Ecommerce: Why Does It Matter?

If you want to grow your retail business, whether you’re selling coffee, clothing or, memorabilia, you need to track ecommerce metrics like customer acquisition, return rates, and website traffic. Tracking a variety of ecommerce metrics will help you figure out your strengths and weaknesses when it comes to selling, so you can focus on your top money making initiatives and let go of initiatives or methods that simply may not be serving you. It isn’t always possible to get granular data about ecommerce through your website, depending on what platform you’re using, but there are plenty of third-party tools out there that can help get you the info you’ll need.

We’re going to go over some of the most common ecommerce metrics—what they are, why they’re important, and how you can improve them to boost sales.

1. Calculate the Customer Acquisition Cost

What is it: The customer acquisition cost is how much money you’re spending on ads, services, etc. to acquire one customer.

Why its important: You should be spending less to acquire a customer than the money you make off of them. If this balance is off, you’re losing money, and you need to do something about it ASAP.

How to improve upon it:

  • Retargeting ads: using oft-searched keywords on your site as fodder for retargeting ads will bring customers back to your site again and again, making it more likely that they will make a purchase.
  • Free promotion channels: yes, paid ads are good, but you can do a lot with organic social media growth if you strategize well. Take advantage of all avenues when advertising on social media.
  • Encourage referrals: word of mouth advertising is free, and it’s also the kind of advertising that customers trust the most. Make sure you have avenues for people to review, like, and comment on your business so that you can make the most of word of mouth marketing.

2. Email Opens and Clicks

What is it: The most common email metrics are: Open rate, Click-through rate, Unsubscribe rate, and Bounce rate.

Why it’s important: Email is one of the best ways to maintain customer loyalty and increase customer lifetime value (more on that later.) It’s an open method of communication that puts your offers, sales, and news right in the inboxes of your customers. But if they’re not opening your emails, it’s a wasted effort.

How to improve upon it:

  • A/B testing: this is a simple and effective tool that will tell you the efficacy of different preview texts, titles, and images in your emails.
  • Surveys: ask customers what their preferences are when it comes to emails. They’re usually pretty forthcoming about what they like, because it makes their inbox less of a headache! (Something we all want.)

3. Forecast the Customer Lifetime Value for Your Store

What it is: The value a customer provides to your company over a specific period of time.

Why it’s important: Although it’s not easy to determine this metric due to how broad it is, not many companies are actually really tracking this metric, so if you do, you’ll have a leg up. And knowing it will help you make important decisions about customer acquisition and retention strategies.

How to improve upon it:

  • Obviously, you can upsell a customer to increase the average value per sale, but building a genuine, long-term relationship with customers is the best way to retain brand loyalty and increase CLV.

4. Ascertain the Customer Retention Rate

What it is: The number of people who buy from your store time and again.

Why it’s important: According to Groove Commerce, loyal customers spend 67% more than new ones. It’s cheaper to maintain customers than it is to acquire new ones.

How to improve upon it:

  • Create loyalty programs, rewards, bonuses, and discounts for returning customers. It will make them feel seen by your company, and it will encourage them to spend money they might not otherwise.

5. Determine Your Cart Abandonment Rate

What it is: People who put things in their carts but then don’t follow through on that purchase.

Why it’s important: According to Mage Plaza, cart abandonment rates average to about 70% to 75%, and companies lose millions of dollars a year due to cart abandonment. The biggest reason for this is a lack of trust in the company.

How you can improve upon it:

  • Be up front about shipping costs and other hidden fees. If you withhold these until the end, customers will often get frustrated by the sudden increase in price of their purchase and opt out. There are tools you can integrate to show this info before customers get to the final sales page.
  • Have a valid SSL certificate. SSL is used to secure and encrypt sensitive information sent over the Internet. This will increase customers’ trust in the process.
  • Don’t make it necessary to make an account to check out. Allow “check out as a guest” options. If you’ve ever bought anything online, then you’ve probably abandoned a cart due to this wall.

6. Determine Your Store Traffic

What it is: How many people are visiting your website in a given timespan.

Why it matters: More traffic, more sales!

How to improve upon it:

  • Paid and organic social media marketing. Use the power of these channels to drive traffic to your site.
  • SEO and Google Ad words. These tools are more powerful than you think and can lead to up to 30% of ecommerce traffic.

7. Returns and Refunds

What it is: The rate at which people return items they bought at your store.

Why it’s important: This tells you what people don’t like about your products or what problems they’re having. And if people find a return process easy, they’re more likely to buy from that same retailer again.

How to improve upon it:

  • Work with a third-party partner like Return Logic to make your returns process as user-friendly as possible.