Big companies like Google, Facebook, Walmart, Amazon, Apple, etc. test and optimize everything. They’re obsessed with data, metrics, and KPIs (key performance indicators). They take action based on results for every aspect of their business. This holds true for marketing and sales initiatives. They look at various metrics and data to incrementally improve results on their road to domination… and you can too!

Metrics and KPIs for eCommerce Stores

We’ve all heard of KPIs. And we intrinsically know the purpose of KPIs, and that they’re useful for measuring progress (or the lack thereof). 

Of course, KPIs are worthless without benchmarks… and without measurable data, there are no valuable metrics on which to base our benchmarks. So before we get into the metrics and KPIs most valuable to eCommerce stores, let’s just assume that you have an analytics system in place to properly measure/track your data.



If you already have an online store, and are running or looking to run paid traffic to it, but aren’t sure if you have the proper tracking in place, read my last post here →



So with analytics systems in place, how do we actually set the target KPI(s) for our online store or advertising efforts? Especially when KPIs aren’t exactly standard from one company to the next.

True – KPIs are dependent on a company’s initiatives, campaign/project goals, market penetration/saturation, stage of business (start-up vs growth vs scale), industry, COGS, etc.  And while one company may deem a certain KPI as more valuable than another, another may not. Just as a specific KPI’s value itself may be good for one org, but not for another.

However – While all this is true, when it comes to eCommerce metrics there are certainly data points and metrics that give you valuable insight into the best next actions to take to improve your bottom-line and overall Return on Ad Spend (ROAS).

But before we can cover what actionable insights you can glean from these metrics, we need to cover what some of the most important metrics are.

For Your Online Store…

*Numbers below are industry averages

Cart Abandonment Rate – this is the percentage of your store visitors that add something to the shopping cart and then abandon it before completing the purchase

= 68.6% (industry average) – (# of completed purchases) / (# of shopping carts created) * 100

Add to Cart Rate – the number of site visitors that add something to their cart

= 5-7% (industry average)

Conversion Rate – this is the number of site visitors that convert into buyers

= 2-3% (industry average) – (# of sales) / (# of users) * 100

Avg. Order Value – this is specific to your offerings and what people are buying (no industry average), but is the average amount spent when visiting your store (you can calculate this for new customers, returning customers, or avg. across all customers)

= (Total Revenue) / (# of Orders Placed)

Customer Lifetime Value – this is specific to your offerings and what people are buying (no industry average), and there are a couple different formulas to calculate CLV and depends on the complexity of your business. But you’re basically calculating how much an average customer is worth to you over the lifetime of the customer (here’s an article explaining the calculations →

* to get more specific CLV you should calculate:

Repeat purchase rate (retention rate)this is the percentage of returning customers to your store (this can be calculated for a specific period as well, e.g., 1 yr)

= (# of returning Customers) / (Total Customers)

Purchase frequency – number of times a customer purchases from your store over a period of time (e.g, 12 months)

Order gap analysis – the average time that lapses between purchases

= 365 / (purchase frequency)

Customer Acquisition Cost (CAC) – this is the cost of acquiring a new customer (this can be segmented by location (e.g,. USA, CAN, etc., or even by state), by channel (FB, Google, referrals, etc), by product line, etc)

= (Total Sales and Marketing Expenses) / (# of Customers Acquired

Average Profit Margin – this is the profit from each product after deducting the cost of supplying it, e.g., Cost of Goods Sold (COGS), Administration, Shipping, etc

Net profit margin = (net income) / (net sales)

Paid Traffic (e.g, FB ads, Google Ads, etc)…

*Numbers below are specific to Facebook Ads

Cost Per Click (CPC) – the price you pay for each click on a paid ad

= $1 CPM (avg for eComm campaigns on 

FB) – this is the average cost per 1000 impressions, and is a metric used to gauge the cost-effectiveness of an ad campaign

= $10 (avg for eComm campaigns on FB) – (total amount spent on ad campaign) / (# of impressions) * 1000

Click-thru-Rate (CTR) – this is the number of clicks that your ad receives divided by the number of times your ad was shown (# of impressions)

Good CTR for FB eComm Ads = 1% (cold), 4% (Retargeting)Avg Cost per Acquisition) CPA – like above CAC, this measures the cost to acquire a customer with paid ads
-on $100 product – $20-$30
-on $500 product – $80-$100

Return on Ad Spend (ROAS) – this is basically your advertising ROI (the return you generated on money you spent on advertising), and should be calculated by advertising channel

= (total website store revenue) / (total cost of ad spend)

Of course there are other metrics that are valuable to your online efforts as well; but depends on the types of marketing you’re doing, and the channels you using. For example, if you’re doing email marketing (and you should), then you’d be concerned with email open rates, opt-in rates, purchases generated from emails, etc.

