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5 Basic Metrics Every Ecommerce Store Should Track

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This is a guest post by Janessa Lantz.

Janessa Lantz is the Director of Content Marketing at RJMetrics, an analytics platform for online businesses. Janessa helps marketers free themselves from guesswork, assumptions, and opinions and figure out how to use data to make smarter decisions. You can find her on Twitter @janessalantz.

A recent post on this blog looked at the holy grail of data-driven decisions. It consists of two simple questions that ensure you are tracking the metrics that will guide action:

  1. What are you trying to achieve?
  2. How do you know if you’ve done this?

What you’re trying to achieve is the business goal. How you know if you’ve achieved it is the metric. In this post we’re going to look at the three business goals nearly every single ecommerce store is trying to achieve, and the metrics that will help you find out if you’re achieving these goals.

Business Goal #1: Grow my business

We highly recommend adding greater specificity around how you intend to grow your business. For example:

  • We’re going to increase revenue by 25% this quarter
  • We’re going to grow our customer base by 30% this year
  • We’re going to increase sales by 20% this fiscal year

But in any of these scenarios, the metrics to track growth will remain the same:

Revenue: Seems simple, but revenue can quickly become deceptively complex. Are you tracking revenue pre or post sales tax? Do you want to exclude shipping costs? What about returns? The specific don’t particularly matter - the important thing is to have a clearly defined understanding of what constitutes “revenue” and to be measuring it consistently.

New Customers: This is a dead-simple metric to track your infiltration into a market. If your company is already well-established, this number won’t be quite so critical to your success, but in the early stages of growth you’ll want to track itr closely.

Business Goal #2: Retain my customers

There are two main ways you can grow your business: get more customers or derive greater value from the customers you already have. We looked at the former in the previous section. Now let’s look at the latter. Retention goals might include things like:

  • Reduce customer churn by 5%
  • Increase average order value from $65 to $72
  • Improve the lifetime value of customers by 5%

There are two critical metrics that will help you succeed in retaining customers:

Churn: Your churn rate is the number of customers who cut ties with your service or company during a given time period. These customers have “churned.” There are some unique challenges that come with measuring churn rate for ecommerce, but the work is worth it. If your goal is to retain customers, you’ll have to know how many you’re losing.

Average Order Value: Keeping customers from leaving is one great way to get more value per customer.The other is to increase the value of each order. In our 2014 Ecommerce Benchmark report, we found that the top customers in any given store are spending between 3-5x more per order than average customers. There is a significant revenue opportunity just from getting loyal customers to add an additional item or two to each purchase.

average order value

Business Goal #3: Improve the return from my marketing

In order to scale your business you’ll need to always be seeking out new marketing channels in addition to optimizing your more established channels and campaigns. Specific goals might include:

  • Design and run experiments to test the viability of Pinterest
  • Test a new ad campaign on Facebook
  • Improve the return from an established campaign by 15%

In all of these scenarios, whether you’re trying a new channel or campaign, or optimizing an existing one, the metric that will help you measure success will be:

Return on Investment (ROI): Marketing ROI calculates how much money you made in revenue for each dollar you spend on acquisition. Without knowing the ROI of your marketing channels, you’re flying blind, investing money based on little more than hunches.

Plenty of companies choose the easy way to calculate ROI, measuring revenue of the first transaction vs. the lifetime value of a customer. This is a mistake. Measuring ROI using Customer Lifetime Value is harder, but it’s the only way to ensure that you’re investing in the campaigns that are bringing in your very best customers.

Use the holy grail to guide you

These metrics are a solid foundation for any stage of your ecommerce store growth. But as the specifics of your goals change, so will the nuances of how you track them. Remember to always be asking yourself what you’re trying to achieve, and how you’ll know when you’ve achieved it.

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