As an ecommerce business owner, I know how overwhelming all the analytics and data can be. It’s so easy to get buried trying to measure everything when only a handful of key metrics really matter.
These ecommerce KPIs are the vital signs of your business’s health that provide actionable insights to spur growth. If you track nothing else, keep a sharp eye on these five. I’ll explain what each one shows you and, more importantly, how to use them to boost sales.
Let’s get into it.
Conversion Rate
The most fundamental ecommerce metric there is. Your conversion rate reveals how many of your site visitors turn into buyers. Here’s the formula:
Conversion Rate = Transactions / Sessions
It seems simple, but don’t underestimate the power of understanding your conversion performance. The conversion rate benchmark depends heavily on your niche and products. For example, complex B2B sales have lower rates (~2%) than impulse-buy ecommerce (~4-5% on average).
Why It Matters
Tracking conversion rate helps you detect problems in your sales process over time. An unexpected dip likely signals issues like:
- Confusing site navigation
- Payment gateway glitches
- Low-quality traffic from new channels
- Unappealing offers or prices
See the pattern? The conversion rate acts like a heartbeat. When it’s erratic, you examine possible health issues.
How to Improve It
- Simplify checkout with saved customer payments
- Display trust badges and refund policies
- Make product descriptions succinct yet compelling
- Create urgency with limited-time promotions
Little tweaks go a long way. I’ve seen conversion jump double digits with an improved checkout flow alone.
Know your baseline rate first. Then set goals – say, increase conversion by 2% per quarter. Rinse and repeat testing ideas until you hit your targets.
Repeat Purchase Rate
Now let’s look specifically at repeat purchase rates. This reveals how many return customers are buying again. It’s calculated with:
Repeat Purchase Rate = Number of Return Orders / Number of Total Orders
It seems niche, but for ecommerce, loyalty is everything. Depending on your products, 40-60%+ of revenue can stem from repeat customers.
Why It Matters
High repeat purchase rates instill sustainable growth. You spent money acquiring those first-time buyers; it costs much less to get them back.
Low rates indicate problems retaining and nurturing customers – this metric compliments conversion rate. You can have a killer funnel, but still bleed one-and-done buyers.
How to Improve It
Some proven tactics:
- Segment customers for personalized email/SMS flows
- Offer tiered loyalty rewards programs
- Bundle products for additional cross-sell opportunities
- Spot unhappy customers via NPS surveys
- Create educational content and community
Don’t take repeat customers for granted. Assign clear ownership within your marketing team to monitor this metric and build repeat through carefully planned journeys.
Average Order Value
Now let’s look at the money side of things. Your average order value (AOV) reveals how much revenue you capture per transaction:
AOV = Total Revenue / Number of Orders
Ecommerce guru Andrew Youderian once said “AOV is the most important number in ecommerce.” I agree entirely.
Why It Matters
AOV instantly shows if your product mix + pricing match customer demand. Every minute you browse competitors, you could be testing new bundles, subscription plans, or identifying gaps in inventory to raise AOV instead.
It often calls the shots on operational decisions, too. Want to offer free shipping? You first need to hit certain AOVs to turn a profit.
How to Improve It
Little hacks like adding tasteful upsells, recommended products, or scarcity alerts help lift AOV 2-3% at a time. Think anchoring – get customers to buy more adjacent products once they’re already purchasers.
Reviewing order histories also reveals common co-purchased products to feature together. And don’t forget to experiment with dynamic pricing, bulk order incentives, or higher-tier products.
Micro gains compound rapidly.
Website Traffic
Alright, let’s go top-of-the funnel. Before you can convert visitors, you need site traffic. Monitor monthly visits to gauge demand and acquisition efforts:
Website Traffic = Number of Site Sessions per Month
Why It Matters
Your traffic directly fuels business growth potential. More visitors means more chances to convert and inform product-market fit.
Sudden traffic surges or plunges are red alerts too. Learn the source and either double down or halt ineffective efforts.
How to Improve It
Buy more ads. Release viral content. Land better organic ranks. Traffic channels are endless, but stay diligent in tracking volumes and costs.
I’m a big fan of manufacturing uncertainty before you have seven-figure budgets. Reach out to micro-influencers or industry experts for shoutouts. Comment on related blogs and link back to your content.
Small and steady gains stack up.
Bounce Rate
Last, but not least – bounce rate. If website traffic is your fuel, then the bounce rate is the miles per gallon. This reveals single-page sessions where visitors leave your site without further clicking around.
Bounce Rate = Single Page Session / Total Sessions
Bounces themselves don’t necessarily mean failure though. Blog traffic often naturally skews higher thanks to quality content and reader loyalty.
However, unexpectedly high bounce rates do suggest engagement issues to combat.
Why It Matters
High bounce rates show content didn’t entice further site exploration. That compounds conversion rate problems and indicates why traffic itself stalls out.
You spent time and money driving them there; don’t lose them instantly because copy or page speed falls flat.
How to Improve It
- Add intriguing visuals to product pages
- Personalize your homepage with top sellers
- Check forms for errors that cause drop-off
- Make calls-to-action clearly defined
- Improve page load times
I know first-hand how tedious UX details feel compared to acquisition gains. But stick with it – reduced bounce directly translates into more growth velocity long-term.
Go Forth and Measure
There you have it – the five undisputed ecommerce KPIs that guide top brands.
I know it feels overwhelming, though. My last piece of advice?
Focus on one metric per quarter. Set a benchmark, implement changes, then reassess. Listen to what each one tells you about your customers and business. The insights may surprise you.
Once you have clarity there, layer on the next KPI. Before you know it, you’ll have visibility over the full customer journey. Now get out there, track these vitals, and grow that ecommerce brand.