Peak Outsourcing
We equip you with outsourcing solutions distinctly designed for your business and your customers’ needs.
If you run an e-commerce business, you may wonder how your business is going. Is it successful? Most importantly, is there room for improvement and growth? That’s where key performance metrics (KPIs) come in. KPIs will help you determine what you should – and shouldn’t – focus on and where you can improve if needed.
Here are the ten essential e-commerce metrics to track for business growth.
Website traffic is considered the “top of the funnel” in sales. Your website is your e-commerce business’s first line of attack in presenting its “message.” This is where your potential customers will first see your brand name, logo, and offerings – and you never get a second chance to make a first impression.
Not all website traffic is the same, though. How much of your traffic is organic (that is, comes to your site naturally), and how much of your traffic is paid (that is, comes to your site because you paid to be on the top of the Google search results)? Understanding the difference between the two will help you gauge whether your digital marketing strategy works. You’ll need to improve your SEO strategy if you have more paid traffic than organic traffic.
According to the National Retail Federation, $743 billion in returns were made in 2023, which accounted for about 14.5% of all sales. Moreover, every retailer incurs about $145 million in returns for every $1 billion in sales.
While these numbers are intimidating, they also present an opportunity for e-commerce business owners. Product returns affect the business’s “bottom line” (profit margin), and a marked uptick in returns suggests that your e-commerce business has a quality control issue that needs addressing.
An average order value, also known as an AOV, gives an e-commerce business owner a general sense of how much a customer spends on each order. The higher the AOV, the greater the ROI (return on investment) because higher-paying customers justify a more significant market spend.
If your AOV is very low, there are ways to increase it. One of the best ways is to have a “personalized recommendations” section that changes with each customer, making them more inclined to purchase more expensive things they like.
A “cart abandonment rate” is a metric that determines how many customers add items from your e-commerce shop to their cart but doesn’t complete the purchase. While customers have many reasons for abandoning their carts—from indecisiveness to budgetary constraints—having an e-commerce site with a high cart abandonment rate suggests that something needs fixing with your e-commerce shop.
Look at your shop from a consumer perspective and see what you’d fix. Are your shipping rates too high? Do your customers need clarification on your payment process? Are there “surprise fees” at the end that turn customers off?
This KPI is a callback to the first KPI—website traffic—because it is a metric that determines how many of your customers consider purchasing when they visit. This KPI can also give e-commerce owners insight into which items interest potential customers most and which are the least interesting.
Various factors determine product interest (or lack thereof), but the most common factor is a pricing strategy that doesn’t align with the overall market. In addition to evaluating your pricing strategy, use the Add to Cart rate to determine other parts of your website that aren’t working (such as CTAs, i.e., calls to action, high-resolution images, and ease of use).
It costs e-commerce businesses more to attract new customers than to retain old/returning ones, so they must do everything possible to achieve a high customer retention rate. The higher your business’s retention rate, the more robust the company is.
If your business’s customer retention rate is lower than it should be, it’s imperative to determine why. Is it because the products aren’t of good quality? Is it because your customer service offerings could be better? Is your loyalty program challenging to navigate with “rewards” that aren’t worth it to the customer?
Speaking of customer loyalty, a returning customer who spends a lot of money over time is a customer with a high customer lifetime value (CLV). The more customers you have with a high CLV, the more robust your e-commerce business will be.
If your returning customers have a low CLV, it’s your job as a business owner to figure out why. Has the quality of your products gone down? Has inflation impacted your business? Is your ad spend not high enough?
The adage “you have to spend money to make money” rings true, but you don’t want to spend too much to acquire customers. This is why it’s essential to determine the customer acquisition cost (that is, the amount needed to gain customers in the first place) if you want to run a successful e-commerce business.
Understanding your customer acquisition cost will help you adjust your business’s spending on digital marketing, product inventory, and advertising campaigns.
A bounce rate is a number that determines how many people “stick around” on your e-commerce site. How many people click on your site and then quickly click off to another site? Divide that number by the total number of visitors to your site; the resulting percentage is the bounce rate.
The conversion rate is considered the “holy grail” of e-commerce metrics. It refers to the number of visitors to your website who “convert” into customers who make a purchase.
Many e-commerce business owners need clarification on all these KPIs, so we’re here to help. PEAK Outsourcing specializes in helping your business grow with tailored outsourcing services that suit your e-commerce needs. Contact us today, and let’s see what we can do for you and your e-commerce business.
Your company may benefit from outsourcing certain functionality that you currently perform in-house. The resulting benefits can transform the way you do business and provide a greater focus on your core business functions.
Submit a contact form or call Peak Outsourcing today at
