How To Use E-Commerce Sales Metrics to Improve Your Site


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Why are e-commerce sales metrics vital to your online business?

Because your sales are the primary source of your business’s revenue and profit ― the two most critical numbers that show your company’s financial position.

Knowing what metrics to track and how to monitor those numbers is beneficial to your online business. However, you’ll only realize those benefits with metrics that are specific to your business and target market.

Not sure which metrics to look for? This guide helps you understand:

  • Why it’s important to track your e-commerce site’s metrics
  • The difference between metrics and key performance indicators (KPIs)
  • Which metrics you should track
  • How to set KPIs
  • How to track your metrics and KPIs

Why Tracking Your E-commerce Site’s Metrics Is Important

Woman talking to man about graphs.
Source: Pexels

Until you know the whole story, you can’t change its ending.

The same goes for your online business. Without an understanding of e-commerce analytics, it’s difficult to improve the numbers you see.

We’ll help you discover which data points matter to your business. But before that, here’s why you need to know which e-commerce-focused sales metrics to track and how to interpret them:

  • It gives you an understanding of customers’ actions so you can serve them better and boost sales.
  • It helps you track all of your marketing campaigns.
  • It shows you real-time statistics so you can know what works and make better decisions about where to invest your marketing spend.
  • It reveals patterns and trends in your business to understand how it’s performing now and in the future.
  • It provides a clearer picture of how price affects purchasing and helps you discover the optimal price points per product so that you can maximize revenue.
  • It offers the right data for forecasting and inventory planning for the upcoming period.
  • It’s useful for your retargeting strategy so that you can know what to cross-sell and upsell to existing customers.
  • It allows you to personalize the shopping experience for your customers by predicting their individual needs and making relevant recommendations.
  • It uncovers where you may have a leaky bucket and how you can maximize your return on ad spend.

What Is the Difference Between Metrics and KPIs?

A metric is a consistent, quantifiable measure that helps you track your site’s performance and evaluate its success. Some examples of metrics include:

  • Increase website traffic: Number of visitors to your site
  • Revenue growth: Growth or decline of sales in a given period
  • Increase audience engagement: How your target audience engages with your content

A KPI‌ is a quantifiable value that helps you track progress against your business goals. Some examples of KPIs include:

  • Number of articles published in a month
  • Number of new visitors to your website
  • Number of keywords on the first page of Google

KPIs are well-defined, measurable, and relevant to your business. They give direction toward achieving desired results and can help you make better-informed business decisions.

Metrics and KPIs are often used interchangeably. However, metrics and KPIs differ, not just by definition, but in how they measure and improve your business’s performance.

Vivalantina Jewelry, a small business that runs online fully, tracks metrics, and KPIs based on different factors.

“The most useful metrics for us are monthly sales, monthly website traffic, quarterly sales, and yearly conversion percentage. We choose KPIs directly connected with the number of sales, number of sales, and conversion percentage. These include monthly traffic on product pages, monthly traffic on service pages, monthly quotes for custom-made service, and monthly sales.” ― Nicolas Tranchant, founder and manager, Vivalatina Jewelry

Another subtle difference is that KPIs are laser-focused on objectives and targets while metrics can exist without a target. For example, if you run a fashion e-commerce business, you can track a metric like average order value (AOV), but your KPI has a specific target, such as an AOV of $50.

Ultimately, each business tracks unique metrics and KPIs.

Careful analysis of your own business data helps you improve your products, services, and/or engagement with your customers.

Which Metrics Should Your Small Business Track?

It’s easy to get overwhelmed by the sheer number of e-commerce metrics to track for your small business. To make things simple and clear, here are the sales metrics to track.

  • Cost per acquisition (CPA)
  • Average order value (AOV)
  • Conversion rate
  • Cart abandonment rate
  • Checkout abandonment rate
  • Revenue on advertising spend (ROAS)
  • Customer lifetime value (CLV)

Cost per Acquisition

Cost per acquisition (CPA) measures how much time and money ― advertising, email campaigns, and discounts ― you spend to gain a new customer. CPA helps you know whether you’re on the right track, and project your return on investment (ROI), which is vital to scaling your business.

“There are multiple metrics that I account for when tracking e-commerce site performance. The three most important metrics I focus on are social media engagement, and cost per acquisition (CPA). Since I mainly handle social media channels, I also track how much engagement we’re getting. I mainly look at click-through rates, and conversions to see which channels perform the best. This way, we know which one we can maximize to get more customers and to see what we should improve in underperforming channels. Similarly, we also have to know whether our marketing campaigns are bringing in new customers without overspending. This can be done by tracking the CPA.” ― Sherry Morgan, founder and CEO, Petsolino

Average Order Value

Average order value (AOV) is the average dollar amount for each order a customer places with your business over a specific period.

