While tracking key metrics may not top everybody’s to-do list (but it should!) – it’s essential for identifying your weak spots in your e-commerce website and the areas where you can maximise your profits. It’s the first step to finding out what’s working for you and to avoid wasting resources on activities which yield little return in terms of revenue. But what exactly should you be keeping an eye on?

In this post we’ll take a look at the e-commerce metrics you need to be tracking to make more informed decisions regarding your online business.

1. Checkout conversion rate

A vital metric for tracking how your e-commerce is performing is through your conversion rate.

A conversion rate is whenever a website visitor completes an action you want them to take. In this case the preferred action you want them to take is buying from your online shop.

Conversion Rate = Purchases / Website Visitors

Essentially you’re looking at the percentage of visitors to your online shop who end up buying something – and this tells you whether you’ve got products people are willing to buy.

Another neat trick which will help get deeper insights is through identifying which cohorts convert the best, i.e. looking at demographics, channels and time of purchases.



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2. Repeat purchasing rate

Conversion rate alone doesn’t give you the complete picture. You may have a lot of one-time shoppers who never come back – or have a group of loyal customers who frequently come back to buy from you.

Looking at your repeat purchasing rate will help you determine if you should be investing more, or less on marketing activities such as retention or acquisition. If you notice the number of customers remaining stable but your orders are increasing, then you’ve most likely got a base of loyal customers on your hands, but could invest more in attracting new customers.

According to RJMetrics, the best online stores get more than 50% of their revenue from returning customers. To calculate your repeat purchasing rate, take the number of total new customers in a given period (e.g. June 2015) divided by the number of customers who returned to make a second purchase within 90 days.

3. Average shopping cart value

Besides knowing how many people bought from you and how frequently – you’ll also want to know how much they spent on your e-commerce website.

The average shopping cart size is essentially the total value of goods people purchase in one session. When you again use cohorts in your analysis, you may find one campaign made people spend more and another one made them spend less.

Average Shopping Cart Value = Total Revenue / Number of Orders Taken

However, while a large average shopping cart value sounds great – you’ll want to compare the total revenue to the amount of money spent on acquiring that figure to get your profit.

This will help you identify your most profitable campaigns and give you a good indication of where to invest your money in.

4. Abandonment rate

Your abandonment rate is simply the opposite of conversion rate and represents the percentage of people dropping off from your checkout process.

A checkout process has several steps before customers finally hit the “buy” button. What’s important here is to analyse each step of your checkout process to see where people are abandoning your online shop. Doing so will help you spot areas you can further optimise.

5. Cost of customer acquisition

Ideally the less money spent on acquiring new customers the better! Knowing exactly how much you’re paying to attract customers comes in determining whether you’re on the road to building a profitable business.

Customer Acquisition Cost = Marketing and Sales Expenditure / Number of Customers

By knowing your customer acquisition costs you’ll be able to make a better educated decision when planning your marketing activities when you have your revenue per customer metric at hand.

6. Revenue per customer

Just like the name implies, this metric measures how much revenue you’re receiving from your customers.

Revenue per Customer = Revenue / Number of Customers

After you know how much revenue you’re generating, you’ll want to look into ways to increasing your conversion rate and average shopping cart value, and identify areas to decrease your abandonment rate.

For more information on increasing conversions, check out: 6 Ways To Improve Your Checkout Conversion Rate

7. Cost of keywords and search terms

A search engine is your future customer’s best friend when looking for products, with 30.5% of all traffic coming from organic searches on Google, Bing, Yahoo, and other search engines. If you’re going along the paid route of attracting more traffic through search engines – you’ll want to identify the costs of your top keywords and search terms.

Ideally you should focus on the least expensive keywords generating the most revenue and decreasing/pausing the campaigns which have expensive keywords and low return on investment. On top of that, you could focus on improving the organic ranking of your most expensive keywords.

8. Recommendation purchasing rate

A simple way to increase your average shopping cart value is by using a recommendation engine to drive additional purchases.

Integrating a recommendation engine into your e-commerce website is easy with a third-party provider such as Nosto.

However, remember to keep a close eye out on how many purchases are made through recommendations and the revenue you gain from it.

9. Email click-through rates

Yes, email still works and according to a study by Custora, email marketing accounts for more than 7% of all e-commerce user acquisitions – making it the second most effective channel behind search.

To evaluate the effectiveness of your email marketing you’ll want to be able to track the amount of people clicking through to your e-commerce website and number of customers you’re attracting through that channel.

Also, don’t forget, your unsubscribe rate as an indicator for whether you are sending out relevant emails.

Collecting and analysing your metrics should become a habit, only then you’ll be able to get a good representation of how your e-commerce website is performing, and spot areas for improvement.



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