates down to these three stages, you’ll have a better idea of how your store is performing and where the visitor experience can be improved.
Cart abandonment rate: As of 2018, cart abandonment averages 74.2% for online retailers. This significant abandonment rate has to do with several key pain points:
- Shipping costs (no free shipping, expensive shipping, or lack of transparency)
- Slow shipping
- Long process
- Bad site UI
Average order value (AOV): AOV tracks the average dollar amount spent each time a customer places an order on a website or mobile app. To calculate your company’s average order value, divide total revenue by the number of orders. The AOV is often used in combination with e-commerce KPI metrics like CR and Revenue Per Visit (RPV) to assess overall performance and determine how to boost revenue growth.
AOV is powerful to optimize because of the massive potential for growth and minimal cost involved in getting it. With a target AOV in mind, you can better plan pricing and marketing strategies that can significantly impact your bottom line.
Depending on your findings, you may try different techniques to increase your AOV. Let’s take Amazon — They offer free shipping, but not without a price. By setting a minimum spend-per-order, their AOV goals and customers’ desire for free shipping are both met. Cross-selling and upselling are also excellent methods for improving AOV.
Customer Lifetime Value (CLV): CLV is the metric that indicates the total revenue a business can expect from a single customer account. Since it costs less to keep existing customers than it does to acquire new ones, it’s essential to increase the value of your existing customers. Finding your CLV makes you think, not just about the sale, but also about the full customer journey. This all-encompassing look at your customers will bring valuable insights that can be used to implement retention efforts and reduce churn.
Cost Per Acquisition (CPA): CPA is a metric that measures the aggregate cost of a customer taking an action (often a sale, a click, or an app download) that leads to a conversion. An understanding of CPA is important because you don’t want to pay more to acquire a customer than what they’re actually worth to your company.
New vs. returning customers: Striking the right balance between new and returning customers is crucial in a company’s recipe for success. However, what that balance looks like is unique to each business, industry, and audience. Because it’s cheaper and easier to convert an existing customer than it is to find and convert a new one, it’s beneficial to spend a good portion of your marketing efforts on retaining, engaging, and upselling existing customers.
Factors to Consider
When determining which e-commerce key metrics are important for your company to track and how to set up your metrics dashboard, consider the following:
- Relevance: Link your KPI metrics to your business goals.
- Accountability: Assign a person to each KPI for accountability.
- Measurement frequency: How frequently you measure the e-commerce KPI metrics can range anywhere from hourly to quarterly depending on the KPI.
- Simplicity: Data visualization is meant to clarify the data and de-clutter. Limit your dashboards to only the critical KPI metrics that deliver meaningful data.
Remember to sort your metrics by priority, and then determine how difficult it’ll be to execute for each. Nail the high impact, low effort KPIs first, before expanding to greater difficulty and lower impact measures.
Master Your Metrics
The e-commerce industry is expected to hit $4.5 trillion in 2021. The sooner you master your e-commerce metrics dashboard, the quicker you can optimize your marketing campaigns and jump ahead of the pack. With the right e-commerce KPI metrics in place, your company can stay focused on what matters, and address issues faster.
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