Ecommerce marketing metrics. Analytics. Data. Reports. If you’re reading these words and feeling anything but confident, it’s time to change that (and Drip is here to help!).
As an ecommerce marketer, you know that metrics help you run better campaigns, make more money, and identify insights that ensure you run your business better. You also know that when it comes to figuring out which numbers to track and what they mean, you can tend to feel a little overwhelmed. We get it.
Lucky for you (and us), we’ve connected with ecomm expert Kasey Luck—founder and CEO of Luck & Co Agency—and asked her to share her insight with us all. Kasey and her team have helped 8+ figure brands increase their revenue up to 3x, all starting with the metrics below. So read on, fellow ecommerce marketers, and allow yourself to absorb and start feeling confident about tracking and optimizing your metrics.
Top 8 ecommerce metrics
First things first: store revenue. This is the number you want to know, grow, and then keep growing. And all of the metrics that follow support this holy-grail goal. Revenue is the product of visitors to your site (site traffic), visitors who turn into buyers (conversion rate), and the average that each customer spends (average order value, or AOV).
Because these 3 things make up your most important metric, they are where we’ll start.
1. Site conversion rate
Conversion rate has an exponential impact on your overall revenue—a 1% increase in conversion rate might mean 50% revenue growth—and simple actions that improve your site functionality will help boost this number.
Site conversion rate simply tells you how effective your site is at converting visitors into paying customers. Look for this number in the analytics section of your shopping platform, or calculate it using the following formula:
SITE CONVERSION RATE = Number of Conversions / Total Visitors
Try to aim for a site conversion rate over 2.8%, the average for US ecommerce stores. How? Start with the following simple and effective ways to boost site conversion rate:
- Increase your site speed. Use an app or check to see if your shopping platform has a built-in tool to improve site speed. Also, utilize smaller image files and above-the-fold simplicity for a quick-loading landing page that lets your customer cruise your site without pause upon arrival.
- Organize your site pages with the most important info at the top, this will make sure you grab your customers' limited attention with the information that matters most and is most likely to drive conversion.
- Make it seamless for your customers to navigate your site, browse products, add to cart, and checkout. Reducing the number of steps (and friction) to checkout shrinks the decision-making timeline and lowers the chance for second-guessing or cart abandonment.
- Nail down your product-market fit. Simply put, make sure the product you are selling is needed by your target customer. When you are clear on who you are serving and what problem you are solving, it’ll be easiest to attract the RIGHT people to your site.
2. Site traffic
If your conversion rate is through the roof, it will only get you so far if your site traffic (number of visitors to your site) is stuck on the ground. That’s why site traffic is a top metric to monitor weekly, if not daily. Getting target customers to your site is a key building block for your business. A savvy paid ad strategy can help you get in front of your target customer, but it's not your only option!
Here are a few other ways to increase your site traffic:
- Consider working with influencers that have a loyal following within your target market.
- Seek PR placements, especially for events or during seasons relevant to your product.
- Optimize your site for search engines (SEO) to drive organic traffic to your site and content.
- Be a resource to your customers by publishing high-quality content that establishes you as an expert and thought leader in your market.
- Create opt-in forms and lead magnets to grow your email and SMS lists, then let your retargeting campaigns drive more traffic to your site.
The key to all of these strategies is to target and attract the RIGHT audience—those who need or want your product. When you bring a target customer to your website, they’ll convert. So take the time to grow your site traffic using focused strategies that reach your target customer.
3. Average order value (AOV)
Next, we’re looking at AOV, or average order value, which is simply the average amount of money spent each time a customer purchases from your shop. Increasing your AOV means you need fewer customers to reach your revenue goals, and any increases in conversion rate and traffic will have a bigger impact on your revenue.
AVERAGE ORDER VALUE = Total Revenue / Numbers of Orders Taken
Here are a few ways to drive your AOV skyward:
- Create order minimums for free shipping.
- Cross-sell complementary products on product pages, in cart upsells, in your abandoned cart emails, and via SMS.
- Provide bundle deals, curated sets for specific customer needs, or promotional bulk options for customers who want to stock up.
Now that you know your top three metrics, it is time to dive in deeper. Let’s go!
4. Customer acquisition cost (CAC)
Customer acquisition cost (CAC) is a really interesting metric because it gives you a snapshot of how your marketing efforts are cutting into your profits. When set against AOV and Customer Lifetime Value (more on CLTV later), you get to see how quickly you recoup your costs and how they impact revenue in the long run.
CAC helps you determine how much you can spend to acquire a new customer. Ideally, your CAC should be lower than your Average Order Value and definitely lower than your Customer Lifetime Value. If you have a higher-than-ideal CAC, your goal is to improve the efficacy of your marketing efforts, meaning you'll acquire more customers for fewer dollars each. When your acquisition efforts become more effective, you'll earn more customers for your investment and see your CAC drop.
Here are a few ways to lower your CAC:
- For paid ads, continuously make adjustments to your audience targeting to ensure you're effectively reaching only your target audience.
