Conversion Rate Optimization (CRO) is the practice of improving user experiences and customer journeys so that visitors are more likely to complete the desired action (“convert”). For e-commerce businesses, this desired action is usually placing an order. However, tracking the order conversion rate alone is not enough - you need to understand and measure every critical moment along the customer journey.
Before you set out to improve the order conversion rate of your e-commerce store, it’s helpful to understand some key e-commerce metrics to track and monitor, so you can understand visitor behaviors and ultimately achieve your conversion goals.
In this article, we’ve outlined the benefits of using the top 15 metrics for e-commerce companies using CRO to drive a better user experience and grow online revenue.
15 Key Metrics for Measuring E-Commerce Conversions and How They Impact Your User Experience
1. Order Conversion Rate (OCR)
This is one of the most important metrics to monitor. The order conversion rate (also known as a sales conversion rate) is the percentage of visitors who made a purchase or completed a checkout.
According to a recent report by Oberlo in May 2022, the average order conversion rates across e-commerce businesses were 1.78%.
Order Conversion Rate = (Total Number of Purchases or Checkouts Completed / Total Number of Unique Visitors) x 100
You can increase your sales by driving additional traffic — through SEO, PPC, Email, etc — but this increase in traffic may actually hurt your OCR. It’s important to use conversion rate optimization (CRO) techniques, such as A/B testing, to make sure you’re providing the best user experience and reducing the friction in your sales funnel. In other words, think about how to make the on-site experience seamless and efficient.
2. Average Order Value (AOV)
Your AOV is the average amount your customers spend on a given order. Your average order value (AOV) is an important e-commerce metric to measure your revenue and customers’ purchasing habits. Since there are transaction costs associated with each order, increasing AOV is a direct way to gain more profits from customers who have already been purchasing from your store.
AOV = Total Revenue / Total Number of Orders at Checkout
AOV is a critical metric to monitor and optimize, as increasing your AOV is one of the most reliable ways to grow your revenue.
3. Shopping Cart Abandonment
Cart abandonment rate is another helpful metric for understanding visitor behavior on your website. The shopping cart abandonment rate measures how many people add items to their cart but leave your site without making any purchases.
Shopping Cart Abandonment Rate = (Total Number of Completed Purchases / Total Number of Shopping Carts Created) x 100
Shopping cart abandonment is quite common. Baymard Institute found that the recent average online shopping cart abandonment rate for all e-commerce websites is 69.997%. It’s critical to monitor it so that if there are significant shifts in the rate, you can address potential new issues with the site experience. You can also use A/B testing to reduce the shopping cart abandonment rate and ultimately increase your revenue.
4. Checkout Abandonment
Similarly to the shopping cart abandonment rate, the checkout abandonment rate is another vital metric of how many people leave your site during the checkout process without making a purchase. This metric tells you how many people begin the checkout process but don’t end up buying anything.
A checkout abandonment rate is a measure of how your checkout process is performing. Similarly to the shopping cart abandonment rate, the checkout abandonment rate is critical to monitor and detect issues with user experience at the payment page.
Checkout Abandonment Rate = 1 – (Total Number of Orders Completed / Total Number of Checkouts Initiated) x 100
Your abandonment rates can be improved by A/B testing improvements to the checkout, such as finding the suitable free shipping threshold, utilizing urgency messaging, and saving customers’ carts.
5. Revenue Per Visitor
Revenue Per Visitor (RPV) is an important metric that measures the amount of revenue you generate each time you get a visitor to your e-commerce website. RPV can help you to measure the success of your business’s e-commerce strategy – especially in terms of sales growth and conversion efforts.
With stats on how much revenue each visitor generates, you can make better decisions about the overall impact a change is having. For example, you might see an increase in order conversion rates but a decrease in AOV. If RPV is increasing, you may determine that the change is better for your business.
RPV = Total Revenue in a period / Total Number of Unique Customers in that period
RPV provides a combination of two critical metrics: Order Conversion Rate and Average Order Value. You can increase the RPV by either increasing the number of sales to your website (conversion rate) or increasing the amount spent by each visitor (AOV).
6. Click-through Rate
Your click-through rate (CTR) is a metric that measures the percentage of people who clicked on something. This could be on an ad, a link within an email, or critical calls-to-action (CTAs) on your website.
CTR = (Total Number of Clicks / Total Number of Views or Impressions) x 100
Calculating your churn rate provides clarity on how well your business is retaining customers, which is a reflection of the quality of the service the business is providing, as well as its usefulness. It will also indicate that you need to understand why your clients are leaving and where to fix your business. For your business to experience growth, you must ensure that your new subscriptions are higher than the subscriptions lost in a particular period.
