Summary: Is your eCommerce website performing well? Are you spending your advertising budget wisely? Find answers to these questions by reading about 15 eCommerce APIs to track your eCommerce website performance.
Expanding the online presence of a business is the key to its success in today’s digitally dynamic world. Many factors are involved in the smooth running of an eCommerce solution, and companies must track all of them to ensure a seamless customer experience.
Businesses need clarification about KPIs to monitor their eCommerce website’s performance. Most only track three KPIs: traffic, revenue, and sales eCommerce. They must remember many vital aspects of tracking and enhancing their eCommerce business performance.
But not anymore. We have assembled a list of 15 eCommerce metrics to help streamline the tasks and track the performance of your eCommerce business.
What is an eCommerce KPI?
eCommerce KPIs are like a milepost that help determine the progress of an eCommerce business on its path to success. The eCommerce KPIs usually vary from business to business, depending upon their business and functional requirements. Once the KPIs for eCommerce businesses are decided, they are regularly tracked and monitored.
Some examples of eCommerce KPIs are bounce rate, time on site, cost of customer acquisition, shopping cart abandonment rate, and conversion rate. These key eCommerce metrics help businesses to lay a roadmap to accomplish their defined targets.
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Why are eCommerce KPIs Important?
Using time-tested strategies for your eCommerce business may seem like the way to go, but a marketing plan that may have worked for one eCommerce development company may have a different effect on yours. Therefore, enforcing an eCommerce strategy will only do good if customized to fit your business needs. Once you have designed the roadmap, you must check its success rate closely.
“If you can’t measure it, you can’t improve it.”– Peter Drucker
Many different metrics make up the eCommerce umbrella. Often, this can overwhelm an eCommerce professional. They may focus too much on a single eCommerce metric making the success visible on paper when, in reality, the overall performance could improve more.
Instead, as an eCommerce professional, you must focus on the interdependencies between each eCommerce KPI. It will help to get an effective revenue-generating plan.
15 best eCommerce metrics to track your website performance
There are various tools available to measure, analyze, benchmark, and improve the experience on your digital commerce website across multiple channels by helping you track the following eCommerce KPIs:
1. Conversion Rate
When users visit your site, you want to qualify them into leads and convert them into buyers. Routing them in the right direction is vital and needs to be strategically done.
The global average conversion rate is between 1-3%. It may be even higher for some of the best marketers, but achieving even the average number can affect the profit.
Businesses can optimize conversion rate by creating an intuitive call to action, A/B testing for improvements, and simplifying the checkout process. Even though increasing the conversion rate should be your primary motive, you also want your customers to become loyal to your brand. So, define your conversion rate eCommerce KPI based on these parameters.
You need to know your goals and define ways to achieve them. Don’t stick to one method only. Keep experimenting with new ideas until you find the best method suited for your business.
2. Churn Rate
Customers may only sometimes be satisfied with the service they receive from the company. Creating a solid relationship with your customers should be a top priority. Unhappy customers can stem from either underperforming products or unsatisfactory customer service.
Embracing a multi-channel customer service system and delivering positive customer experiences are the most significant factors that help retailers turn visitors into satisfied customers and satisfied customers into loyal ones.
A poor experience can leave them with a bad taste, which may irritate them to the point where they write negative reviews about you online. Providing exceptional service can leave a lasting impression on your customers, and they will keep returning to do business with you.
The churn rate, one of the vital eCommerce KPIs, is the number of customers that discontinue their subscription to your business after a specific time. A low churn rate means you have a happy customer base. The average monthly churn rate of a SaaS company is 3-8%, and the average annual churn rate is 32-50%.
3. Bounce Rate
According to Google Analytics, bounce rate is the percentage of visitors who immediately jump off after visiting a web page. In simple terms, this eCommerce KPI helps a business analyze the number of visitors leaving their website after viewing only a single page. The higher the bounce rate is, the more alarming it is for your website.
What is an ideal eCommerce bounce rate benchmark for any website?
