A 2020 survey from Statista mentioned that over 40% of ecommerce businessES in North America and Europe have found their market competition as being tough. With almost all companies taking their services to the digital world, there is no doubt that the competition will be at an all-time high.

With that being said, ecommerce metrics exist to help businesses by utilizing data-driven insights to make informed decisions. Businesses that neglect crucial data tend to miss out on opportunities to optimize their website structure and discover new opportunities for long-term improvement.

Of course, this article would be remiss if it did not mention the existence of “vanity metrics”– data that provide little to no value to the improvement of your business.

This article lets you in on the most essential ecommerce metrics that your business needs to track right now.

Conversion Rate (CR)

Well-established ecommerce businesses most likely keep track of their conversion rates, but it’s always a good idea to emphasize the importance of this statistic.

Conversion rates are calculated by dividing the total number of conversions and the total number of visitors. If, for example, an ecommerce site receives a total of 500 visitors and makes 25 sales, the conversion rate would be 20%.

In the United States, the average conversion rate is at 2.63%. Even if you follow all the steps to becoming a successful ecommerce website, you can expect your conversion rate to be between 1% and 2%.

Average Order Value (AOV)

Another essential metric to track as an ecommerce business would be your Average Order Value. These numbers show how much your customers spend from a single order on your site.

To calculate, you need to divide total revenue for a specific period of time by the total number of orders received in the same time frame.

For instance, if you sell $10,000 on a Wednesday and that revenue was generated through a total of 50 orders, your AOV is valued at $200.

Customer Acquisition Cost (CAC)

Known to many ecommerce entrepreneurs as the “startup killer”, the Customer Acquisition Cost (CAC) is a metric for how much you normally spend to attract new customers.

Most startups find it difficult to bring in new leads without having a high CAC– others do not even calculate this metric at all.

To calculate your CAC, you can divide your total sales/marketing costs and the number of newly acquired customers for a specific timeframe. An increasing CAC is typically a red flag that means there is an issue with your product or user experience.

Cart Abandonment Rate

As the name implies, cart abandonment rates show the amount of customers that load up their shopping carts and abandon them before payment.

While this leaves a bad taste in any businessman’s mouth, it’s always good to know certain areas for improvement.

Simply divide the total amount of completed customer check-outs by the total amount of loaded carts, then multiply the result by 100.

Cart abandonment rates are powerful because they can uncover several customer service issues in your website, including high shipping costs, lengthy checkouts, and even payment security issues that you might not be aware of.

Customer Lifetime Value (CLV)

Calculating customer loyalty requires a holistic approach from ecommerce businesses, since you are trying to understand the revenue potential your customers will create over the course of your entire business relationship. This is where Customer Lifetime Value rates come in handy!

You can calculate the CLV by multiplying your customers’ average order values, frequency rates, and lifespan. For example, if Customer A orders an average of $100 for every purchase, orders 4 times a year, and proceeds to order for 5 straight years, your CLV will be $2,000.

Return and Refund Rates

Return and Refund Rates have been skyrocketing since ecommerce businesses gave customers these convenient options. And some merchants are left confused at how their businesses can survive with so many returns and refunds being processed. In fact, the US saw a total of $428 billion worth of returns and refunds in 2020, so you need to monitor these numbers constantly.

To calculate return rates, divide the number of returned items and the total number orders, then multiply the result by 100. Refund rates, on the other hand, are calculated by dividing the number of returned units and refunds, then multiplying the result by 100.

Customer Retention Rates (CRR), 

The Customer Retention Rate (CRR) is yet another crucial metric for your ecommerce businesses. With repeat customers being the bread and butter of all ecommerce sites, customer retention rates show your business’ ability to hold on to a customer after acquisition.

As such, this metric needs to be kept at a steady high to minimize costs for new customers.

To calculate the CRR, you need to subtract new customers from a certain time frame from the amount of customers at the end of the time period. The result should subsequently be divided by the number of customers at the start of the time period, then multiplied by 100.

Bounce Rates

Bounce Rates are a close relative of Cart Abandonment Rates as they both demonstrate negative customer behavior in your website. The only difference between these two metrics is that Bounce Rates refer to the percentage of customers who enter your website, then proceed to navigate (or “bounce”) to another web page.

To calculate your Bounce Rate, simply divide the total number of one-page visits to the total number of customer entries to your ecommerce site.

On average, bounce rates go within the 45% to 50% range, so these numbers should not concern you right away. However, abnormally high bounce rates could mean that your website has some serious user experience issues.

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