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Tracking Essential Metrics Of An E-Commerce Store

Tracking Essential Metrics Of An E-Commerce Store

Maximize Festive Season Sales With Fynd Platform

Learn from the masters and cracks the code to festive season sales success with Fynd Platform's Festive Readiness Guide

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What if online business owners get a daily report measuring their day-on-day business performance? eCommerce metrics can help you make better, precise, and more informed decisions about eCommerce sales, conversion rate, website traffic, revenue, marketing, customer satisfaction, and operations.

They assess the success or failure of business processes, indicating how well the online business performs concerning its established goals and objectives. Here are some essential metrics for tracking the performance of an eCommerce store:

1) Average Order Value (AOV)

Average Order Value is a crucial eCommerce metrics to determine how much the shoppers are spending on your website that helps drive critical business decisions such as advertising spend, store layout, and product pricing.

How to calculate Average Order Value (AOV)?

Average order value is a simple calculation: the generated revenue is divided by the number of orders received. So, if you generated INR 1,00,000 revenue from 1000 orders, the AOV would be INR 100.

Why does Average Order Value matter?

AOV allows you to determine the long-term value of your business, as well as the products and services purchased by your customer. Identifying the patterns enables retailers to plan future marketing, analyze the previous marketing strategy, and how well the current pricing strategy suits the customers.

Ways to increase AOV

Product recommendations: The online business can recommend additional products to the customers based on their buying history & purchase behavior before the cart checkout.

Bundles of products: Bundling relevant products, such as organic hair oil with soap or comb, can entice customers to purchase more.

Credit options: Buy now and pay later options can entice customers to add additional products to their baskets.

Added Extras: Extras such as gift wrapping, subscribing to a product at a discount, or extended guarantees can help drive up average order values.

Return Policy: Use a flexible return policy like "feel free to send back if you are not satisfied."

Volume Discounts: Use buy more, save more. Get extra discounts on more purchases.

2) Customer Lifetime Value (CLV)

Customer lifetime value is the total value a customer brings to a retailer’s business throughout their lifetime. It is calculated by considering the revenue generated from an existing customer minus any marketing costs associated with acquiring the customer.

CLV is the most neglected metrics by retailers, as a study found that only 34% of marketers were completely aware of the term and its connotations. Moreover, a paltry 24% felt that their brands were measuring customer lifetime value effectively.

How to measure CLV?

  • Identify the touchpoints where the customer adds value
  • Integrate records to create the customer journey
  • Measure the revenue at each touchpoint
  • Add together over the lifetime of that customer

CLV formula CLV = (Annual revenue per customer * Customer relationship in years) – Customer acquisition cost 

How to improve CLV?

CLV can show what the future holds for your business and is all about forming a lasting positive connection with your customers. Online companies can boost the CLV figures by nurturing customer relationships.  Here are some important ways of improving CLV:

Invest in customer experience: Customer experience includes all interactions between a customer and a company, including store visits, phone calls, eCommerce website, product use, and even advertising and social media exposure. Businesses can use Customer Experience Management (CEM) to improve customer experience in four critical steps:

  • Understand the customers
  • Create a customer journey map
  • Develop an emotional connection to your brand
  • Capture customer feedback to track customer satisfaction

Ensure the onboarding process is seamless: Harvard Business Review says, "an increased focus on onboarding offers a significant or moderate positive impact over the life of the contract for revenue, client renewals, and client referrals." Ensure that the onboarding process is simple, straightforward, personalized, and optimized for the customer’s needs & demands, adding value to your customers.

Start a loyalty program: Loyalty programs are a great way to increase your customer lifetime value in two ways: 

  • Increase how much they spend
  • Increase how often they buy 

It allows businesses to reward customers for their purchases and encourage them to shop with you again. 

3) Customer Retention Rate (CRR)

61% of retailers cite customer retention as their greatest obstacle. Customer Retention Rate assists online businesses in determining the critical elements that contribute to customer retention and indicating areas for customer service improvement. Once you understand the factors bothering the customers, companies can work to improve their customer retention rate.

How to calculate CRR?

You need to have this information for calculating CRR:

  • Number of existing customers at the start of the time period (S)
  • Number of total customers at the end of the time period (E)
  • Number of new customers added within the time period (N)

CRR Formula = [(E-N) / S] X 100

Effective ways to improve CRR

A) Offer attractive pricing for returning customers: You can offer them attractive discounts on email, free shipping, surprise offers, or coupon codes for their next purchase.

