5 Key E-Commerce Metrics to Track for Your Shopify Store
Zeynep Avan
If you have an online business, you know one thing for sure: achieving success in e-commerce is a long journey. Throughout this journey, its dynamics change daily, and your sales and marketing efforts must align accordingly.
When considering these two aspects, you need the right insights to keep up and improve your Shopify store’s performance.
E-commerce metrics provide these insights by measuring different aspects of your operations and performance, from customer conversion to cart abandonment.
Many e-commerce metrics can help your business grow, and we will present the 5 most important ones. Discover the top 5 e-commerce metrics.
- Conversion Rate
- Average Order Value
- Customer Lifetime Value
- Cart Abandonment Rate
- Customer Acquisition Rate
Why Is Tracking E-Commerce Metrics Important?
Rule number #1 of having an online business: optimize everything you do. Tobias Lütke, CEO of Shopify, has one saying: “E-commerce is not an industry; e-commerce is a tactic.”
When you think of this, you clearly see that a tactic needs to be improved as conditions change. This means continuously refining your strategies based on your performance indicators.
Tracking these key e-commerce performance indicators, a.k.a. e-commerce metrics, is important for the general success of your online businesses. But, looking closely, it is important for several reasons.
They provide important insights and analytics to contribute to your success. How many customers converted? How much is the average order value? How many of the customers are returning customers?
You can find answers to your questions by looking at these metrics. They help you analyze your performance, make informed decisions, improve your sales and marketing efforts, and grow meaningfully.
E-commerce metrics, in a full list, can help you:
- Get valuable data that can inform your business decisions and make strategic adjustments
- Measure the effectiveness of your marketing campaigns and website performance
- Analyze customer behaviors, customize your offerings and improve customer satisfaction
- Understand which marketing channels and campaigns are most effective
- Enhance the user experience
- Track the growth of your business
- Spot emerging trends in customer behaviour and market conditions
- Set realistic and achievable business goals
- Take proactive measures to reduce risks
- Allocate resources more effectively
Conversion Rate
Conversion rate is an important e-commerce metric that shows how well your visitors convert to perform certain actions.
It gives the percentage of visitors to your website who complete a desired action, such as making a purchase, signing up for a newsletter, or filling out a contact form.
Here, we will focus on the visitor-to-customer conversion rate, in other words, the sales conversion rate.
Conversion rate (CVR), in this context, is a metric that tells you how many users are converting on your website. It gives the number of people who make a purchase, out of the number of total visitors to your e-commerce store.
The formula for the conversion rate is:
Conversion rate (CVR) = (Number of Purchases / Number of Sessions) x 100
Importance of Conversion Rate
The conversion rate directly impacts your revenue and provides insights into the effectiveness of your sales funnel. A high conversion rate means that a larger percentage of your visitors are converting into customers, which can lead to increased sales and business growth.
How to Improve Conversion Rate
- Optimize website design for user experience
- Simplify the checkout process
- Use clear and compelling calls to action
- Provide detailed product descriptions and high-quality images
- Offer promotions and discounts
Average Order Value (AOV)
Average Order Value (AOV) measures the average amount spent each time a customer places an order on your website.
It is calculated by dividing the total revenue by the number of orders over a specific period. It looks like this:
Average Order Value (AOV) = Total Revenue / Total Number of Orders
Importance of AOV
The higher the AOV, the higher the revenue without the need to acquire new customers.
By increasing the amount each customer spends, you can improve profitability and achieve better returns on your marketing investments.
On the other hand, knowing your AOV can significantly improve your revenue predictions and sales and marketing efforts.
By understanding that your average order value per session is X, you can set more realistic revenue targets. In fact, you would also understand how many new customers you need for higher goals.
Strategies to Increase AOV
- Improve your UI/UX
- Offer product bundles and upsells
- Implement a loyalty program
- Cross-sell related products
- Provide free shipping on orders over a certain amount
Customer Lifetime Value (CLV)
Customer Lifetime Value (CLV) represents the total revenue you can expect from a single customer throughout their relationship with your business. It takes into account the customer’s purchasing frequency and the average order value.
It has a slightly more complex calculation than the others, but it is still a simple formula:
Customer Lifetime Value (CLV) = Average Purchase Value x Number of Times the Customer Shops x Average Length of the Customer Relationship (Years)
If you want to make it simpler, you can also calculate CLV by multiplying customer value by average customer lifespan.
This metric is not directly given on your Shopify analytics dashboard because it is hard to hit the accuracy of it.
However, an online business owner should look at this metric to detect recurring/repeating revenue coming from the same user and understand the average customer value.
Importance of CLV
A higher CLV indicates strong customer loyalty and profitability. It helps you understand the long-term value of your customers and guides your strategies for customer retention and engagement. Focusing on increasing CLV can lead to sustained business growth.
For instance, if you understand your customer value, it helps you decide how much you can put into acquiring new customers. Or, the other way, you can decide which products you sell have the highest profit.
Ways to Boost CLV
- Improve customer service
- Personalize the shopping experience
- Offer exclusive deals and rewards
- Create a loyalty program
- Regularly engage with customers through various channels
- Implement AI Agent acting as an shopping sales assistant
Cart Abandonment Rate
Cart abandonment rate measures the percentage of customers who add items to their cart but do not complete the purchase process. It is simply a drop-off during checkout.