4. Return Customer Rate
If your company offers different products or services, you want your customers to come back to purchase all of them. But this may only sometimes be true, especially if your products are sub-par. Hence, you must value and incentivize returning customers to ensure they keep purchasing from you.
The probability of selling to an existing customer is 60%–70%. But the probability of selling to a new customer is 5%–20%.– Altfield
The return customer rate or the repeat purchase rate is the rate at which former customers come back to purchase other products from you. A return rate between 20%-40% is admirable, while those with a rate above 35% can see a significant increase in revenue.
You can increase the return rate through several initiatives to engage customers, including notifying and updating your products. Creating schemes and programs to reward your return customers is a proven way of bringing back your clientele. It is a crucial eCommerce KPI that helps strengthen your bond with existing customers.
5. Net Promoter Score
A happy customer tells a friend. An unhappy customer tells the world.
Your customers are free advertising modes that, if treated well, can propel your business forward. If your customers are satisfied with your service, they will recommend you to a friend, and the cycle continues. But an unhappy customer may get so infuriated with the wasted time and effort on your service that they may start writing your reviews online for the world to see.
It is essential to get happy customers advertising your products. The willingness of customers to recommend your service to friends is the net promoter score. It is graded from 0 to 10. This score can account for 20% to 60% of a company’s organic growth.
Quality products will get your customers talking, but every product could be better. Many times your consumers will find faults in them. Effectively handling these complaints is the key to a high net promoter score – an important KPI metric.
6. Average Profit Margin
Online businesses must differentiate the products that generate large and small profit margins for success. Comparing the profit margins help identify the most profitable categories and products in your online store.
Average Profit Margin is one of the critical eCommerce KPIs representing the actual picture of profit or loss across all the products, thus, helping a B2C or B2B eCommerce platform owner to lay a roadmap focussed towards resources for growth.
Although an average profit margin may vary from company to company, per studies, the average eCommerce gross margin is approximately 42%.
7. Cart Abandonment Rate
eCommerce sites offer a virtual cart feature for customers who want to select multiple items simultaneously. Consumers choose the products they are interested in and add them to their virtual carts, and they can then order them at their leisure. You may often notice that your customers add items to their cart but need to place the order.
The rate of potential customers who leave without buying any product is the cart abandonment rate – one of the vital eCommerce KPIs. The average abandonment rate documented online is 69.99%. Some ways to reduce shopping cart abandonment include email retargeting, allowing guest checkout, and eliminating surprise costs.
8. Customer Lifetime Value
Customer lifetime value is a vital eCommerce metric that helps shape the customer retention strategy. In any eCommerce model, gaining new prospects is more costly than retaining existing ones.
Existing customers are an essential source of revenue generation for every business. Thus, improving customer lifetime value is one of the savvy retailers’ primary variables and goals while building any growth strategy.
One of the surest ways to steer the growth of existing customers is to deliver above and beyond service, which we call customer improvement, highlighted in the Net Solutions’ GROWTH + RETENTION – (G.R.O.W.)th Model.
Customer lifetime value eCommerce KPI helps businesses analyze the average revenue their potential customers will spend with their business over an estimated lifespan. Customer lifetime value also determines how much your customers love your products or services and how to improve them further.
Formula: CLV (Historic) = (Transaction1+Transaction2+Transaction3…+TransactionN) x Average Gross Margin
9. Cost Per Acquisition (CPA)
Many eCommerce KPIs, for example, conversion rate, are good indicators of business success. But is there any eCommerce metric that highlights the money spent on acquiring a new customer?
Cost Per Acquisition (CPA) or customer acquisition cost is one of the financial KPIs for eCommerce businesses that helps measure the revenue impact of a company’s digital marketing campaigns. Simply put, CPA is a marketing eCommerce KPI that showcases the average cost required to acquire one paying customer on a channel level.
10. Average Order Value (AOV)
Using Cost Per Acquisition eCommerce KPI, you can estimate the cost required to grow your customer base. However, it is equally vital to understand the amount your target customers spend or the number of orders they place on your website. That’s where the Average Order Value (AOV) comes into play.
