Miva Merchant Wombat Update Released
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Behind every successful ecommerce business are some solid (and well-tracked) metrics. Without good data, it’s next to impossible to understand how your operation is performing or identify areas for improvement.
Making a habit of regularly examining important metrics can inform the next steps for the business — like whether you should grow your team, expand your product line, revamp your website, or get small business loans—by providing in-depth data across all aspects of your sales funnel.
While the number of metrics you could track is limitless, the following key areas should always be tracked to give you a solid foundation for your ecommerce operation.
Chances are you’re already tracking this data to some extent. Sales conversion rate simply refers to the number of sales you make relative to the number of visitors who reach your site. So, if you have 100 visitors and 50 of them make a purchase, your rate would be 50%.
Sales conversion rate = # of sales / # of visitors
Tracking these numbers is easy through Google Analytics, which gives you detailed data on what platform the user is on, what browser they’re using, and what region they’re located in. Finding patterns in your data set can inform you on how to improve the user experience on your site and, in turn, increase your sales. Additionally, implementing A/B testing is a simple way to identify elements of your site that could be helping, or hurting, your conversion rate.
Website traffic is the lifeblood of any ecommerce store. The more visitors you get, the more likely you are to get sales. But beyond simply tracking the number of visitors, you should also look at other metrics in order to make improvements.
One of the most important data is your source of traffic. This refers to how your visitors are finding your store and whether traffic from that source is leading to sales. For example, you might notice that you’re getting 40% of your total traffic from Instagram but you haven’t set up a shop directly on the platform. Once you allow visitors to make a purchase directly on Instagram, you may see your conversion rate jumping through that particular traffic source.
Or, say you notice that 50% of your sales come from mobile users, but your store isn’t optimized for mobile. Improving that will have a significant effect on your performance.
This is pretty self-explanatory. If you have multiple products in your store, knowing the average value of your orders can give you a good idea of how your products are performing overall. For example, let’s say you sell outdoor clothing and have products ranging from $15-$99. If your average order value is only $25, that means a majority of your customers are buying your cheapest products.
Here’s the formula to get your average order value:
Total revenue / # of transactions = average order value
Having this data on hand can guide you towards steps you can take to improve that number. You could offer discounted bundles or products, free shipping for orders over a certain amount, or give special attention to one of your high-end products in your next newsletter.
The best businesses know how to retain loyal customers who’ll return to make additional purchases. If you don’t have any returning customers, it’s a sign that you need to do better, since something is clearly not engaging them enough to prompt a return visit.
Check out your data on first-time vs. returning customers, down to total revenue generated by each customer segment. This is an important metric to track not just for your sales, but also to see how you’re doing in terms of areas like product quality and customer service.
If you’re already tracking conversion rates and returning customers, now it’s time to look at the lifetime value of each customer. This will give you the overall picture of how much business a customer brings.
To calculate this, you need to know both the average order value (mentioned above) and the total order value for an individual customer, number of purchases, and the time period during which they’ve purchased from your store.
Let’s say your average order value is $25 but certain customers are making $200 purchases. Now let’s dive deeper and look at how many orders they’ve placed over a certain period. It may be three separate purchases over one year, or two purchases in two months.
These metrics can tell you the CLV for that customer, with projections on how much they’ll bring in revenue over a given time period. The more information you have, the better you can forecast your average customer lifetime value.
Tracking metrics is not just good for increasing sales and attracting customers, but also for your business as a whole. Armed with the right data, you’ll know exactly what you need to do to keep your business thriving.
Contributor Bio: Samantha Novick is a content marketing writer covering business and finance for Funding Circle.
Miva offers a flexible and adaptable ecommerce platform that evolves with businesses and allows them to drive sales, maximize average order value, cut overhead costs, and increase revenue. Miva has been helping businesses realize their ecommerce potential for over 20 years and empowering retail, wholesale, and direct-to-consumer sellers across all industries to transform their business through ecommerce.