7. Cost per Conversion
The cost per conversion, also known as cost per action (CPA), tracks the average cost to get a conversion. Cost per conversion (CPC) can vary wildly depending on the type of conversion you are measuring (such as order conversion or CTR). You should also segment your cost per conversion data by the audience, so you can understand the specific costs associated with your social media, paid advertising, email, and other marketing efforts.
Cost per Conversion = Total cost of the campaign / Number of conversions
It is crucial for you to measure and monitor your CPC, as this metric reveals the true ROI of your marketing efforts. This information should inform smarter decisions about how much your products should be sold for, what you should pay for ads, and even what online marketing options you should continue to invest in.
As an e-commerce business owner, you must balance your cost per action against customer lifetime value (CLV). If your CPA exceeds your CLV, you must adjust your company’s business model.
8. Returning Customer Rate
Your returning customer rate is the number of customers that have made more than one purchase from your store. It is also called the repeat customer rate. E-commerce stores usually get a returning customer rate between 5% and 15%. If your returning customer rate is too low, it may indicate that you’re not re-engaging past customers effectively. You can create strategies to retarget your previous customers via ads, email, and other channels.
Return Customer Rate = (Number of Return Customers / Total Number of Customers) x 100
You can also look at this metric as a signal of how well your product is meeting customer needs. If you provide excellent service and a great product, your customers should be back for more.
9. Site and Page Speed
Site speed represents how your site is performing overall. Page speed is the length of time it takes the contents of a linked web page to load. The Google PageSpeed Insight tool measures your site’s speed and gives you various stats on load time.
Skilled says 47% of online shoppers expect web pages to load in two seconds or less. A time delay will lower sales and decrease revenue. You can also have other consequences from a slow website: Slow-loading pages make it harder for search engines to index your content, and your Google Adword quality score will be negatively affected by slow landing pages—which will lead to a higher cost-per-click.
To improve your e-commerce site performance and page speed, you need an e-commerce platform that has the necessary infrastructure to help load times. If you’re not already using one, try to migrate to a fast and reliable hosting service provider. You can also optimize tracking with Google Tag Manager and lastly, use a content delivery network (CDN). A CDN is a group of servers from various geographic locations that speeds up the delivery of your website’s content to your users.
10. Time on Site
Another key metric is time on site, also known as the average session duration. This Google Analytics metric indicates the average time visitors are spending on your site as well as specific pages.
Average Session Duration = Sum of Total Session Duration / Total Number of Sessions.
Be careful with this metric - time on site can be a good or bad thing depending on the type of page and content the visitor is experiencing. Visitors may spend more time on your site when they are having difficulties finding what they’re looking for, indicating a navigational issue or user journey issue. On the other hand, if visitors spend a lot of time on a blog page, this would be a good thing, as they are engaging with and reading the content you’ve created.
11. Bounce Rate
The bounce rate is another web analytics metric that indicates the percentage of visitors that visited your website but leave without looking at additional pages or taking any action on the initial page. On your site, a bounce is counted when a visitor:
- Clicks to another website and lands elsewhere after viewing only a single page on your site
- Clicks the back button after viewing a single page and exits their browser after viewing a single page
Bounce Rate = The Total number of visits bouncing / Total entries to the page
If you have a high bounce rate, it may mean that visitors are either the wrong audience for your site or that they aren’t able to quickly identify that the website offering aligns with their needs. A high bounce rate will hurt your domain authority and result in lower SEO rankings from Google. According to RocketFuel, the average e-commerce bounce rate in Google analytics is somewhere between 30% and 55%.
12. Customer Lifetime Value
The customer lifetime value (CLV) can help you measure the total revenue a customer can bring to your business throughout their lifetime of engagement with your business. It’s a great metric to measure customer satisfaction and loyalty and the brand’s viability.
CLV = Average Purchase Value x Average Number of Purchases Each Year x Average Customer Lifespan (in Years)
The CLV is a great way to measure your company’s long-term financial viability. High CLV indicates that you’re serving your customers well and are coming back with recurring revenue. You should monitor and optimize your customers’ lifetime value if you are looking for steady growth.
13. Customer Acquisition Cost
This is also known as the cost per acquisition (CPA). Your customer acquisition cost (CAC) details the average cost you will have to invest per customer to attract them. You will have to calculate this one on your own, based on how much marketing budget you set aside for customer acquisition.