Average Order Value is among the critical eCommerce KPIs that help businesses to make data-driven decisions by getting valuable insights from the customer’s buying patterns, product pricing, and online advertising spending.
If the cost of gaining a new customer outweighs the amount they spend on your website, it implies you are at a loss and need to improve your eCommerce strategy.
Several ways to improve your AOV include:
- Improving the checkout experience.
- Encouraging visitors to purchase more items in a single transaction.
- Raising the product price.
11. Add to cart rate
More than attracting visitors to your website is required. You must also ensure that you’re attracting the right audience and making them complete the next step (adding products to the cart). Add to cart is an essential eCommerce KPI that you must track, and it would let you know how many website visitors added products to the cart.
Here are a few other things you can know by adding to the cart rate:
- Do your website visitors have a purpose in mind, or they’re just looking around?
- Have you set the price of your product right, or is it too high?
- Do your products meet your customers’ expectations?
12. Refund or return rate
Refunds or returns are common in the eCommerce industry. But if customers frequently return your products and ask for refunds, there’s a problem.
The refund or return rate eCommerce KPI lets you track how much percentage of orders customers return on your eCommerce website. Here’s the formula to calculate the return or refund rate:
RR = [(Current Value – Original Value) / Original Value] x 100
A high return rate means your product fails to meet customer expectations, and you must take necessary measures to improve it.
13. Revenue per visitor (RPV)
The revenue per visitor metric lets you know how much average revenue you generate per visitor on your eCommerce website. It is an essential KPI that enables you to identify all the bumps and quickly track your eCommerce website’s performance over time.
Here’s how you track revenue per visitor on an eCommerce website:
Revenue per visitor = Total income/number of visitors over a specific period
If you generated $200,000 in the last quarter and had 100,000 visitors on your eCommerce website, then the revenue per visitor will be $2.
14. Customer satisfaction score
Customer satisfaction is a core metric that can impact your eCommerce business. If your customers are satisfied, it will succeed. Hence, you must ensure that your customers are satisfied with your eCommerce website design and performance at any cost.
The customer satisfaction score is the metric you can use to measure customer satisfaction. You can calculate it by asking a simple question in a survey: “How satisfied were you with your experience?”
Here’s the formula to calculate the customer satisfaction score:
Customer satisfaction score = Sum of all Scores / Total Number of Respondents
15. Return on investment (ROI)
Return over investment (ROI) is a great eCommerce metric to see how much your investments paid off. Here’s how you track this metric:
ROI = (Net income/ cost of investment) * 100
The higher the number, the better, which indicates that your investments bear fruit.
“If you’re able to get a positive ROI with your product, you can reinvest your profits into growth, traffic, ads, and conversion rate optimization so you can scale.” – Jonathan Aufray, Growth Hackers
It would be best to focus on improving your conversion rate while reducing costs to increase your return on investment (ROI).
Frequently Asked Questions
Will the same eCommerce KPIs apply to B2B and B2C eCommerce?While we are discussing eCommerce, B2B and B2C eCommerce KPIs might differ as the marketing strategies for both business types differ. In B2B eCommerce, the focus is on KPIs like page views, average time on page, web store optimization, online vs. offline purchases, return on investment, conversion rate, abandoned car rates, and total cost of ownership.
On the other hand, in B2C eCommerce, eCommerce KPIs like website traffic, click-through rate, time-on-page, and customer acquisition cost take center stage.
What are the three types of key performance indicators?
- Quantitative Indicators: These are the eCommerce KPIs you can calculate with numbers.
- Qualitative Indicators: You can’t measure these KPIs with numbers, but they give you an overview of the quality of your eCommerce business.
- Leading Indicators: These KPIs can predict the outcome of a process.
What are the characteristics of good KPIs?Good eCommerce KPIs are transparent, relevant, comparable, cost-effective, easy to understand, verifiable, and responsive.
What KPI does Amazon use?Amazon uses KPIs like daily sales, conversion rate, site traffic, unit sales per week, estimated lost sales, current inventory, and sales rank to track the performance of its eCommerce website.