If you’re running an e-commerce business and you are looking to make money online dropshipping. Examining the metrics that your website data produces is a key component to growing and scaling your online business.
Because key e-commerce metrics can indicate issues with your sales funnel, your organic SEO or your on-site conversion, it’s vital to stay on top of them.
This isn’t a new concept, business owners have always relied on data to make decisions. The insights and reports available to us today make these decisions easier, thanks to the online platforms we use to run and market our businesses.
In digital marketing, everything is measured. Views, likes, comments, shares, clicks and more are shared and stored for your data-viewing pleasure and strategies.
But what’s important is not these numbers alone, but what you do with them. So let’s take a deep dive.
- What is a Metric?
- What’s a KPI?
- The Difference between Metrics and KPIs
- Establishing your Key E-commerce Metrics
- The Customer Funnel
- Impressions and Reach Metrics
- Engagement and Cost-per-click (CPC) Metrics
- Email Click-through-rate (CTR) and Checkout Abandonment Metrics
- Average Order Value (AOV), Sales Conversion Rates, Refund and Return Rate Metrics
- Customer Retention Rate, Customer Lifetime Value (CLV) and Repeat Customer Rate Metrics
- Using Key E-commerce Metrics
- Start Using Your Key Metrics To Make Money Online
Simply put, a metric is a numerical measurement of data.
In our case, a metric is any quantity, statistic, or data measuring numbers that are related to an e-commerce business’ performance. There’s an abundance of key e-commerce metrics (which we’ll get to) but which are most important to you will depend on your business, your goals, and your customer funnel.
Your online store, your social media, your email marketing and your Google analytics all provide you with important data that you can translate into meaningful information to help understand your business’s successes and shortcomings.
What’s a KPI?
If you’ve been exploring digital marketing topics and e-commerce best practices, chances are you’ve come across the term KPI. And you might be wondering what it means.
KPI stands for Key Performance Indicator.
Depending on the source of the data you’re interpreting and your business’s goals, different metrics will become KPIs.
KPIs take metrics and your goals into consideration to bring you the most important data and help you develop insights for your business strategies.
While both represent numerical data of your e-commerce business’s performance, KPIs should be regarded as the data that’ll guide the future of your business.
KPIs provide valuable insight that will help you make decisions for where your business is headed.
If metrics measure numbers, KPIs measure the performance of those numbers.
You probably already know your business’s goals. And chances are you’ve established your strategy for how you plan to achieve your goals. Your strategy should include 5-7 KPIs that you can use to measure your efforts, your site’s performance, and your growth as you pave the path towards your goals.
KPIs are valuable as they’re personalized to your e-commerce business’s ambitions.
There are so many different e-commerce metrics, it’s hard to know which you should prioritize. But don’t worry, we’re here to help. This isn’t a simple list of the most important metrics in ranked order, because we could never make that list.
There are too many factors that could lead to prioritizing one over another which depend on your business, your goals and your customer funnel.
Continue reading on as we’ll break down how to prioritize which metrics are key for measuring your business’s health and performance.
And as promised, here are the most common key e-commerce metrics:
- Impressions and Reach
- Engagement and Cost-per-click (CPC)
- Email click-through-rate (CTR), Cart abandonment
- Average order value (AOV), Sales conversion rates, Refund and return rate
- Customer Retention rate, Customer lifetime value (CLV), Repeat customer rate
What’s important about these metrics, is some will show you where your business is succeeding while others examine where your business might be experiencing trouble.
But how to know the difference?
Well, you’re going to want to examine these metrics within your customer funnel, as they’ll mean different things along the journey. So here’s our breakdown.
The Customer Funnel
The customer funnel is used to describe the journey your customers take, from when they first discover your business to when they become loyal customers.
Not all customers will end up becoming your business’s biggest fan, but all customers will follow the same path – they just might not make it to the bottom of the funnel.
The five phases of the customer funnel are:
Examining your key e-commerce metrics within their corresponding funnel component can help you understand your problem areas and success stories.
These are two key e-commerce metrics that occur at the top of your customer funnel. The top of the customer funnel is defined by the awareness phase, and it’s where the customer has discovered your brand.
If your impressions, reach and engagement are growing, that means you’re attracting new potential clients frequently. If they aren’t growing, this could be an area of concern where you would need to strategize how you can increase these metrics and create a stronger awareness phase within your funnel.
These metrics are important at the second level of the customer funnel, the interest phase. The consumer is now aware of your business and they’re interested. At least, interested enough to engage with the content they were exposed to or to click on a link you’ve paid to promote.
By looking at your engagement and cost-per-click metrics, you can understand if your marketing content is interesting enough to consumers.
Say your impressions and reach metrics are doing great, but your engagement and cost-per-click are suffering… your content may not be engaging enough to intrigue the potential customers that are becoming aware of your brand.
Email click-through rate (CTR) and cart abandonment are key metrics once your customer has entered the third stage, the desire phase. Customers are aware of your products or services, they’re interested, and now they want them.
So much so, that an email campaign can direct them to your website. Or, they’re adding items to your store’s online cart but not checking out.
If these metrics are growing, that’s great. That means that you’re attracting customers into the middle of your funnel. If these metrics aren’t meeting your expectations, you’re probably due to revise the desired stage of your funnel and find ways to improve it.
It’s worth noting that the Cart Abandonment metric is a tricky thing. On one hand, Cart Abandonments growing can mean more interest in your website. On the other hand, it can mean people are losing interest in purchasing your product.
You’ll have to examine this metric carefully (and against your other metrics) to truly identify its performance within your customer funnel.
The next step in the customer funnel is the action phase. Congrats, your customers are making purchases!
But, you’re not done yet!
Average Order Value, Sales Conversion Rates, and your Refund and Return Rate are all key e-commerce metrics that are indicative of customers taking the leap and purchasing your product or service, and whether they like it after purchase.
They can tell you whether the action phase within your funnel needs attention.
If your Average Order Value or Sales Conversion Rates are growing, it means your customer funnel thus far is working to convert your audiences into customers. If your Refund and Return Rate is growing, that may mean your products or service aren’t living up to your customers’ expectations.
You’ve reached the bottom of your funnel, the loyalty phase. This is where your most loyal customers live. They’ve purchased from you more than once, and they keep coming back for more.
By examining these metrics, you can understand how committed customers are to your business, your products and your brand. If all of these metrics are growing, you’ve successfully built a customer funnel.
Using metrics to measure your e-commerce business’s success is not just a great idea, it’s a necessity. Taking the data that’s generated for you and turning it into meaningful business decisions should be a top priority of yours.
But how to do so?
Well, we suggest creating a tool so that you can follow your business’s success by watching your metrics. Pick your key e-commerce metrics based on your goals and your customer funnel, and closely examine their performance.
Use a spreadsheet and update it periodically so that you can also measure their performance over time. