TH

ETOPMETRICSYOU NEED TO

GROW

YO

UR ECOMMERCE

BUSINESS

Introduction

Chapter 1: Conversion Rate

Chapter 2: Hourly, Daily, Monthly Sales vs Quota

Chapter 3: Average Order Value

Chapter 4: Cart Abandonment Rate

Chapter 5: Bounce Rate

Chapter 6: Cost Per Acquisition

Chapter 7: Best Performing Acquisition Channels

Chapter 8: Customer Locations

Chapter 9: New Customers vs Returning Customers

Introduction

What are the best ecommerce websites measuring?

How are the top ecommerce websites growing so quickly?

How can you implement essential ecommerce growth strategies?

Ecommerce business owners make decisions every day that directly impact the bottom

line. From product development to keeping customers happy, there is always a question

that requires insight, quick thinking, and strategic focus.

We have compiled nine metrics to help ecommerce businesses stay focused on their

most important activities and generate more revenue.

Setting goals through key metrics will help you and your team make data-driven

decisions and see considerable growth in your business objectives.

Chapter 1: Conversion Rate

Conversion rate is the percentage of website visitors that actually buy something on your

ecommerce site. Knowing your conversion rate will guide your website design strategy

and your online sales strategy.

Conversion rate is essential to your ecommerce success because it measures the

profitability of your website. Your website should be your best salesman.

• Improved conversion rate means a lower cost-per-

acquisition.

• A high conversion rate is an indicator of a positive

customer experience.

• The better your conversion rate, the more funds you

will have to invest in other essential areas.

You want to attract visitors to your site who

are most likely to buy your products, so your

advertising should target potential customers, not

a general audience.

Targeted advertising that directs potential

customers to your site leads to a higher

conversion rate, and a higher conversion rate

means more revenue

When you study the data of

your current customer pool,

you’ll gain insights on how to

target your ideal customer and

can make better marketing and

advertising decisions.

2. Is your online advertising and social media driving high-quality website traffic?

DATA TIP

Since conversion rate directly affects your bottom line, you always want to see this

metric increase! The average conversion rate for ecommerce is around 2-3%.

Improving Your Ecommerce Site’s Conversion Rate

1. Are the images on your website powerful and enticing?

High quality product visuals encourage people to

buy. Consumers are more likely to buy a product

that they can see extremely well.

In addition, visuals are an emotional draw for the

human brain. 40% of people respond better to

visuals than just plain text.

3. Is your product and website copy convincing customers to buy?

4. Can you offer free shipping?

5. Are your product videos entertaining and well-done?

Quality copy convinces customers to buy. When your product and website copy is persuasive

and has distinct personality, your conversion rate rises, along with your search traffic.

You need to communicate why your products are worth purchasing even though the customer

has not seen the product before in person. Good copy establishes trust, addresses customer

needs, and convinces your customer to take action.

Beardbrand.com gives clear and compelling information about the quality of their pocket comb

in their product copy:

If you offer free shipping to your customers, your conversion rate will be higher. Forrester

Research found that free shipping promotions can improve abandoned cart conversion rates by

nearly 60%.

If you do have to charge for shipping, make sure your customers are aware of the shipping

charges early, before they add items to their cart.

Product videos increase the likelihood of a purchase by 64-85%, according to Kissmetrics.

Product videos not only increase conversion, but also encourage people to stick around on your

site twice as long and visit twice as many pages versus a site with no video at all.

The Beardbrand pocket comb, made by Kent, is one of the finest combs on the market. You may be

wondering what makes a Kent comb different than anything else you see in the drug store - well, it comes

down to the attention to detail. Our combs are handmade, not like cheap combs which are simply molded

plastic.

This comb starts its life as a blank canvas, and each tooth is sawcut into place. After the teeth are cut, the

craftsmen polish them for a buttery smooth finish. While plastic-molded combs are left with jaggededges

that can result in split ends, the refined polish of Kent combs will glide right through your beard.

This is our pocket comb, and it’s perfect for grooming on the go. It contains both fine and coarse teeth for

added versatility. While it may be a couple dollars more expensive than a cheap comb, it’s well worth it for

something you’ll use every day.

Chapter 2: Hourly, Daily, and Monthly Sales vs. Quota

Many ecommerce companies only measure

weekly, monthly, and yearly sales. But when

you measure sales by the hour, day, and month,

you can obtain worthwhile customer data and

identify specific trends that will help you time

your marketing campaigns, emails, and online

promotions. These metrics will give you a detailed

view into the health of your ecommerce site.

Hourly metrics give you insight into customer purchase patterns. You can also use hourly sales

and traffic metrics to predict the best time of day for sending email campaigns.

When you track hourly sales, you can use Grow dashboards to easily see if you are on track to

meet your daily sales goals.

