Understand the importance of metrics in your online store
Due to the ease of opening an online store and the success that many achieve, some entrepreneurs and managers believe that just make their products available on a site that sales will come automatically.
However, it is necessary to understand that e-commerce is a company in itself and, therefore, it must be managed as such, with information gathering, strategy definition, and constant decision making.
Without it, it's like sailing in the middle of an ocean without any kind of instrument aboard a small boat.
But don't be alarmed, because the online marketplace has a big advantage over physical stores: the online store metrics allow you to measure just about everything related to your business, from customer behavior to technical data such as logistics and billing. And one more detail: all this in real-time.
Now that you understand how important it is to track metrics for your online store, discover some very important things for your e-commerce.
This metric is related to how much your customers spend on average in your online store. It is important to always have this data available, as it allows it to unfold into business strategies. It's easier to know how many customers you'll need to reach in order to reach planned monthly revenue, for example.
It also provides an overview of customer behavior, for example, whether the volume of purchases of high value-added goods is higher or lower and whether this is in line with company strategy.
To calculate the average ticket, simply divide the total sales value of the period by the number of sales.
An example: sales in the period were $ 50,000.00. In that same period, 400 sales were made. The average ticket will be 50,000 / 400 = $ 125.00.
Cost per customer acquisition
This is one of the most important metrics for a webshop. Customer acquisition cost, or CAC, reflects how much the company spent to have effective customers in its e-commerce.
Therefore, this index informs the effectiveness of current marketing strategies. The smaller the better, as it indicates that less money is being spent to gain and retain customers.
For its calculation, it is necessary to sum all the investments with marketing and advertising applied during the period and divided by the number of clients won.
This metric must be analyzed in conjunction with the average ticket. If the CAC is higher than your customer's average spending, it indicates that the business is operating at a loss, because it spends more on attracting the customer than it provides in revenue.
Another important use of CAC is to define the number of resources required to reach the desired number of customers to meet store goals.
Conversion rate indicates how many shop visitors actually consumed something. This is one of the online store metrics to watch closely because more important than having a lot of visitors is having a lot of these people consuming.
Therefore, the higher the conversion rate, the better your e-commerce performs. Indicates that visitors found the information they needed and felt secure enough to make the purchase.
The calculation of this metric must be done with the following formula:
(number of buyers / total number of visitors) x 100
The result will be given as a percentage of visitors who made a purchase.
If the result is low, this could indicate a number of factors, such as the store being technically flawed, lacking detailed information, difficult payment system, or a marketing campaign that is attracting non-business audiences.
This metric indicates issues with the checkout process in your online store. If your cart abandonment rate is high, it means your business has been able to attract people who are interested in your product but have not purchased it.
Therefore, it is very likely that the problem is related to this step in the process. It can point out failures or difficulty in payment, expensive or time-consuming shipping, or lack of customer trust in the store.
The calculation of the cart abandonment rate is done as follows:
(number of people including goods in cart/number of people making purchases) x 100
The result will indicate the percentage of people who abandon the cart with some merchandise in relation to the number of people who make purchases.
This is one of the online store metrics that must be constantly monitored by a competent manager because losing a sale in the final step means that the company spent to attract a non-revenue generating customer.
Thus, high dropout rates demonstrate the need for urgent action to improve completion.
ROI - Return on Investment
To know if marketing investments are generating returns for the company through profit, this is the indicated metric. Therefore, one of the metrics for the online store that should be considered indispensable by you.
The ROI calculation is done as follows:
ROI = (Revenue - Marketing Investments) / Marketing Investments
An example to better understand: One company invested $ 10,000 in marketing campaigns and earned revenue of $ 15,000. The calculation looks like this:
ROI = (15000 - 10000) / 10000
ROI = 5000/10000
ROI = 0.5
In this case, the return was 0.5, or 50%, in relation to the amount invested.
To name just a few of the most important metrics for a webshop, you may have noticed that by following them, the manager is provided with information that allows them to:
- establish short, medium and long term strategies for e-commerce;
- monitor the achievement of established strategies;
- act quickly in case of deviations;
- identify opportunities not yet explored;
- increase revenues and reduce operating costs.
- Therefore, real-time monitoring of store information allows management to follow the development of the enterprise and identify process failures that can lead to major losses if not corrected.
So from now on, be sure to select and track metrics for your online store and get the expected success. For this, know a tool that detects signals and points out errors in any digital business. Contact Testby!