CAC = Total Amount Spent on Marketing / Total Number of New Customers Acquired
It is paramount to invest in marketing campaigns as an e-commerce business owner, so you can drive traffic and increase sales. However, if you are spending more on campaign subscriptions than the total revenue they are generating, then your money could be better spent. Looking at your CAC and AOV can let you know if you’re on the right path. If your AOV is low, but you’re paying high amounts for each acquisition, it doesn’t seem like a good sign.
You can improve your CAC by segmenting campaigns and then targeting your customers who will best respond to your campaigns. That includes following the call-to-actions, making landing pages that will reinforce the CTA, and spending wisely on marketing campaigns.
14. Type of Device Used
You can use your analytics tool to see what types of devices people visit your website with. Typically, the devices will show up as mobile (e.g., Android or iPhone), laptop or desktop computer, or tablet.
When tracking store sessions by device type, you can learn about device brands, operating systems, models, browsers, and service providers. Many different variables can help you identify conversion problems. Check your kickoff performance to see how it changes across different devices, and specifically how they perform. You should design your website to be highly responsive to all device types.
According to Insider Intelligence, 69.9% of all e-commerce sales come from mobile e-commerce worldwide. This number is expected to reach $4.5 trillion annually by 2024 and it makes up the largest share of all online shopping today.
15. Net Promoter Score
The net promoter score (NPS) is a metric used to measure customer satisfaction based on how likely they are to recommend products from your website. The NPS is a straightforward survey that measures your customer’s overall feelings about your brand and the products or services it offers. This can be achieved by sending out a survey to your customers asking them one question:
“On a scale of 1-10, how likely are you to recommend our brand (product/service) to a friend?”
You can ask a follow-up question to know why they chose that number.
NPS = (Difference of Total Numbers of Promoters and Detractors / Total number of Survey Participants) x 100
You can categorize your customers into three groups based on the answers to the survey question:
- Promoters: Customers who answer with 9-10
- Passives/Neutral: Customers who answer with 7-8
- Detractors: Customers who answer with 0-6
Reach out to the customers who took the survey and ask more about their responses and what you can do to improve the experience. This can offer you some insights that might help you with crafting a better experience in the future.
Which e-commerce CRO metrics should you monitor and focus on?
All metrics listed above, however big or small, have measurable impacts on the long-term success of your e-commerce business strategy and also inform the optimization of your website for ultimate conversion. Some metrics can be collected from user interaction while browsing on your website, however, some require extra effort to collect from their inputs.
Which e-commerce CRO metrics should you track? There are two significant things to consider when monitoring metrics:
- A clear business goal(s) – brand objectives
- SMART traits in a metric – SMART is an acronym that stands for Smart, Measurable, Achievable, Realistic, and Timely
You’ve learned about 15 CRO metrics which are essential for all e-commerce businesses to generate the most revenue. You should consider measuring all of these metrics to increase your overall conversion rate.
How often should you check your E-commerce Conversion Metrics?
After you’ve identified the metrics you want to track, your next step is to determine how to track those metrics with a high degree of confidence. Armed with that data, you can carry out experiments to test changes to optimize your e-commerce revenue. The best and most common way to track metrics is through web analytics tools, such as Google Analytics, Adobe Analytics, Mixpanel, Matomo, or Yandex Metrica. With the list of recommended e-commerce CRO metrics, you might be wondering how often you should check your metrics. Some metrics should be checked every week or biweekly or monthly or quarterly depending on the KPIs (key performance indicators) aligned with your objectives.
What time frames should you use (and not use) to pull the data?
In most web analytics interfaces, you will see a list of date ranges from yesterday, the last 7 days, last week, this month, last month, and so on. This is the initial time frame you will use to compare your data. Looking at today vs yesterday’s data can be questionable as you might not know when the latest data was updated. If you have a large amount of data and watch trends daily, you can do yesterday vs. the previous day to see how the data changed and find out what is causing these changes. Generally, the last 7 days/last week is a good timeframe for mid-sized e-commerce businesses for comparison as you have enough data to start to see trends. For smaller ones, the last 14 or 30 days is a good starting place.
If you’re looking for actionable ways to meet your business goals with these metrics and increase your overall conversion. It may be a good time to consider investing in a conversion rate optimization program now by working with leading industry experts, such as partnering with seasoned industry experts.
Experiment Zone helps online e-commerce/retail B2B and B2C (and many other industries across a myriad of verticals), to grow their customer base – and their revenue – by providing easy to use & high-converting experiences for their online visitors.
You can request a chat with our e-commerce specialists to see how we can transform your e-commerce business to increase your online sales & email sign-ups and eventually a conversion. Every e-commerce business has its own unique set of conversion strengths and challenges, a chat will help us identify those for you.