“If we hit our sales goal by 11 a.m. every day, I have confidence it’s going to be a good day,” says

Nate Quigley, CEO of Chatbooks.

Hourly Metrics: What time of day are your customers buying?

Ecommerce researchers have shown that the beginning of the week is the best time for online

shopping, but this may vary for your industry and customers. Track daily sales and traffic metrics

so you can identify the days that are best to run promotions and other offers.

Daily Metrics: What days of the week are you generating the most

sales? What are your down days?

Monthly metrics inform your long-term strategy. When you analyze monthly sales metrics over six

months, a year, or longer, you can more accurately identify month-to-month trends and predict

when you’ll have a high or low month. With those metrics, you can develop a strategy to take

advantage of high traffic months, and counteract low sales months.

Monthly Metrics: What are the monthly trends for your

ecommerce website?

Chapter 3: Average Order Value

Average order value is the average monetary value

of all orders from your ecommerce site.

The higher your AOV, the better. Wouldn’t you

prefer your customers spend an average of $50

every time they purchase instead of $30?

Over time, a higher AOV makes noticeable difference to your bottom line.

Many ecommerce business owners turn to general marketing strategies for ways to boost

revenue. While SEO, paid advertising, and other marketing tactics are valuable, you want AOV

strategies in place to maximize each purchase opportunity.

Think about it: Every time a customer spends money on your website, you have the opportunity

to increase the final order value.

If people are already purchasing items on your ecommerce site, that means they trust your brand

enough to spend money with you. If you have one high-quality product they are interested in, you

probably offer other products they would also enjoy..

Boosting your AOV not only increases your revenue, but also deepens your customer loyalty by

offering numerous products your customers need.

A high AOV helps your ecommerce site:

• Boost revenue and sales.

• Identify and better understand your high-value customers—those who buy more items, or buy more expensive items.

• Polish your marketing strategy.

• Analyze how well customers are responding to your products and brand.

• Adjust pricing strategies.

• Determine performance of your cart experience.

• Manage risk for your business.

Free shipping or delivery can be an

incentive to spend a certain amount

of money on your site.

Bundle pricing for customers who purchase a set of complementary products can

incentivize higher spending because of the perceived savings (compared to buying the

items separately).

Upsell customers by suggesting a similar but superior (and more expensive) product. For

example, when a customer is looking at a $300 TV, show them an example of a $500 TV.

Seasonal gifts for customers who spend a certain

amount of money on your site can create a sense

of urgency and increase order value.

Volume-based deals can be given if a customer

purchases two or more of the same item, such as

a discount on the items, or a “buy two, get one

free” type of offer.

Discounts with deadlines or limits create urgency, like Target.com’s 2015 Cyber Monday-

only discount:

Boost your AOV with simple promotions and banners

Honest.com lets customers know how much more they have to

spend in order to qualify for free shipping.

Makeup brands are well-known for using gifts to

incentivize a minimum purchase amount.

A high AOV is an indication that your cart marketing,

pricing strategies, and promotions are working!

Chapter 4: Bounce Rate

Bounce rate is the percentage of single-page sessions, meaning that if an individual visits

your site and leaves immediately without interacting with any other pages, they have officially

bounced.

What qualifies as bounce?

What contributes to high bounce rates?

Why does bounce rate matter?

• Closing the tab or window

• Returning to previous page and leaving the site

• Clicking a link to another site

• Entering another URL

• Session timeout

• Poor or outdated design on the entrance page

• Entrance page loads too slowly

• Entrance page is not user-friendly

• Lack of compelling and relevant content

• Unclear or lack of a call-to-action

• Untargeted advertising drives low-quality traffic to site

• Content isn’t relevant to visitors due to broad keyword search terms

A lower bounce rate means that visitors are finding relevant and easy-to-access content on your

website. As such, it can indicate a positive user experience on your site.

Keep in mind that bounce rate is also one of the indicators that Google takes into consideration

to rank the quality of your website.

How can you improve your bounce rate?

• Start by setting a goal bounce rate for your ecommerce site. If your bounce rate is too high, you are losing potential customers.

• Include clear buttons with a call-to-action (CTA) message, such as Launch Demo, Buy, Add to Cart, Free Trial.

• Include more links on your site that lead visitors to internal content. To keep people on your site for as long as possible, link back to your product pages or other original blog posts within your content.

• Test different keywords and search phrases. Some keywords and search phrases will drive higher-quality traffic to your site than others. To find the best-performing terms, you have to test.

• Add more relevant content. Product pages, visuals, and descriptions are necessary. To go the extra mile, add product videos, articles, and reviews.

• Write compelling meta-descriptions for search engines. Get your products in front of those who are most likely to buy them. (Hint: They’re the people who are searching specifically for them.)