*Also –  order gap analysis is useful here, as it’d help guide the timing of your automation sequence.

Or alternatively, looking at audience metrics of paid advertising such as gender, age, demographics (e.g., married, single, college student, etc), delivery metrics (e.g., time of day most actions taken) would provide valuable insight into better targeting and optimization options for ads.

Using Metrics to Set Benchmarks

Once we’ve identified the metrics we should be tracking and paying attention, the next step is to set up benchmarks to measure our progress and growth. This starts with understanding where you currently are (i.e., what your current metrics are). This is important, because benchmarks should be goals based on time. Meaning – there should be a timeline to them (e.g., quarterly, yearly, etc).

For instance, let’s say your online store’s CVR is currently at 0.48%, then setting a benchmark for 3% might be a bit optimistic. Sure – that might be the overall goal, but if your benchmark schedule is quarterly, then increasing CVR rates by almost 2.5% in the first quarter might be too big a jump.

Also – it’s important to understand that certain metrics are more meaningful and relevant than others at the various stages of your pipeline. Since the intent of your customer isn’t the same at the across the entire customer buying cycle (e.g, Awareness vs Consideration vs Conversion vs Retention vs Advocacy), some metrics are more meaningful at certain points versus others (as is the type of marketing campaign you choose).

For example –  if you’re looking to generate traffic to a new store or online effort, then you’ll likely focus on Awareness type campaigns. For these types of campaigns, metrics like Reach, CPM, etc might be more important. However, if you’re looking at running a retargeting campaign to people who viewed an ad, or read a blog post, then you’re likely looking to run a Conversion style campaign. And you’ll be more focused on CPC, CTR, and CVR.

Here’s a simplistic breakdown of the stages and some metrics that might be of value:

1. Awareness (Product Discovery) Stage – Your goal here is to generate awareness of your brand, store, or products.

Important metrics: Reach, Impressions, traffic, CPM, etc.

2. Consideration Stage – Your goal here it to convince people to engage with your brand (some might buy here, but your goal isn’t the sale, it’s engagement).

Important metrics: Social Media Likes/Shares, Inbound traffic, email (bounce rate, open rate, email CTR, email CVR), etc

3. Conversion (Purchase) – You goal here is to actually get people to purchase, and in an optimal funnel you’re retargeting people that have already engaged with something you’ve posted, an ad they’ve seen, or shown some interest in your brand in some way.

Important metrics: Revenue, CVR, CTR, CPC, AOV, (all these can be calculated by Channel, by product category, etc,) Cart Abandonment Rate, CPA, etc.

4. Retention – Here you interested in repeat business. Getting existing customers to buy again is always cheaper than getting a new customer to make an initial purchase.

Important metrics: LTV, Churn Rate, Purchase Frequency, Order Gap Analysis, etc.

5. Advocacy – Your goal here is to measure your referral efforts. We all know that referrals can be a great low-cost method of acquiring new customers, while also generating much higher conversion rates than cold traffic. Social Proof goes a long way.

Important Metrics: Reviews, Shares, Affiliate sales, Net Promoter Score, etc

Setting up your KPIs based on Customer Lifecycle Stages is extremely useful allowing you to focus only on the relevant metrics for specific initiatives. It also enables you to craft a streamlined pipeline, and measure the success of your marketing/sales initiatives at the various stages. Ultimately, giving you a better plan of action to improve results, and scale effectively.

Insights that we glean from metrics

Obviously, some metrics are easier to set benchmarks for than others. For example, if there’s an industry average associated with them (e.,g online store CVR), it’s easier to know where we stand, and what our goals aught to be. However, some are internally specific (to your company). Nonetheless, all metrics provide data that allows us to measure our progress, as well as provide a measurement of progress over time.

Let’s go over some actionable insights you can glean from focusing on some of these metrics.

Conversion Rates – Clearly by improving the CVR of the website leads to more customers. Also, with a good CVR, you can have confidence in paying to send traffic to your store. So if your CVR is below industry average, or you’re simply looking to improve it, here are some things you can do:

1. Use high-quality images Using larger, higher-quality images has been shown to improve sales.

2. Add trust badges Your visitors want to know that your site is safe, secure, and legitimate before they enter their payment information. Adding trust badges (e.g. SSL certificates, BBB Accreditation, PayPal Verified, Secured by ___, Google Trusted Store, etc.) helps to alleviate much of the concern revolving trust. Shows you’re not trying to scam the visitor.

3. Add Customer Reviews Customer submitted reviews adds another level of trust. By providing social proof from peers, you provide visitors affirmation that what they’re looking at online is what they’ll receive.

4. Live Chat Adding live chat has been proven to improve conversions. Not only can it improve overall CVR, but it can also improve AOV.