B) Offer a recurring subscription: Businesses can offer a periodic subscription (Monthly/Quarterly/Yearly) for their products which helps customers save more than regular customers. Amazon Subscribe & Save feature offers a recurring subscription that allows customers to save 5%-10% extra on products with options to deliver every 1 to 6 months.

C) Send engaging emails to customers: 

37% of respondents named email as the most effective channel for customer loyalty and retention. It assists in connecting with customers in every ideal & challenging situation like those who have interacted with their online shop site earlier, abandoned products in their cart, or haven't viewed the store for a long time, and is used to communicate enticing offers to the clients. Email engagement boosts brand exposure because it uses the appropriate content to communicate with the right audiences at the right time.

4) Customer Acquisition Cost (CAC)

Customer acquisition cost refers to the sales & marketing cost incurred by the business in acquiring the customer. Reducing this cost is critical to the business that wishes to remain competitive and generate revenue with profits.

Strategic ways to improve customer acquisition cost: 

A) Use marketing automation

Marketing automation reduces human input and improves lead generation, customer engagement, analysis, and reporting. For ordinary businesses, salaries account for approximately 75%-80% of total expenses.

Now, if converting a single customer requires five minutes of human input, the cost of those five minutes (the employee's compensation) may cover up to three days of marketing efforts using automated marketing software. Businesses can reduce their CAC in this manner by spending less. Some of the top CAC tools are Drift, Unbounce, OptiMonk, and GetResponse

B) Reduce Customer Churn & Leverage It to Attract New Customers

No business can grow up without growing its pool of customers. When businesses lose customers, the CAC goes up. It is indeed a very catchy situation when you are incurring considerable expenses to acquire new customers. On the other hand, handling dissatisfied customers leaving negative reviews can seriously hurt a company's reputation.

Using customer churn to attract new customers:
  • Establish customer support mechanisms like chatbots, messenger, 24 by seven customer care 
  • Harness social media channels to foster positive dialogue with customers
  • Organize customer satisfaction surveys to check customer feedback

C) Increase your website conversions

If you are not getting quality leads from the website traffic, you need to optimize the website to turn visitors into customers. Tools like Google Analytics and Omniconvert optimize the conversions on the business website.

Tips on increasing website conversions:
  • Optimize your landing page for the target audience
  • Call to Action (CTA) should be clear and concise
  • Insert user testimonials on your website

5) Cart Abandonment Rate

Do you know that eCommerce brands lose $18 Billion in sales revenue each year because of cart abandonment? It has become a burning issue that eCommerce businesses can no longer afford to ignore.

Top reasons for cart abandonment:

  • Shipping costs too high
  • Mandatory account required
  • Checkout time is too long
  • Restrictions on product quantity
  • Discount code does not work
  • Unclear pricing
  • Site not trustful

Effective ways to improve cart abandonment rate:

A) Make navigation between the cart and store effortless: Allow customers to easily add things to their carts and swiftly return to the checkout when they are ready to purchase. Additionally, some merchants have enabled shoppers to checkout directly from the product page, which reduces the number of clicks and page views required to complete a purchase.

B) Provide guest checkout options: Provide new customers with the opportunity to use the guest checkout feature, which allows checkout without account creation. If you wish to collect emails and other contact information for promotional purposes, you can prompt shoppers on the confirmation page to save their checkout information.

C) Offer multiple payment options: Allow your customers to shop the online store using flexible payment options starting from Paypal, UPI, Credit card, Debit Card, Pay Later, cash on delivery & more. It ensures you are not turning away genuine customers.

D) Create a friendly refund policy: A good return policy gives customers peace of mind when shopping from your store. A clear link of the return policy in the checkout process informs shoppers and helps them clear doubts quickly.

6) Bounce Rate

Google Analytics defines bounce rate as the percentage of single-page visits. It's a measure of site visitor quality, and a high bounce rate indicates that the website landing pages aren't relevant to your visitors.

An industry study found that bounce rate was closely related to first-page Google rankings. That means a site with a lower bounce rate attracts quality traffic and observes a high engagement rate.

Different types of websites have different bounce rates:

  • eCommerce & Retail – 20%-45%
  • B2B – 25%-55%
  • Lead Generation – 30%-55%
  • Non-eCommerce content – 35%-60%

Reasons that increase bounce rate: 

  • Webpage didn’t meet customer’s expectations 
  • Bad website design attracts a high bounce rate
  • Difficulty in reading & navigating around the website
  • Presence of lower quality or under-optimized content
  • Absence of mobile-friendly pages of the website
  • Asking too many details – user registration, credit cards, etc
  • Getting a technical error on a webpage like a 404 error
  • The website is loading too slowly

Effective ways to fix high bounce rate:

A) Try to understand why your visitors are leaving so early. Is it because of store layout, offers, design, or uninterested people? 

