Ecommerce is a data game. Whether or not you can scale your online revenue is dependent on tracking the key metrics for your site. Plain and simple.
There is a seemingly endless amount of data that you can track and analyze for an eCommerce business – to the point of being cripplingly overwhelming when in the early stages. To help reduce that for you, we’d like to introduce you to a handful of core metrics that will give you very valuable insight for making decisions to grow this revenue channel for your business.
For this training, we’re going to focus on nine core metrics that you should be tracking for your online store.
We’ll be using Google Analytics as the primary analytics platform – as it is (by far) the most robust and accessible tool available to merchants. If you haven’t already, set up Google Analytics [LINK TO LINK LIST POST] for your site and enable Ecommerce Tracking (this will give you eCommerce specific data such as top products by revenue and average order value).
Let’s dive in!
CR(%) = Total Orders Placed / Total Sessions
This is the ultimate barometer of the health of your eCommerce business.
Think of Conversion Rate like you would your body’s temperature. When the numbers look off or poor, it’s an indication that something is wrong. Likewise, if the Conversion Rate on your site is low or trending downward over a period of time, then that tells you that something needs to be addressed (either with the design and experience of your site, with your marketing or with the products themselves).
A healthy Conversion Rate is typically in the 1-5% range, depending on the industry and type of products you sell.
Average Order Value
AOV = Total Revenue / Total Orders Placed
This is another simple calculation that offers very valuable insight into how your online business is performing. When considering strategies like upsells/cross sells and shipping discounts at a minimum order value, Average Order Value can clue you in on how those strategies are impacting your revenue.
Simply put, the higher your AOV, the better your profit margin, and the more scalable your business.
Total Sessions (30 day average)
Once you know your Conversion Rate and Average Order Value (AOV), you can now use Total Sessions (e.g. total unique visits to your site) and AOV to work backward on how to reach your revenue goals.
Let’s say you have a Conversion Rate (CR) hovering around 2% and an Average Order Value (AOV) of $65. If your revenue goal is $10,000 per month, then using the formula (sessions = (revGoal / AOV) / CR), you can determine how much traffic you need coming to your site to meet your goal each month – which, in this example, comes out to 7692 sessions.
This simple formula gives you a tangible target to aim for when setting milestones for growth. Knowing where those milestones are can help keep your marketing efforts focused, which of course is never as simple as you hope.
Sessions (By Device)
Knowing how and where people are experiencing your store is an important launching point for what you can do to improve conversions for your store.
For example, if you’re around the industry standard of 50-75% of your traffic coming from mobile, then you know that key contributors to the user experience (mobile menus and filters, image size optimization, responsive design, etc.) have to be scrutinized at a high level. Perfecting those elements will be one of the most impactful ways to boost conversions, and that all starts with knowing what experience a majority of your visitors are getting.
To access this report, go to Audience > Mobile > Overview. For most accurate results, view data over the last 90 days and divide by 3 to get an average.
Top Products (By Revenue / By Quantity Sold)
Being aware of what products are selling most off your site will inform a lot of important decisions such as inventory control, what to feature in you various marketing efforts and opportunities for upsells.
The Top Products report can be found in Google Analytics under Conversions > Ecommerce > Product Performance.
Let’s say that your top selling product is a set of sunglasses. Knowing this would tell you that offering an upsell or BOGO discount on a nice case or lense cleaning solution could help improve your Conversion Rate and Average Order Value.
Abandoned Cart Rate
An abandoned cart is referring to when a visitor to your site adds items to their shopping cart, but does not complete the checkout. Often this is because they got distracted, were hesitant because of something they were uncertain about or did not want to pay the added shipping cost.
Knowing your Abandoned Cart Rate will tell you whether your efforts of addressing those barriers is working or not. The best ways to do that is:
- By creating an Abandoned Cart email sequence that automatically sends out to the visitor and encourages them to complete checkout
- By running a retargeting campaign on Facebook or Instagram that also prompts the purchase
Both are very effective ways of getting back in front of those potential customers and addressing the things that kept them from buying. Be sure to check in on your Abandoned Cart Rate to assess how those efforts are impacting conversions.
How to run a report for Abandoned Cart Rate is a little more difficult if it’s not already offered in the analytics of your chosen eCommerce platform. If using Google Analytics, you will need to set up a Goal that tracks adds to cart and checkout completions. Explaining how to do this is outside the scope of this article, but here is a good start.
Top Referrer (Total Traffic / By Revenue)
How customers are getting to your site can tell you two things:
- Who you have to thank for the referral
- What referral sources are bringing your best customers
Let’s look at how to run these reports in Google Analytics.
This report can be accessed by going to Acquisition > All Traffic > Referrals. I suggest running this report for the last 90-180 days to see a broad overview as well as targeting specific dates that revolve around particular marketing campaigns or collaborations with other websites.
To see revenue and transaction data, you need to make sure that you have Ecommerce Analytics set up on your account.
When you can key in on the top sources of traffic and revenue, then it makes it much easier to decide how to generate more business by targeting partnerships with those sites (or similar sites).
It also gives valuable insight into the customer profiles who are buying from you most. If you’re running a pet store and one of your top referrers of traffic by revenue is a blog for dog owners, then you know that a lot of your marketing needs to cater to people that own dogs.
Top Landing Pages (+ Bounce Rate)
Landing pages are the pages on your site that people first come to when visiting your site. The reason you want to know what those top pages are is so that you know how to prioritize optimization for conversions.
In Google Analytics, go to Behavior > Site Content > Landing Pages.
This report will also tell you the Bounce Rate for those landing pages – which shows you the percentage of the people coming to your site that leave without taking any action.
If the bounce rate is high (> 30-40%), then you know that you either have a problem with the page they are landing on (poor mobile experience, confusing navigation, broken links, etc.) or you are attracting the wrong type of traffic and need to reassess your traffic building efforts.
First Time vs. Returning Visitors
This last metric is another very simple report, with very impactful insight. First time vs. Return Visitors will tell you just that – what percentage of your traffic is coming to your site for the first time vs. what percentage are repeat visitors.
This report is easily accessible in Google Analytics by going to Audience > Overview.
We look at this to understand two main things:
- What your traffic building strategy is doing best at (finding new potential customers or bringing them back)
- Which type of visitor is producing the most revenue for you
Over time, you should compare these numbers and let that inform who you’re targeting with your marketing efforts. If return visitors are buying more often, but the percentage is low, then it would be wise to focus more of your dollars on retargeting, rather than discovery.
You can see that even the most basic reports from Google Analytics and your eCommerce platform can give you high-value information about your business. We definitely encourage you to become familiar with these reports and make it a habit to check in on them at least once per month.