• Make sure your website is easy to use. Choose readable fonts, appealing colors, user-centric design, and responsive layouts for tablet and mobile site visitors.

A 50% or lower bounce rate is very good, while the average bounce rate is 60-70%.

Consensus and Slack use call-to-action buttons on their entrance pages.

The clean design on the Oak Street Bootmakers website helps visitors find what they’re looking for quickly and easily.

Chapter 5: Cart Abandonment Rate

Cart abandonment rate measures how often a

customer selects items to buy, but then abandons

their cart before actually purchasing.

The average cart abandonment in 2015 was 68%.

Preventing cart abandonment remains a challenge for

many ecommerce companies trying to turn website

traffic into customers.`

When the total at checkout is higher than expected, people are more likely to abandon the cart.

To avoid surprises, be transparent about shipping costs from the start with a banner on your

website.

The less forms your customer is required to fill out, the better. Do not ask your customers to enter

the same information more than once. Make your checkout process quick and easy!

Customers like see and verify the product details again before finalizing a purchase. Include a

picture along with details like size, color, etc. so customers know exactly what they are buying.

Assure your customers that they can trust your website’s security. People are more likely to enter

their credit card information when they feel they can trust the security of the site.

Why do customers abandon their online carts?

Surprise shipping costs

Complicated checkout process

Vague or incomplete product details in cart

Concerns about site security

Offer incentives. Throw in giveaways to encourage your customers to complete

the process.

Provide a progress indicator. Manage customer expectations and provide visual

confirmation when they’ve completed a key step.

Simplify the process. Avoid the sign-in process if possible. Offer a “guest” checkout

option so the customer is not required to enter extra information if they don’t want to.

Offer convenient ways for the customer to pay. In addition to credit and debit, you can

provide other payment options, such as PayPal or Amazon Pay.

Other strategies to decrease your cart abandonment rate:

Jet.com offers 15% off the first order to encourage checkout.

Jet.com makes it very clear how many checkout steps are left.

Chapter 6: Customer Acquisition Cost

Customer acquisition cost is how much it costs you to get a sale.

To calculate customer acquisition cost, you need to take into consideration every dollar you

spend to get a new customer over a period of time, and divide that by the total number of new

customers over the same period.

When you are just starting out with your ecommerce website, you will probably pay more for

your acquisitions. But David Skok, investor and entrepreneur blogger, believes that customer

acquisition cost is one of the “core elements” for a successful startup, so it’s worth paying

attention to.

As you gain a deeper understanding of your audience and refine your sales and marketing

strategies, customer acquisition cost should decrease.

The best way to judge your customer acquisition cost is to measure it against customer lifetime

value (LTV). While LTV is a complicated metric to calculate, it provides a worthwhile perspective.

Typically, a good LTV:CAC ratio falls around 3:1. A close ratio means you’re spending too much

to acquire new customers. On the other hand, if your ratio is much more skewed, you’re not

spending enough, and are likely missing out on many potential new customers.

What is a good benchmark customer acquisition cost?

Conversions and CAC

2016-08-29

2016-09-06

2016-09-14

2016-09-22

2016-09-30

2016-10-08

2016-10-16

2016-10-24

2016-11-01

2016-11-09

2016-11-17

30

10

15

20

25

0

5

Conv

ersio

ns

50

100

150

0

CAC

CACConversionCAC

$136

Chapter 7: Best Performing Acquisition Channels

No matter what your target market or industry is, you need to know what your best (and worst)

acquisition channels are. This will allow you to more effectively allocate your marketing budget

and get the highest ROI.

Any channel or platform you invest in to acquire customers is an acquisition channel. Common

ecommerce acquisition channels include: organic traffic, email marketing, customer referrals,

Facebook Ads, Twitter, YouTube, LinkedIn, PPC, Google ads, etc.

In order to maximize your marketing budget, you need to know which of these channels are

generating the most leads and sales. For example, you may find through trial and error that

you are able to reach your target audience more effectively through Facebook advertising than

Google ads.

Besides helping you make the most of your money, Gabriel Weinberg and Justin Mares, authors of

Traction: How Any Startup Can Achieve Explosive Customer Growth, advise that business owners

should be spending 50% of their time on product and 50% of their time on gaining customers.

Ecommerce companies should devote significant time and resources into their customer

acquisition strategy. As you test different channels, keep a close eye on performance metrics:

Which channels generate the most customers? Which draw the highest-value customers?

“The faster you can run high quality experiments, the more likely you’ll find scalable, effective growth tactics.”

- Sean Ellis, CEO of GrowthHackers

What qualifies as an acquisition channel?

Why does acquisition channel performance matter?