AOV is a key sales metric to track because it measures how well you capitalize on every opportunity to cross-sell and up-sell to your existing customers.

The higher your AOV, the higher the revenue you can earn from the same number of customers without increasing your sales and marketing spend.

“Even if you don’t get any new visitors, you can simply boost your overall income by increasing the average order value. You just pay a fraction extra for products, processing, and shipping when you place a larger purchase. It does, however, save you money on acquisition and transaction charges. As a result, a greater average order value equates to more profit.” ― Mitchel Harad, Overdraft Apps

Conversion Rate

Do you want to know if your strategies are working to push customers to purchase from you? Check your conversion rate.

Conversion rate is the percentage of visitors that complete the desired action ― signups, account creation, inquiries, and sales ― upon visiting your site. You calculate this metric by dividing the number of visitors that take action on your e-commerce platform by the overall number of visitors.

On average, e-commerce conversion rates range from 2% to 3%. Tracking your monthly and annual conversion rates can help you discover the source of your increased revenue.

If you struggle with lower-than-average conversion rates, our guide on how to increase your conversion rates shares some solid strategies you can use to boost it.

Cart Abandonment Rate

Shopping cart.
Source: Pexels

Roughly five to six out of 10 customers (59.22%) won’t complete their transaction.

Cart abandonment rate measures the number of shoppers who add items to their cart but leave without buying anything.

There are several reasons ‌shoppers would quickly abandon their carts, including:

  • Slow loading time
  • Bad (nonintuitive) or long checkout experience
  • Unexpected high shipping costs and additional fees
  • Payment security issues

Finding out and fixing any hitches in your site or cart process not only reduces cart abandonment but improves your conversion rate, too. For instance, you can implement intuitive cart management, which includes features like saving customers’ carts or urgency messaging.

Checkout Abandonment Rate

Checkout abandonment rate measures the number of customers who begin the checkout process and then abandon their purchases.

It’s similar to cart abandonment rate. But you want to measure both metrics separately to see if the problem lies with your checkout process or there’s a different issue altogether.

Are you not sure how to fix checkout abandonment issues? Our guide on how to optimize your e-commerce website’s checkout and shopping cart can help.

Revenue on Advertising Spend

Return on advertising spend (ROAS) measures how much advertising it costs to get shoppers to complete their purchases.

For example, you spend $1,000 on a digital ad campaign in a single month. That campaign generated revenue of $5,000 in that month. The ROAS, in this case, $5 as $5,000 divided by $1,000, which is a ratio of 5 to 1. So, for every dollar you spend on your ad campaign, you generate $5 worth of revenue.

Knowing this value helps you evaluate your digital campaigns to discover what works and how to improve future campaigns.

Customer Lifetime Value

Customer lifetime value (CLV) is directly linked to profitability and measures how you’ll profit from a customer on average during their time as your customer.

For example, if a customer returns three times to buy something, and they spend $50 per purchase, on average, your profit margin is 10%. That customer’s CLV is $15.

The higher your overall CLV, the more you can spend to attract customers, and the higher your margin.

How To Set KPIs for Your Small Business

Finding the right KPIs to track starts by asking yourself:

  • What are your goals or desired outcomes?
  • How do those goals or outcomes help you achieve your vision of success?
  • How do you know you’ve achieved those goals or outcomes?
Magnifying glass and pencils.
Source: Pexels

From your answers to these questions, work backward to understand which KPIs help your business grow, and then:

  • Use the SMART framework to create smart, measurable, actionable, relevant, and time-sensitive KPIs
  • Set up analytics tools to track and measure those KPIs accurately and reliably
  • Analyze your KPIs continuously ― look at specific moments in time against current performance so that you know where you’re and where you aim to be
  • Adjust and fine-tune your process to gain more actionable insights from the data you collect

When to Track Your Metrics and KPIs

Keeping your fingers crossed and checking your sales figures at the end of the month won’t help you measure your store’s performance. You need to track measurable metrics and KPIs that have the most impact on your revenue.

Get a tracking frequency, which can be:

  • Weekly: Track website traffic, purchases, or social media engagement, to ensure your business is running well
  • Biweekly: Track CPAs or AOVs twice a month
  • Monthly: Track shopping cart abandonment or email open rates among other automations
  • Quarterly: Track CLVs and subscription rates, which are like benchmarks for your business that indicate you’re on the road to success

What Should You Do Next?

Succeeding in e-commerce involves tracking data and harnessing those insights to make informed decisions.

The key is to:

  • Identify your business needs and goals
  • Find out the metrics with the most impact on your business
  • Use the insights to optimize the customer experience across the buyer’s journey
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