It is widely said that ” What you cannot measure, you cannot manage”. This saying holds when measuring the performance of your e-commerce business. 

Measuring the data can help you strategize better, identify strengths, address weaknesses, and adapt to the dynamic market needs. In this blog, we will discuss the four key metrics to measure your e-commerce business performance.

Metric Number 1- Conversion Rates

Conversion rates help in evaluating the performance of the website, marketing campaigns, and conversions. 

Conversion Rate=Conversions/Total number of visitors* 100

A good conversion rate means that e-commerce businesses are spending less on marketing efforts and earning more from customers. A good conversion rate falls between 2% to 5%. The conversion rate is directly proportional to the business ROI. 

A/B Testing improves the conversion rates. A/B Testing will help you to

• Analyze where you are losing customers
• List of potential changes in the website
• Analyze the results

You can also improve the conversion rates by integrating clear and compelling CTA buttons and improving the user experience. Social Media provides a great platform to boost your e-commerce sales. 

Metric Number 2-Customer Acquisition Cost (CAC)

Customer Acquisition Cost (CAC) is the second most important metric to track your e-commerce business performance. CAC helps you to determine the money you are spending to acquire a customer. 

Customer Acquisition Cost= Marketing expense/ number of new customers

Customer Acquisition Cost is important for e-commerce businesses as it helps in improving return on investments and in enhancing profitability and profitability margins. To lower your e-commerce business CAC, you must-

• Optimize your website and landing page experience
• Have a clear path to conversion
• Align your ads accordingly
• Set a baseline
• Check your placement and geo targeting settings
• Write great content

Metric Number 3- Average Order Value (AOV)

Average Order Value (AOV) measures what a customer spends on a single transaction at a specific point in time. A higher Average Order Value (AOV) is equal to higher sales & revenue, faster profitability, greater ROI, and increased customer lifetime value.

You can increase your e-commerce business’s Average Order Value (AOV) by:-

• Use appealing designs for product pages
• Highlight trending products
• Offer social proof
• Personalize shopping experience
• Create a loyalty program
• Offer reliable customer support

Metric Number 4- Customer Lifetime Value (CLV)

Customer Lifetime Value (CLV) represents the total value a customer will generate over the entire relationship with the brand. It helps you to assess the value of the customer. 

But why is Customer Lifetime Value (CLV) important for your e-commerce business? Customer Lifetime Value (CLV) helps you to save money, spot and stop attribution, and find the best customers & replicate them.

Ways to improve the Customer Lifetime Value (CLV) are-

• Investing in customer experience
• Ensuring a seamless onboarding
• Starting a loyalty program
• Recognizing and rewarding loyal customers
• Providing omnichannel support

Conclusion

By using the metrics discussed above, you can track the performance of your e-commerce business performance. Ultimately, e-commerce businesses have to understand the customer experience and measure and improve the feedback at every touchpoint. 

Constant improvement and social listening will help you sail through the dynamic customer preferences and digital landscape.

Jaykishan Motwani

Mehul is a content writer with the heart of a nomad. He is currently working with Digital Daisy and he is passionate about Quantum Physics, Tarantino’s dialogues, and Delhi’s street food. His weekends are well spent with his Golden Retriever recharging him with cuddles and walks.

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