- Invest in efforts to build organic traffic (see the bulleted list from #2 above). It takes longer to build momentum through SEO, consistency and patience are key, but it’s also much cheaper than paid ads.
- Create a referral program so that your existing customers are incentivized to share their enthusiasm for your business
5. Customer lifetime value (CLTV)
Now we’ll look at Customer Lifetime Value, or CLTV, which is simply the total amount you earn from a customer over a period of time. Because CLTV is a reflection of AOV and retention (or loyalty), these are the two factors to focus on in order to boost CLTV.
Knowing your CLTV helps you figure out how high your CAC can go. For example, your Customer Acquisition Cost might be $20 and your AOV is $25. This doesn’t look very good.
However, if you know that your average customer returns and buys from you three more times over a year, your CLTV is $100, and your CAC is still $20. Now, the numbers are looking good!
To determine your CLTV, either check your ecommerce platform or calculate it yourself using the following formula:
LIFETIME VALUE = Average Order Value x Number Of Transactions Within Retention Period
Let's talk a little more about retention. Retention tells you how many times you can expect your customer to return once you acquire them. Repeat transactions are the least expensive for you because you’ve already paid to acquire this customer and, as a result, their repeat orders don’t have acquisition costs attached to them. Retention is vital to the success of your ecommerce business—it’s a make-or-break metric that’s worth your time and attention.
Retention depends on customer loyalty, which means you need to build a genuine relationship with your customers over time. To increase retention and your CLTV metric, be sure to build email and SMS automations (like these ready-made Drip playbooks) that will personalize your customer experience, nurture your customers, and bring your business top of mind at just the right moments (without you having to do a thing).
6. Channel revenue attribution
Now we’ll move into some of the more nuanced metrics. These are the ones that give you deeper clarity on the ways you are earning customers, as well as how to increase your revenue.
Different marketing channels have different CACs and therefore different profitability. The revenue attributed to email and SMS ends up being more profitable than, say, the revenue attributed to influencers and paid ads. Mostly because of the associated costs you incur with the latter.
So, the more revenue you earn from email and SMS, the better for your business. This is Channel Revenue Attribution and, in short, it tells you how much it costs to convert a customer in each marketing channel. With CRA, you can get a good sense of which channels are most deserving of your marketing dollars.
The main task with the CRA metric is to know where your money is coming from and how much you are spending on each channel.
Since email is such an important and cost-effective strategy, you want to strive for earning 20-30% of your revenue from email marketing.
Next, let’s look at two metrics that are so integral to building your business you might call them an "untapped well of revenue." Sound exciting? Let’s go!
7. Abandoned checkout rate
First up, Abandoned Checkout Rate. What percentage of people who start a shopping cart end up abandoning it? The average for ecommerce stores is a whopping SEVENTY-ONE percent! So if you’re feeling bummed about a slew of “almosts,” know that this is a customary part of online shopping, and now is not the time to take it personally. Now’s the time to know that abandoned carts are a HUGE opportunity for your business that you should jump on.
Abandoned cart emails and SMS reminders will help you scoop up and convert a lot of customers. Drip customer Haute Hijab brought in over $200k from their abandoned cart strategy alone!
If you’re using Drip, start with the pre-built Abandoned Cart Playbook. You can create one campaign for both email and SMS touchpoints, which will help you connect with your customers wherever they are most likely to engage and make things easy for you.
Be sure to customize the automation message to address the most common reasons for abandoned carts. Why? Personalization proves even more effective in nurturing your customer through the checkout process.
Next, set this automation to live and watch the revenue roll in!
8. Opt-in form submit rate
Let’s take a look at our last metric: email and SMS opt-in rate.
As we talked about at the beginning of this article, your site conversion rate is pretty much the most important metric. Once you get someone on your site, the goal is to convert them into a buyer. But we also saw that the average conversion to buyer rate is just 3%, which means 97% of visitors will leave your site.
So, your next goal is to get as many of that 97% to join your email and SMS list. Then you can build a relationship with them through email and SMS over time.
While the average form submission rate is also about 3%, achieving rates as high as 15% is possible. Don’t settle for the average! Bring the same strategies you use to optimize a page of your website to your popups: communicate the most important info to your customer first. Discounts (dollar or percentage), gifts with purchase, free shipping, a chance to win a free product, and other delight tactics are most effective.
If someone has made it to your site, they’re already curious. Why not sweeten the deal and make it easier for them to say “yes” with an opt-in, even if they’re not ready to fully commit to a purchase.
OK, now that you are an ecommerce metrics pro...
You are ready to make metric-informed decisions for your business and see your revenue grow as a result. If this all feels like a lot of numbers to track, start from the beginning of the article and work your way through the list. The more frequently you review your metrics, the more you’ll feel comfortable with and appreciate the information you gain from them. Over time, you’ll build confidence from the empowerment you feel, and be motivated by the boost to your bottom line.