It’s perfectly normal to have such customers, but still, knowing how many of your customers abandon their carts and exactly at which step they do so can help you detect problems and improve your checkout process.
This e-commerce metric is calculated by dividing the number of completed transactions by the number of shopping carts created, then subtracting from 1 and multiplying by 100 to get a percentage.
The formula looks like this:
Shopping Cart Abandonment Rate = Number of Completed Purchases / Number of Shopping Carts Created) x 100
Having a high shopping cart abandonment rate is normal, as we talked about before. Don’t get worried when you see a rate between 50% – 60%. But, if more than 90% of your customers are leaving during the checkout process, this might be signalling something important.
Understanding Cart Abandonment Rate
A high cart abandonment rate can indicate issues in the checkout process, such as complicated steps, unexpected costs, or a lack of payment options. Reducing cart abandonment can directly increase your sales and revenue.
Reducing Cart Abandonment Rate
- Simplify the checkout process
- Provide multiple payment options
- Offer guest checkout
- Send cart abandonment emails
- Send reminders for one or two weeks
- Ensure transparency in pricing (including shipping costs)
Customer Acquisition Cost (CAC)
Customer Acquisition Cost (CAC) is the total cost of acquiring a new customer. It includes all marketing and sales expenses divided by the number of new customers acquired over a specific period.
This is also a metric that cannot be simply given to you on a Shopify dashboard, so, you need to specify your budget and calculate this metric at least twice a year. Our suggestion is to calculate it for each quarter, even if your budget doesn’t change.
The formula for customer acquisition cost looks like:
Customer Acquisition Cost (CAC) = Marketing and Sales Expenses / Number of New Customers
In other words, if your marketing and sales budget is $10,000 for each month and you acquired 1000 customers, your customer acquisition cost is $10.
So if you spent $1,000 on a monthly ad campaign and brought in 100 new customers, your CAC would be $10 per customer.
The most important point in calculating CAC is to analyze it together with CLV. You might be spending $10 for each customer but your customer lifetime value shouldn’t be lower than CAC, or actually, it is better to be way higher.
Importance of CAC
Understanding CAC helps you evaluate the efficiency of your marketing and sales efforts and overall profitability. A lower CAC means you are spending less to bring in new customers, which can lead to higher margins and better financial health for your business.
Strategies to Lower CAC
- Optimize your marketing campaigns
- Improve your organic search and content marketing
- Build referral programs
- Retarget existing customers
- Improve website SEO
- Design your store the way it triggers a purchase
- Improve UI/UX
- Automate sales processes
How Can Juphy Help You Track and Improve These Metrics?
Juphy is an ‘Built for Shopify’ badged AI Agent and customer service software that supports your e-commerce business from all perspectives. By using Juphy, you can improve your Shopify store performance overall with these metrics in different ways:
Providing Real-Time Customer Support
Juphy’s AI Agent makes your store alive. When potential customers visit your website and have the intent to purchase your products, they might likely have a question. It might happen at different times of the day and you might not be providing 24/7 support.
At that point, Juphy’s AI chatbot comes into play. By responding promptly to customer inquiries and issues, you can ensure a positive shopping experience. This support helps reduce friction during the buying process, which can lead to higher conversion rates and lower cart abandonment rates.
This is essential for improving your conversion rate (CVR) and reducing your cart abandonment.
Personalizing Customer Interactions
Juphy allows you to personalize customer interactions by analyzing past customer behaviour and preferences.
Personalization can significantly boost your Average Order Value (AOV) and Customer Lifetime Value (CLV) by making customers feel valued and understood.
Customizing product recommendations and targeted marketing messages can lead to more frequent and higher-value purchases.
Analyzing Customer Conversations and Training Juphy
Juphy’s AI-powered tools analyze historical customer conversations to provide insights into common issues and customer sentiment.
This analysis helps you understand the root causes of cart abandonment and low conversion rates.
By training Juphy’s AI Agent with this data, you can continuously improve the quality of customer interactions, making them more effective and efficient.
Reducing Cart Abandonment
Do you know that you are losing 50% of your customers without an online shopping assistant that is available 24/7?
Juphy can help reduce cart abandonment by providing timely support and reminders to customers.
Automated messages and follow-ups can address any concerns or questions customers may have during the checkout process.
Additionally, Juphy’s ability to send personalized cart abandonment emails can remind customers of their pending purchases, encouraging them to complete the transaction.
Conclusion
Tracking e-commerce metrics for optimizing your business operations, enhancing customer satisfaction, and driving growth is important. By focusing on key metrics like conversion rate, AOV, CLV, cart abandonment rate, and CAC, you can make data-driven decisions that improve your Shopify store’s performance.
Key Takeaways
- Optimize everything you do in your online business.
- Track key e-commerce metrics to gain valuable insights.
- Use data to inform decisions and refine strategies.
- Continuously adapt to changing market conditions and customer behaviours.
- Use tools like Juphy to enhance customer interactions, support and sales.
*These e-commerce metrics in this list are not ranked based on importance, yet, the conversion rate can be thought of as one of the most important metrics to focus on.