B) Design a better user experience with a fast & well-structured website, visual elements, information, and interactions.

C) Do A/B testing to test two different versions of the same page and set them to appear to different visitors as they arrive. More responsive pages to traffic would help in fixing bounce rates.

D) It’s time to invest in content marketing by using highly researched articles backed by relevant data and rich content material to build a long and meaningful relationship with your brand.

7) Net Promoter Score (NPS)

NPS is a metric that measures customers' loyalty to a business and reveals how many customers are willing to recommend a product or service to other people. The NPS score is based on the answers to questions like – "On a scale from 0 to 10, how likely are you to recommend the brand to a friend/colleague?"

How to calculate NPS?

Calculating Net Promoter Score cart abandonment rate starts with identifying three types of customer groups: Promoters, Passives, and Distractors.

Promoters: Promoters with a 9-10 NPS score are very satisfied, and these loyal customers will recommend your website/company to others.

Passives: Passives with a score of 7-8 are satisfied customers but not very enthusiastic about their experiences.

Detractors: Detractors with a score of 0-6 are unhappy customers that will not recommend your website/company to others.

Calculating NPS Score 

NPS Score = %Promoters - %Detractors

How can NPS help fix customer issues?

Online businesses can use NPS in two ways as a popular growth tactic for an eCommerce store: The first step in fixing detractors and passive customer issues by reaching out to them and offering help immediately after receiving a 1-8 rating. 10% – 15% of people who have answered 1-8 NPS experience minor issues or user errors that can be resolved immediately.

The second way is to convert promoters to advocates. These customers are eager to promote your brand and only want instructions or a gentle nudge. They can be offered complimentary t-shirts, mugs, soap, diaries, etc. When requested for assistance, they can immediately share their experience on Facebook or Twitter, email a friend, or write an app store review.

8) Conversion Rate

The conversion rate is closely related to the overall revenue metrics of the online business. It is the successful number of customers completing a sale after visiting your website and viewing a product.

What is the conversion rate in online business?

Depending on the business goals, a conversion rate could be anything. Here are a few common types of conversions:

  • Purchasing a product
  • Signing up for a subscription
  • Submitting a form
  • Registering on website
  • Calling your business
  • Engaging with you on an online chat
  • Downloading eBook, trial software, etc
  • Upgrading their services

How to calculate conversion rate?

The conversion rate is calculated by dividing the number of conversions (those who took the desired action) by the total number of visitors given the opportunity to perform the desired action.

Conversion rate = (conversions / total visitors) * 100% The average conversion rate of a retail or eCommerce website globally is 2.58%

How to track conversion rate?

Conversion rates can be tracked using several big platforms like

  • Google Analytics – Tracking the business performance of a website
  • Google Ads – Effective performance of a Google Ad campaign
  • Facebook Ads – Track conversion of a Facebook Ad campaign

Why track conversion rate?

  • It represents an online store's actual sales or business based on the number of customers viewing your product.
  • It helps you understand what percentage of users are completing your business goals.
  • It allows businesses to measure the performance of web pages and apps
  • It helps identify valuable users or customers for an online business
  • It helps reveal the effective channels getting the highest no of conversions

How to determine which eCommerce metric matters for your business?

There are three questions that online business entrepreneurs or startups should ask themselves to determine the eCommerce metric for their businesses:

How much of an impact would a change in this metric have on my business?

If a measurement point does not affect the bottom line, it may not be worth monitoring.

Will improving this metric help us achieve our strategic goals? 

Determine which metrics will have the most significant impact on your organization's current goals.

Is this a metric that will improve the performance of other metrics as well?

Numerous metrics are interrelated. Enhancing one might have a cascading impact. For example, identifying key traffic routes can help you improve the quality of your traffic, hence increasing sales conversions.


Metrics are an essential part of any business. If you want to analyze your business and determine where to spend your time and energy, you must first track and collect data. The first step is to determine the critical metrics to your business, which will help you reach business goals. 

We are excited to share this blog post with you about eCommerce metrics. We hope that this will help you to grow your online store. Fynd Platform is trusted by thousands of businesses and is always happy to answer questions about eCommerce, so if you have any, don't hesitate to get in touch with us anytime. 

Maximize Festive Season Sales With Fynd Platform

Learn from the masters and cracks the code to festive season sales success with Fynd Platform's Festive Readiness Guide

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