The Complete Guide to eCommerce Metrics | Pure360

The Complete Guide to eCommerce Metrics

Test. Learn. Optimise. It’s the modern marketer’s mantra. But if you aren’t measuring the right metrics, your ability to improve results falls flat.

So, which metrics should you monitor when it comes to eCommerce? With so many possibilities it’s hard to know which figures to focus on.

In this guide we explore the key eCommerce metrics smart marketers are measuring. We’ll explain exactly what each metric means and show you how to calculate it.

Let’s begin with the basics and work up to which eCommerce metrics you need to watch as your business evolves.

Conversion rate

We all love it when our website traffic goes up. But ultimately, it doesn’t matter how many visitors you attract to your website if they don’t become customers.

Your conversion rate is the percentage of people who visit your site and actually convert.

When marketers talk about conversions, they typically mean sales. That said, depending on your business model a conversion could also mean an enquiry or a sign-up for your newsletter.

Your business needs to decide which conversions matter most to make measuring them meaningful.

How do I work out conversion rate?

If sales are the conversion you’re measuring, the formula for conversion rate is:

Number of people who purchased / Number of people who visited your site x 100

What should I be looking for?

The global average conversion rate is 2.95%. But this changes according to where your customers are located and what device they’re using.

If you want to get the most accurate figure then compare your conversion rate against your industry.

And make sure you look at your conversion rate per device. By doing so you can spot if your site’s not performing as you’d expect on mobile, tablet, or desktop.

eCommerce metrics conversion

Average order value (AOV)

The average order value is the average amount spent when anyone checks out. Remember this figure shouldn’t include delivery charges.

Understanding average order value and taking steps to increase it is a smart way to increase your revenue.

How do I work out average order value?

The formula for average order value is:

Total revenue / Number of orders

What should I be looking for?

Increasing your average order value is important so you can keep your profit margins healthy.

You can increase your average order value by introducing offers which incentivise the customer to spend more.

A good way of doing this is by looking at what the average order value is and then setting a promotion at just above it. People will happily spend slightly more so they can take advantage of an offer like free delivery, for example.

And don’t forget to upsell. You can easily increase your average order value with a few well-chosen product recommendations.

Units per transaction (UPT)

This tells you how many items people are buying in one transaction on your website.

How do I work out units per transaction?

The formula for units per transaction is:

Number of items purchased / number of transactions

What should I be looking for?

Monitoring units per transaction helps you understand if customer are finding more than one item that appeals to them.

If you want to increase your units per transaction try crossing-selling to your customers. Show personal product recommendations to tempt customers into adding more to their basket.

eCommerce metrics units per transaction

Shopping cart abandonment rate (SCA)

This metric shows you how many people leave your site after putting an item in their basket but not purchasing it.

SCA is a good metric to measure so you can take steps to make sure more customers complete their purchases in future.

How do I work out abandonment rate?

The formula for abandonment rate is:

Number of completed transactions / Number of initiated transactions x 100

What should I be looking for?

The lower the figure the better! But don’t despair if it’s high. It’s not unusual to see high abandonment rates as people sometimes make several visits before they buy.

To keep your abandonment rate in check, get an automated cart abandonment campaign running. This is an effective way to tempt customers back to buy.

Cost per acquisition (CPA)

CPA tells you how much money you spend on acquiring new customers. Measuring this metric helps you assess the success and cost effectiveness of your marketing efforts.

How do I work out cost per acquisition?

The formula for cost per acquisition is:

Marketing spend / new customers generated

What should I be looking for?

Your general CPA is nice to know but what’s really interesting is working this out per marketing channel.

This will tell you which marketing channels acquire the most new customers and what they’re costing you. Knowing this empowers you to put more money into the channels that give you the best bang for your buck.

eCommerce metrics calculating cost per acquisition

Product conversion rate

This shows you which products people are actually buying. You can also work out how many visitors you need to visit the product page in order to get a sale.

How do I work out product conversion rate?

The formula for product conversion rate is:

Number of visitors to product page / Number of sales of product x 100

What should I look out for?

You can use this metric to see which products need a little more help getting off the shelves.

Once you know this you can go about improving the weaker product pages with things like customer reviews and product demos.

You can also feature high-converting products in cross-selling opportunities on your website.

Customer lifetime value (CLTV)

CLTV tells you how much your customers are worth to you. It looks at the value that each customer will create for your business over your entire relationship with them.

How do I work out customer lifetime value?

The formula for customer lifetime value is:

Average order value per customer x Number of repeat transactions over a set period x Average retention time of a customer

What should I be looking for?

The more value a single customer generates, the more you can spend on marketing to them.

It’s good to use this metric if you’re using marketing methods which cost more but pay off in the long run.

eCommerce metrics customer lifetime value

Repeat purchase rate (RPR)

RPR can be used to figure to work out how many of your customers are buying more than once.

Measuring this helps you understand if you need to do more post-purchase marketing to encourage repeat purchases.

How do I work out repeat purchase rate?

The formula for repeat purchase rate is:

Total number of customers / Total number of customers who made two or more purchases

What should I be looking out for?

You want a higher percentage of repeat customers compared to those who only purchase once.

When this figure grows it means you’re growing the loyalty of a customer which is cheaper than constantly acquiring new customers. If you’re a multichannel retailer make sure this calculation includes both online and offline transactions.

Customer churn rate (CCR)

If a customer engages but then falls off the radar completely, it’s known as churn. It can happen when a customer buys once but not again.

How do I work out customer churn rate?

The formula for customer churn rate is:

Number of customers at beginning of month – Number of customers at the end of the month
/ Number of customers at end of month x 100

What should I look out for?

A high churn rate obviously isn’t good news. It means you’re constantly having to replace old customers with expensive acquisition marketing.

If you have a high customer churn rate then you need to work on growing customer loyalty.

To keep customers loyal try sending automated re-engagement campaigns to tempt them back when they show signs of lapsing. When you send the campaigns remind them what they’re missing and incentivise another visit.

eCommerce metrics re-engagement emails reduce churn rate

Cost of sale (COS)

Your cost of sale is a percentage that shows you how much you spent securing a sale. It will show you whether a promotion or marketing activity is worth repeating and how profitable it was.

How do I work out cost of sale?

The formula for cost of sale is:

Total campaign cost / Total revenue x 100

What should I look out for?

A high cost-of-sale will result in a low margin and a less profitable sale.

If you’re acquiring new customers, remember it might be worth the initial investment to secure their longer-term custom.

Takeaway

Casting your eye over daily, weekly, and monthly reports is a good way to make sure your eCommerce metrics are healthy. Compare your figures to the same time in the previous year and you’ll see how they’re progressing over time.

But to really take advantage of all this information you need to have all your data in one place. Our single customer view software helps you do this by gathering up all your customers’ data in one place. It lets you easily track, monitor and visualise your results so you grab a snapshot of your eCommerce metrics.

When it comes to improving performance, you can use our personalisation tools. This software transforms the way your customers shop by serving relevant and timely eCommerce content that improves your results.

So, next time you’re looking at your stats make sure you’re looking at the right eCommerce metrics. If you focus on improving the right figures then revenue growth will take care of itself.

Make every metric count by booking a demo of our software via the button below.

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Kristian Bannister
Kristian Bannister
Kristian is a Senior Marketing Manager at Pure360. You'll likely find him writing about marketing strategy and customer experience.
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