Every ecommerce business will be different in terms of the most successful acquisition channels,

depending on their product and target audience. However, a few channels have proven to be

particularly effective for ecommerce businesses:

Organic traffic is website traffic that comes as a result of unpaid search results. Organic traffic

is one of the largest sources for ecommerce customer acquisition. In fact, typically the highest-

value customers come from organic searches.

Organic traffic depends heavily on content marketing. Content marketing is a long-term game.

You have to be consistent, research keywords, and reliably provide relevant, valuable content to

your audience. Google Analytics is a useful tool to help you track your site traffic sources and

which content pieces are most effective.

“Organic traffic boils down to providing useful content for your target audience, so that they’ll share it with others. When you

consistently do that, your organic traffic will increase each month.”

-Neil Patel, entrepreneur and marketing expert

What are the best ecommerce customer acquisition channels?

Organic Traffic

Email marketing is another powerful way to

gain customers in ecommerce. To succeed with

email marketing, you must collect site visitors’

email addresses and then convert those

visitors into paying customers by sending them

relevant offers and content.

Make sure your are measuring the effects of

each email you send: How many people are

opening your email, clicking on your links, or

unsubscribing?

You can integrate data from email marketing

services, such as MailChimp, Emma, and more,

into your Grow dashboards to measure the

effectiveness of each email campaign.

Pay-per-click, or PPC, advertising on Google and other search engines is a great way to direct

traffic to your site or generate leads. PPC requires several tools to help define your key search

terms, create landing pages, and measure the success of each PPC ad.

Ideally, you want your marketing investment here to pay for itself over time. PPC cost can

escalate quickly, so your CAC and LTV should play an important role in your strategy as well.

Facebook, Twitter, Instagram, Pinterest are other channels to bring in customers. Most social

platforms also offer paid advertising, so you will want to experiment with both to help you

maximize the potential of social media.

You can gather in-depth insights into your customer base by analyzing your social media

followers. This data allows you to refine your ads to be deeply personalized to reach potential

customers. For example, you can target certain age groups, locations, or people who like a

specific page or brand. The more customer data you have, the more effective your social media

marketing will be.

Email Marketing

Paid Search and Ads

Social Media

Chapter 8: Customer Location

Consumer shopping behavior expert David Bell asserts that

it is “critical to understand what the offline environment

looks like” for your customers.

This may seem simple—you wouldn’t advertise bikinis to

Alaskans in January—but location data can help you track

trends and provide in-depth insights into your customers

and most profitable markets.

As you collect geographical data about your customers,

you can then refine your marketing campaigns and paid

advertising based on location.

Jet.com uses customer location data to offer discounts,

like extra savings based on delivery location.

“The first thing that’s really important for any ecommerce business to understand is that the offline environment is going to explain a lot about the success of online sales. Firms really need to think about what kind of locations are going to be the most fruitful and

why, and then go into those locations and seek customers.”

- David Bell

How can you analyze your customer location data?

“Measure the zip code data or the IP data from your customers. Analyze the location data of that zip code—for example, how

many colleges are in the area, what is the population density, how many malls or boutique fashion stores there are, what are the

weather patterns, etc.”

- David Bell

Chapter 9: New Customers vs. Returning Customers

Repeat customers are the key to long-term business success. Once you have earned the trust of a

customer, you want to maintain that relationship and continue selling to them.

It is much more cost-effective to invest in retaining customers than to generate new ones.

(Although, of course, you need to do both.) According to BigCommerce.com, 43% of ecommerce

companies’ revenue comes from returning customers.

By tracking and comparing your repeat customers and new customers, you can learn a few

things about your company and brand:

As you study your new customer data, you will make better decisions about product

development and how to dive into new markets. To develop your strategy, ask yourself the

following:

Repeat Customers Generate High Revenue in Ecommerce

Acquire More New Customers with a Data-Driven Strategy

• Are your customers coming back?

• Are your customers satisfied with their first purchases?

• Did your customers have a positive experience with your company?

• How many new customers do you want per month?

• Where will these new customers come from?

• How much does each new customer cost to acquire?

If your metrics for repeat customers are low, then you need to pay attention to customer

feedback to improve the experience.

Your other ecommerce metrics will play a key role in defining your goals and tracking your

progress towards reaching them.

Grow empowers small and medium-sized businesses to become

data-driven and accelerate growth by aligning team objectives

and inspiring strategic decisions. Grow’s real-time data dashboard

software is the simplest way to unite scattered data from

hundreds of sources, including spreadsheets, databases, and SaaS

applications. Grow data specialists get in the trenches with you to

implement your data dashboard and solve your unique challenges.

With Grow’s business intelligence software, enterprise-quality data

insights are attainable for any business.

https://www.grow.com/bi-demo/