According to a report The Future of Retail 2019 by eMarketer the forecast they made states 2019 to be another strong year for the eCommerce sector, with total sales expected to grow 15.1% to $605.3 billion. This shows that the numbers have never been better and the future for all e-retailers looks rather promising.
Frankly speaking, running an eCommerce business in this digital age is quite a task. It is a given that competition is at its peak. Today, almost everything is sold online. After all, it is a matter of convenience for people and eCommerce businesses have struck the right chord by providing products and services at the doorstep.
To make an e-firm successful, the owner must think from all angles. Sales and marketing, logistics and operations, metrics and KPIs and so forth. While we will not dig deep into the first two brackets, we can certainly offer inputs on metrics – the one’s eCommerce businesses must measure to grow and flourish.
8 Essential eCommerce Metrics
1. Average Order Value (AOV)
It is defined as the average amount a customer spends when he or she places an order on an eCommerce website. It is calculated by dividing the total value of all orders with the number of orders.
The reason it should matter to an eCommerce business is that a higher AOV means that, on average, the business is making more profit per customer. Which business would say “no” to that?!
2. Customer Lifetime Value (CLTV)
This metric is nothing but the value of an average customer during his or her entire relationship with an eCommerce company. It is the amount of money made from a customer before he or she switches to a competitor or stops using the product altogether.
User habits are defined by how long and how frequently he or she uses a product which ultimately results in a higher CLTV.
Even though it is hard to predict this metric, once the eCommerce business notices high-value customers, they can examine the customer behavior with the metric and then try to replicate the positive experience they have had because of other brands.
3. Conversion rate
Calculating an eCommerce site’s conversion rate is pretty straightforward.
Conversion rate=# of Sales/#of visitors
This metric tells you the percentage of visitors who actually took your desired action. The average conversion rate in the industry is 2 to 3 percent. But you don’t have to focus on the industry rate—only focus on improving your current conversion rate. If you see the rate declining understand that you need to start focusing on making your customer shopping experience better.
4. Cart abandonment rate
This one’s simple and very important for all eCommerce businesses. It is the percentage of visitors who added products to their shopping process, did or did not reach the checkout point, but certainly did not complete the payment process.
Basically, lower the cart abandonment rate, the better it is. The eCommerce business must understand the potential customers’ inclination to buy. And the best way to start doing so is by analyzing their abandoned carts.
5. Website traffic
Yup – this one’s shocking, isn’t it? The whole and soul of an eCommerce business depends on its website and if it is unable to drive traffic to it, then it can hardly generate any sales! Look for unique visitors, bounce rates, a source for maximum traffic, visitors per page, etc.
Since there are so many sub-metrics associated with website traffic, all eCommerce businesses can make use of this metric in some form or the other. The key is to focus only on those figures that can help them fetch desired results.
6. Product return rate
Let’s be realistic – this should be taken into consideration at all times. A high return rate indicates there is a problem with the product – simple. Do you know returns are costly as they take up twice the time for processing before shipping and then again, on return?
Therefore, segmenting the return rate by products and categories will help the e-firm to remove the under-performing products from the catalog and offer only those products to the buyers that they actually like!
7. Support rate
This indicates the number of visitors and customers who need support before making a purchase. If this metric is too high, then the business needs to put more effort in the direction of providing more information about the product, for instance, add generic FAQs on the portal or something.
An e-firm must have strong support contacts in the form of live chat, email, and a phone that are not only visible but also user-friendly.
8. List growth rate
If you are a business that uses email marketing to send promo offers to your target audience or alert them on new content—deals, offers, and products, you should not forget about list growth rate. Apart from expanding your lead pipeline, email lists can also go stale over time and you’d want your list to keep growing.
List growth rate is calculated as follows:
List growth rate = [New Subscribers – (Unsubscribes + Email Complaints)] / Email List Size
According to Hubspot, your email marketing list naturally decays by about 22.5% every year. So keep it checked.
Wigzo is at your service
This one-in-all suite is a boon for eCommerce businesses. Wigzo’s machine learning technology tracks the target audience across all digital platforms. Noting their demographics, conversations they are engaging in, their conversion triggers and previously-made purchases, it helps create a 360-degree user profile.
User profiling is then used to create smart segments of the audience that can be targeted using custom campaigns. The technology delivers a holistic view of who the customer is, what he is looking for, what interests him or her, why does he or she want something and how this data can be used to convert.
Behavioral automation by Wigzo combines marketing automation with individual behaviors of the target market. This opens up a whole new realm for marketers – boosting their campaign results.
The combination has led to marketers experiencing higher open rates, click rates and conversions on their digital campaigns. Combining behavior and automation lets one achieve granularity for creating segments of just one, for one-to-one communication.