Customer Acquisition Costs – Often times the cost to acquire customers turns out to be higher than expected, and when this happens, it exceeds your company’s ability to monetize those customers; ultimately, leading to failure. However, there are things you can do to lower your CAC:

1. Use a combination of paid and ‘free’ marketing channels We all like paid marketing, as the time-frame to generate sales is often 

Improve Conversion Rates – Again, by focusing on your CVR and increasing the amount of traffic that converts to purchases, improves your paid traffic results as well.shorter. However, if the cost to acquire customers is too high, or you don’t have much of an advertising budget, there are ways to drive traffic to your store using ‘free’ channels. For example, social media posting, content marketing, messaging campaigns, online communities (e.g, Quora or Reddit), PR.

Improve shopping experience – When you invest in your customers and improve your overall shopping experience (e.g., excellent customer service, better quality products, faster shipping times, etc), you increase the likelihood of repeat purchases, as well as improve customer reviews. This helps to lower CAC.3. Referrals and Affiliate marketing Getting others to refer your brand/products cuts costs. On top of that, a referral usually converts at a higher rate than cold traffic. Besides, referral traffic is often times free. Affiliate marketing might cost you some, but the cost could be lower than your other paid efforts.

Average Order Value – Outside of increasing the number of customers and repeat purchases, the other main method of growing your company is to increase the average order value of purchases. The more a customer purchases in a single order, the more profit you’ll make. Some ways to increase AOV:

1. Upsell Upselling customers is nothing more than encouraging customers to spend more than they had originally planned. This could be accomplished with better copy, or by offering a product/service that comes with more features.

2. Cross-sell You could offer products that are complementary to what they are buying.

3. Bundle You can offer packages of products, or bundle different items together to offer a more ‘complete’ set. So rather than buying a single item, and leaving before looking at other items in your store, they see the bundle and intrinsically view more value; ultimately increasing AOV.

4. Offer Free Shipping for higher purchase Offering free shipping for hitting a certain threshold can entice people to add more items to their cart so that qualify for free shipping.

5. Incentivize with something free If you have a more expensive product, you can incentivize customers to purchase that item by offering something free as bonus.

Customer Lifetime Value – By focusing on LTV, you can figure out how much you can spend to acquire and retain a customer. Increasing the LTV is always a goal, and to do so, focus on:

1. AOV As mentioned before, increasing AOV will inevitably increase the value of your customers.

2. Focus on relationships If you focus on building relationships with your customers, you can increase the number of times they come back to your store, and the number of times they make repeat purchases. Building loyalty is key here. The more your customers love you, the more they buy, and the more they tell others about your brand.

3. Reward loyalty – Going along with relationship building, creating loyalty programs helps increase LTV. These programs help to encourage customers to come back to redeem rewards, gifts, or discounts.

4. Email marketing Sending newsletters and email sequences to your customer base is cheap way to nurture more sales. It also allows you to communicate with your customers regularly to inform them of upcoming sales, product releases, etc. If also opens up a feedback loop; allowing your improve areas of your business that might be pain points for your customers.

Shopping Cart Abandonment Rate It’s a given, many prospective customers will add things to their shopping carts, and bounce before they actually complete the purchase. There are many reasons a customer might not finish the purchase, but by focusing on lowering this rate, you can improve your revenue. To reduce this, focus on:

1. A Clean checkout page – Simple and clean checkout pages tend to convert better. By reducing the distraction of the checkout page or reducing the number of steps need to complete the process, you can expedite the checkout experience and allow for a smoother purchase.

2. Educate with “steps” Often times your can’t help but have multiple steps to the checkout process. You need shipping info, payment, info, and a review/submit step. Outlining the steps (e.,g 1 of 3), or highlighting with graphics, can ease the tension people having when buying.

3. Remarket Whether with email marketing, or an Ad that people see letting them know that they left something in their cart is a low-spend method of getting people to come back to complete the purchase. For example, with Facebook Ads you can create an ad that shows the products that added to their cart (tailored to that specific buyer). Also, you can send cart abandonment emails if you have their email address.

Key Takeaway

The best eCommerce businesses have KPIs they are constantly tracking to measure their progress against. More importantly, they’re taking actions based off data.

Tracking all the above metrics and updating them regularly in spreadsheet or using KPI dashboard software  is vital to the success of your business. Using this data in regular strategic team meetings allows your to make decisions based on data, and provides insight into which areas require more attention.[/vc_column_text][/vc_column][/vc_row]

Justin Sharpe

Justin Sharpe

I help eCommerce Brands and Online Coaches scale profits (4-10x return) with Facebook, Google, and LinkedIn Marketing, Ads, & Website Conversion Rate Optimization! Connect with me on LinkedIn ->

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