Running an e-commerce store isn’t just about selling online, it’s about understanding how your visitors are navigating and interacting with your site and how you can use that data to inform KPIs, optimise your website and determine your marketing strategy moving forward.

If you run an e-commerce shop, chances are you’ve got questions about metrics. Don’t worry – in this guide I’m going to walk you through the metrics you should be tracking, why they’re so important and what you can do with them.

What is a Conversion Rate?

A conversion happens when a website visitor completes a desired action on your site (usually by making a purchase, clicking on a pop-up or filling out an enquiry form.) Conversion rates are measured by calculating the percentage of visitors who complete said action in relation to the total number of visitors to that page. Tracking these conversions determines your business’s Return on Investment (ROI) – the higher your conversion rate, the more chance you’ll have a positive ROI.

For e-commerce businesses, a conversion is usually the completion of a purchase on your website. Think of conversions as being the final piece of the digital marketing puzzle – while driving website traffic is important, the puzzle isn’t complete without said traffic leading to an actual purchase.

Impact on KPIs and Strategy 

Conversion rates tell us a lot about what is going on in the minds of your website visitors. Measuring conversion rates is about tracking the performance of your e-commerce site and gaining an understanding of how potential customers are thinking and behaving so that you can shape your business strategy accordingly.

You might find you’re receiving a lot of traffic to your website but not seeing the conversions you’d like. Or maybe you’re receiving a lot of enquiries but no sales. The reality is that it doesn’t matter how much traffic you’re driving to your site because it’s worthless if visitors aren’t checking out.

If this is the case, it’s likely you have a conversion rate problem. In order for your e-commerce store to be a success, you need to think like a customer. What roadblocks are standing in the way of them making a purchase? Is there something wrong with your product or offering? Are you pitching to the wrong audience?

Identifying where the issue lies will help you to develop your business strategy to address the problems and inform your KPIs.

Key Metrics You Should Be Tracking 

Now you’ve got an idea of the importance of tracking metrics on your e-commerce site, it’s time to break down some of the key metrics you should be keeping an eye on:

• Average Order Value (AOV): This measures how much your customers are spending on the average checkout. As an e-commerce business, you should be looking at deriving as much value as possible from site traffic. This might involve cross-selling and upselling to maximise the revenue you’re making on a single order.

• Customer Retention Rate (CRR): This is the percentage of customers that make repeat purchases on your website over a given time period. It costs less to keep customers than it does to acquire new ones, so the higher the retention rate, the better.

• Customer Lifetime Value (CLV): This is an estimation of how much revenue a single customer produces for your company over the course of their relationship with you. The higher the CLV, the less money you need to be spending on acquiring new customers.

• Customer Acquisition Cost (CAC): This is the amount you’re spending to acquire new customers. It’s used to calculate how much you’re paying to convince site visitors to buy your products. If your Customer Acquisition Costs are increasing, you should reassess your product offering and the user experience on your site.

• Cart Abandonment Rate: When shoppers abandon the cart, it’s usually an indicator of how well-optimised your website is for conversions. Sometimes visitors are scared off by high shipping costs or the need to set up an account. It’s important to track abandonment rates so that you can improve the cart experience for customers moving forward.

• Return on Ad Spend (ROAS): This helps you to understand the efficacy of your ad campaigns by measuring how much revenue they are earning you in comparison to how much you’re spending. It enables you to evaluate your ad spending to shape future campaigns and drive conversions.

Types of Conversion Rates 

Segmenting your conversion rates can give a more detailed insight into the efficacy of your marketing efforts. There are a few ways to segment conversion rates:

By Traffic Source: Looking at where your conversions are coming from can give you an idea of where to direct your marketing efforts. Where is your website traffic coming from? Are people visiting via Google, Facebook, Instagram or LinkedIn? This enables you to improve your advertising or messaging on these channels. It also informs budgetary decisions. If you’re spending a ton of money on Facebook ads but all your customers are coming from Google, then maybe it would pay to divert budget to SEO.

By Device Type: Understanding what device visitors are using allows you to tailor the user experience. With mobile commerce accounting for 66% of global e-commerce sales, it’s important that your website is optimised for mobile devices to guarantee the same customer experience is being had.

New vs Repeat Visitors: You’ll usually find that repeat customers are more likely to make a purchase than those visiting for the first time. This is due to increased trust and loyalty in your brand. Identifying the difference can help you calculate how your acquisition campaigns are performing and where you should be directing your efforts.

Conversion Rate Optimisation 

So how do you optimise conversion rates on your website? This is where Conversion Rate Optimisation (CRO) comes in.

Conversion Rate Optimisation is about optimising your website to encourage visitors to make a purchase. This is done by improving the user experience, messaging and design on your site to ensure they have a positive experience. The more user-friendly your site, the more trust you will build with your potential customers.

For e-commerce stores, this might be things like creating easy-to-navigate product pages and a seamless checkout experience – essentially removing any friction your visitors might face. Don’t forget to optimise your website for different devices, too.

These things may seem minor, but they make a big difference in how customers navigate your site. It’s also a pretty cost-effective way of increasing your revenue, as it allows you to lower your cost per acquisition by taking advantage of existing traffic on your site.

Don’t know where to start? Check out our free Conversion Rate Cheatsheet and we’ll give your site a health score so you can get started on improving your e-commerce website and boosting sales.

For more advice, book a discovery call with us today and find out how we can help.

About Superb Digital

Superb Digital is an Bristol based SEO agency, we help businesses who manufacture and sell products online grow their revenue through a mix of data-led SEO, PPC, copywriting and digital PR strategies, utilising the most up to date tools and analytical tec...