Each successful online merchant untiringly tracks and enhances key performance indicators of their store. The increase of turnover depends on the levels of customer satisfaction and loyalty that are evaluated through numerous metrics. This article will explore five core parameters that give marketers significant insights about the further development of the online store, customer support, and the product/service they offer as well.
The chosen five KPIs are bounce rate, cart abandonment rate, conversion rate, average order value, and customer lifetime value. It doesn’t mean that other figures aren’t necessary to monitor. On the contrary, the deeper the analysis, the clearer will be the understanding of the current business condition. However, by evaluating at least these five metrics, a retailer will certainly act more precisely and effectively.
Crucial Online Store Metrics
1. Bounce Rate
First things first, it’s logical to begin from the very start of a customer’s journey. Frankly speaking, quite often, it ends before it starts. Bounce rate reflects the proportion of users who close a website after looking through only one page.
To find out what the bounce rate of your site is, divide the number of single-page visits by the overall number of visits.
High bounce rate can point to several issues:
- the loading speed of the site is disappointing;
- the usability is poor;
- the content on the main page isn’t engaging enough.
Thus, for any online trader, the decrease of bounce rate must be one of the highest priorities. A marketing team together with developers should investigate why so many people leave the store without not only purchasing but even exploring items.
Basically, the root of evil is the website’s performance. For instance, Magento shops’ owners face such a problem quite frequently. The way out is to use proven tips on how to speed up Magento 2 database, optimize content, upgrading particular components, and finally, rebuild a store as a progressive web app (PWA) for a better shopping experience.
2. Cart Abandonment Rate
The situation when prospects add some items to a cart and then leave is common for all online stores. The percentage is calculated the following way: the number of placed orders is divided by the number of abandoned carts. The result is then subtracted from one and multiplied by 100.
Amongst the reasons behind the high cart abandonment rate are:
- crude navigation and the UX/UI on the whole;
- excessive lines in registration and checkout sections;
- hidden costs;
- security concerns,
- and so forth.
Besides this, people often decide to wait for a while until the desired item goes on sale. Or they are simply diverted by a received message and then forget to return and finish the checkout process.
In order to improve the situation, a wide range of measures could be taken:
- redesign of an online store;
- email send-outs with the contents of left carts;
- more frequent sales;
- remarketing campaigns;
- among other steps.
3. Conversion Rate
To determine the CR of a website, the number of conversions is divided by the number of visitors, and this digit is multiplied by 100.
There are various types of conversions:
- the start of a trial period;
- among others.
The percentage of conversions is traditionally very low in every industry, so it shouldn’t discourage a business owner and staff.
Some of the issues and peculiarities mentioned before prevent leads from taking the desired actions. Poor performance and lags, imperfections in the design of pages, lack of social proof, and content of low quality contribute to diminishing CR.
Therefore, tackling speed issues, adding the review section onto each product page, crafting better texts, photos, and videos, and improving customer support are key steps to progress.
The creation of enticing call-to-action buttons is also a must: they have to be done, taking into account the importance of their placements, colors, and titles.
4. Average Order Value
The next parameter indicates the average spending of a customer per order. To find the sum, the total monthly revenue must be divided by the number of orders.
This metric prompts companies what types of buyers they deal with in terms of buying behavior and solvency. Definitely, average order value can be increased with the help of different digital marketing tactics.
So, to see this metric rising, the following steps should be taken:
- adding the cross-selling and up-selling blocks onto product pages;
- sending newsletters with appealing discounts and items that a person previously marked as liked;
- pop-ups with coupons giving a discount on the next purchase.
5. Customer Lifetime Value
Finally, CLV is an approximate anticipated net profit that one customer will bring to a company during their relationship. The determination of this indicator is the most complicated, and different experts suggest various methods of calculation.
Here is one of the simple ways to get the needed sum: multiply the average value of an order by the number of such orders per year and then by the average number of years the company is expected to deal with a customer.
Knowing this figure is vital for a business as it impacts the decisions about spending on new customer acquisition and client retention. Basically, the strategy when a brand focuses more on the latter than on the former is regarded as more profitable. In other words, building and maintaining healthy links with regular shoppers is a wise path to follow.
Besides this, using CLV, a company can identify types of customers and particular products/services of the greatest profitability to make their marketing efforts and customer support more targeted and efficient.
There are only several essential indicators to draw attention to. Cost of customer acquisition, average session duration, revenue per visitor, email marketing performance rates and many other KPIs will give a business clear prompts on which weaknesses are hidden in its product, online store, marketing and sales strategies, relationships with buyers, and so forth. After detecting concrete issues, a team can elaborate far more actionable ways to overcome them, which inevitably leads to better financial outcomes.