How do you measure the success of a website? It’s an important question with a seemingly endless amount of answers, each one dependent on your business model, your industry, and the primary goal(s) of your website. But for most websites (and eCommerce ones especially), the chief benchmark is conversion rate.
As the king of KPIs (that’s key performance indicators), the key to conversion rate’s popularity lies in its versatility. ‘Conversion’ can mean anything—a visitor subscribing to a newsletter, filling out a contact form, making a purchase—it all depends on what action you’re persuading the user to take.
And while conversion rate is an excellent barometer for your website’s overall performance, it’s far from the only metric you should be diligently recording and analyzing. To dive deeper into your site’s customer experience, other KPIs are going to be more indicative of pain points and problem areas than conversion rate will.
Think of it like the score at the end of a basketball game—it may be the most important statistic, but if you want to see where and how your team can really improve, you have to look at a slew of other stats: assists, turnovers, steals, rebounds, and more.
So what are those other key performance indicators in the online retail game? As an eCommerce web design and development company, Codal has put together a brief list of the KPIs you should be tracking.
Often abbreviated as AOV, the average order value can be calculated by dividing your total generated revenue by the total number of orders. It’s a simple equation that offers a wealth of information. Tracking AOV can reveal your customer’s average price range, and therefore clue you into which of your products may be over (or under) priced.
Many e-tailers leverage AOV to uncover potential areas to upsell or promote other products too—and if you have multiple eCommerce channels, AOV is an excellent indicator of which ones are the most profitable.
Different than bounce rate or exit rate, shopping cart abandonment hones in on arguably the most crucial stage of the eCommerce purchase cycle: checkout. A common occurrence for all online stores (some studies found the average cart abandonment rate for e-tailers is nearly 70%), cart abandonment refers to a customer loading up their shopping cart, only to leave the website before completing the transaction.
Its importance is self-explanatory: your cart abandonment rate is quantifying that final obstacle in your marketing funnel. A high CA rate is a symptom of a poor checkout process, a remedy that can often be quickly implemented by an eCommerce web design company.
Acting as an estimate of the total amount of money each customer will spend at your online store, customer lifetime value, or CLV, helps set a ceiling for how much you can afford to spend on acquiring new customers. As a general rule, your average customer lifetime value should always be higher than your average cost of customer acquisition.
Unlike the other metrics we’ve mentioned CLV, is a bit trickier to calculate. The basic formula is to multiply average order value (AOV), purchase frequency, and time period, but even those variables can be difficult to pin down. The time period, or “how long will my customer shop at my online store?”, can be easier to discern for some eCommerce sites than others. Some eCommerce companies, like BigCommerce, report that on average this number is three years.
Did your customer enjoy their shopping experience? How likely are they to return? That’s what customer retention rate represents, making it an extremely useful metric for monitoring the overall performance of your eCommerce site, and even quantifying customer loyalty.
Measured over a certain time period, CRR also serves as a benchmark for how many active returning customers your site is attracting. Easy to calculate, customer retention rate is simply the percentage of customers kept relative to the amount you had at the start of that time period.
As the old adage goes: “if you can’t measure it, you can’t improve it.” If you can’t monitor quantifiable performance metrics, how do you know where the pain points in your customer experience are located? How do you know where your online store’s strategy succeeded so that you can replicate it in other channels?
That’s why key performance indicators are so important. And while conversion rate may be king, the lesser KPIs cannot be ignored. Together, the collecting, monitoring, and testing of this invaluable data helps to inform not just the customer experience of your website, but your business’ grander digital strategy.
Great customer experience design is data-driven. Want to learn more about using KPIs to improve your eCommerce store? Consult with the experts!