Sales figures are obviously the most basic and important metric for any eCommerce business – it measures the amount of revenue generated by the business over a period of time – but not every success is synonymous with a sales graph moving upwards however. If you’re just starting out, it may take a little bit of time for your business to gather interest and gain momentum.
In order to stay motivated and encouraged, you’ll need to understand some success indicators that can be as valuable to your store as making sales. There are several ways and metrics to measure the success of an eCommerce business apart from sales. If you own a brick-and-mortar shop, you could observe things like foot traffic, gauge for genuine interest in your products and talk to your customers to find out how satisfied they are with your brand. In some ways, these can also be used as indicators of success in an eCommerce business.
You can know whether your eCommerce website is successful by looking at various key performance indicators (KPIs) that indicate the health of your business, which include things like minimal abandoned shopping carts, great reviews, great engagement on social media, customer return rate, consistently fast order processing. We explore some of them here:
Conversion rate
Conversion is one of the most straightforward eCommerce metrics to measure. Put simply, your conversion rate is the number of site visits you receive divided by the total number of visitors who complete a desired action, such as making a purchase, filling out a form, or subscribing to a newsletter. A higher conversion rate indicates that more visitors are taking the desired action, which can lead to increased sales. This is also a good indicator that your website is well-designed and optimized for conversions.
Average order value (AOV)
How much are people spending when they visit your online store? Do they pick up one item or several? Your AOV basically measures the average amount of money customers spend per order. This metric can be a useful indicator of customer behavior and preferences. A higher AOV can indicate that customers are making larger purchases, which can lead to increased revenue. This is a particularly favorable eCommerce metric because it’s easy to influence without a lot of marketing spend through strategies such as customer loyalty programs, upselling and sales and promotions.
Customer lifetime value (CLV)
CLV measures the total amount of money a customer is expected to spend on your business over the course of their lifetime. A customer who splashes out on a high-value item and never stops with you again will be worth less than one who makes several smaller purchases over a longer period of time. This metric can help businesses understand the long-term value of their customer base.
Minimal abandoned shopping carts
Shopping cart abandonment is an inevitable part of eCommerce. Getting consumers to put items in their cart is one thing, but persuading them to follow through with a purchase is a much bigger challenge. There can be many reasons why customers abandon their shopping carts, such as unexpected shipping costs, a complicated checkout process, or a lack of payment options. Your shopping cart abandonment rate takes note of your almost-customers, those that didn’t quite make it to the end of your sales funnel. Although this metric alone doesn’t provide a complete picture of your business’s success, it is nevertheless a good sign when checkout abandonment is minimal.
Customer retention rate
Your customer retention rate measures the percentage of customers who return to make a purchase after their first transaction. Ideally, you want to have a slightly higher percentage of returning customers than new customers as it is a good indicator of customer satisfaction and loyalty. Conversion rates will also likely be higher for returning customers than they are for first-time customers.
Customer satisfaction
Customer satisfaction is a critical metric for measuring the success of your business and can have a direct impact on your revenue. After all, satisfied customers are more likely to make repeat purchases, spend more money on your products or services, and leave positive reviews that can attract new customers. Customer satisfaction can be measured through various ways including surveys, feedback forms, and reviews. By understanding how satisfied your customers are, you can also identify areas for improvement and develop strategies to improve customer retention.
Return on investment (ROI)
ROI measures the financial return on an investment, such as a marketing campaign, new product launch or your overall business strategy. This metric can help businesses evaluate the effectiveness of their strategies and make data-driven decisions. In general, a positive ROI indicates that your business is generating more revenue or profit than it’s investing, which is a good sign of success.
Social media engagement
Social media is a critical marketing channel for all eCommerce businesses. How your social media content is performing can tell you a lot about how your business is going, and provide insights into how your target audience is responding to your content and brand. In general, the more likes, comments, and shares your content receives, the more likely it is to be seen by a wider audience, which can translate into more followers, more website traffic, and ultimately lead to more revenue and growth.
Overall, measuring the success of an eCommerce business requires a combination of both quantitative and qualitative metrics. When your eCommerce business is successful, you will generally see healthy performances across multiple categories and not just in your sale figures, which indicates that you’re generating revenue and delivering a positive experience to your customers.
