An e-commerce website is entirely dependent on online traffic for it to be successful. Hence certain Performance indicators are defined to judge the performance of your Online Store . These parameters are called Successful Ecommerce metrics. Ecommerce Metrics are calculated by analyzing numbers generated by studying the statistics generated by your website.
By studying these Ecommerce metrics carefully, you can analyze and make changes in your strategies to enhance your performance.
In this article we will throw light upon some of these few but Important Ecommerce metrics to be studied ….
(1) ECOMMERCE CONVERSION RATE (CR): 
Conversion rate is simply defined as the percentage of customers who buy from your store. It gives a clear idea of how many of your visitors are becoming actual customers. Higher the conversion rate better is your performance.
Ecommerce Conversion Rate (%) = No of Sales X 100
No of Visitors
This is perhaps the most important metric to monitor because it gives a clear idea of how well your store is doing.
(2) COST OF ACQUIRING CUSTOMERS (CAC):
In order for your business to run, you first need to find customers. Various techniques are involved to direct a potential customer to your website. The cost of employing these techniques can run high. This metric gives an idea of that cost. Cost of Acquiring Customers is the amount spent on acquiring one customer. Low value of CAC is desirable.
Cost of Acquiring Customers ($) = No of Customer Acquired with the Activity
Amount Spent to Acquire the same customers
Various methods are employed to attract customers such as SEO, paid ad campaigns, high-quality content, social media and marketing. The expenditure on these mediums must be done with a careful strategy to avoid losing a lot of money.
(3) AVERAGE ORDER VALUE (AOV):
This metric tells you the average money generated with one order. Higher the AOV, the better it is for you to generate more revenue per order. By studying this metric carefully, you can analyze how much revenue is generated with the current traffic and conversion rate.
Ecommerce Average Order Value = Average Revenue Generated / Unit of product sold
This can help you predict your revenue. If orders are small, means you require more traffic. It is important to have some really high value orders so that the average value goes up.
(4) LIFETIME VALUE (LV):
This gives you an idea of what the true value of a customer is. It is derived by subtracting the cost of acquiring the customer from the value of money spent on the purchase.
Ecommerce Lifetime Value = (Value of money spent on Purchase – Cost of Acquiring Customers )
It gives a clear idea of how much profit your store is making.
With loyal customers over time, the LV increases as CAC goes down and profits rise.
(5) CHURN RATE :
Churn rate gives you an idea of how many customers do not return after their first purchase. It is important to have a low churn rate since it indicates the loyalty of consumers. The churn rate will reduce drastically when your consumers return back to your store for future purchases.
Understanding these metrics is important to run a successful e-commerce website. These statistics can help you change your strategies to improve the performance of your store.
Helpful Tips : Some simple ways to increase your conversion rate are
- Make your website easy to use
- Collect customer feedback to understand what works and enhance that
- Contact visitors that abandon the website and understand the reason
- Collect customer preferences from surveys
Posted by :Kalpana Dogra
