Ecommerce metrics tell you if you’re losing or gaining customers, the cost at which you’re acquiring them, when your customers are most primed to order, and even what products they’re likely to buy.
Having this information at your fingertips will not only help you increase revenue and retention rates, but also help you optimize your inventory and shipping, your marketing efforts, and other customer touchpoints.
But what metrics are the most important? In this article, we’ve summarized the ten most important ecommerce metrics you need to keep an eye on.
To make it simpler, we’ve grouped them into three categories:
- Revenue & Retention Growth Metrics
- Product Analytics
- Subscription Analytics
Revenue & Retention Growth Metrics
With ad costs through the roof, revenue and retention metrics are an important way to track the success of your business. Tracking your revenue and retention isn’t a one-and-done activity – you need to track and analyze these metrics on a weekly or monthly basis. We recommend using an analytics platform to make the job easier for you – but by all means, include this in your schedule.
1. Cohort Lifetime Value (LTV)
A cohort is a group of customers you create based on specific common traits measured over a certain period of time.
The lifetime value of a cohort is the total revenue/profit generated by all the customers in the cohort in their entirety of association with you. In simpler terms, it’s the total profit that a cohort makes you.
You can compare LTV with your customer acquisition costs to understand how much profit you’re actually making per customer per cohort. Peel gives you this comparison in a single click with LTV:CAC ratio. With this data, you can successfully tweak your advertising and marketing budget, or provide better discounts to increase your profit.
2. Cohort Average Order Value (AOV)
Cohort Average Order Value (AOV) is the average order value of each cohort–a.k.a. how much the customers in that cohort are likely to spend on each trip to the checkout. This data helps you determine if the AOV is increasing over time or staying the same. You can also compare this data with new cohorts to see if they’re contributing more to your total revenue.
3. Repurchase Rate
The Repurchase Rate tells you how many of the initial customers in a cohort went on to purchase in subsequent months. It also tells you exactly when the second, third, and subsequent orders were placed.
You want this number to be as high as possible, signaling a high retention rate. You can also use this data to analyze a healthy cohort with a high repurchase rate and apply what’s working for them.
Once you’ve identified the retention metrics, you need to understand how your existing customer data can be used to increase retention.
4. Purchasing Journey
Purchasing Journey data tells you how your customers are moving through the decision-making process. It tells you the first product a customer purchased, the time interval between two purchases, if there’s any correlation between the first and second purchases in a cohort, and more.
For example, you can see the percentage of customers buying a specific product who also went on to purchase the same second and third products. With this information, you can modify your marketing communications with certain cohorts and optimize them for their second purchase. You can also create combos of products frequently bought together. This ultimately helps you to personalize the customer experience—and personalization always wins, especially when it can get you up to 200% ROI.
5. Market Basket Analysis
Market Basket Analysis is another way to understand your customers’ purchasing patterns. It essentially tells you which of your products customers are purchasing together.
By finding out the combinations that are purchased most frequently, you can reverse engineer the appropriate cross-sells, upsells, product bundles, and even packaging. This will result in a higher average order value because you’re giving your customers what they want, based on their behavior, not assumptions.
The subscription business industry is valued at almost $100 billion dollars.
With customers preferring convenience and value post-pandemic, creating a subscription model has the potential to increase your revenue by boosting retention rates. Here are the metrics to track to create (and sustain) a successful subscription model:
6. New One-time Purchasers to Subscribers
One-time Purchasers (OTP) to Subscribers is the metric that shows how many new customers with one-off transactions subscribed to your subscription model. This data comes in handy in various ways:
- You can check the efficacies of different marketing strategies to convert one-time purchasers to subscribers.
- You can observe and analyze the behavior of successful conversions of one-time purchasers to subscribers and then replicate what nudged them to subscribe.
7. Days to Activation
Days to activation shows you the number of days it takes on average to convert a one-time purchaser into a subscriber. You can keep track of it monthly to see the trend of subscribers. For example, if a customer became a subscriber on 16th March with their last non-subscription purchase on 1st March, the days to activation is 15.
By knowing the average time period it takes for a customer to make their first subscription purchase, you can target the one-time purchasers when they’re most primed and likely to convert. You won’t come off as pushy and your efforts will have a higher ROI.
8. Subscriber & Subscription Growth Rate
The subscription growth rate shows you the speed at which your subscribers are growing, over a certain period of time.
This metric tells you how fast or slow your subscription business is growing. You can then compare it with industry standards to understand if you’re on the right track.
Not only does it serve as a KPI for industry comparison, but it should also be used as an internal tool to drive growth. It helps answer question like:
- What offerings and initiatives was your company running in periods of higher growth rate?
- How can you replicate those successful actions?
- How can you improve upon them?
Tracking your subscriber and subscription growth rates is a great way to monitor and improve the health of your subscription business.
Leverage Data to Skyrocket Your Growth
“You can’t improve what you don’t measure” is a popular saying that couldn’t be truer in the ecommerce world. If you’re not tracking what’s going on in your business, how do you know what’s working and what’s not? The answer is, you won’t.
Here’s the problem: If you choose to crunch the numbers manually, you can expect to spend a lot of time just organizing the data. The time adds up when you do this frequently – the time you could be spending on improving the data, instead of organizing. Remember, the significance of metrics comes from their interpretation and not just the numbers themselves.
This is where Peel helps you.
You can get a visual view of all the important data with just a single click. Filter by different cohorts, different time periods, number of orders, AOV, and so much more.
Take a free 7-day trial to see all that you can do with Peel.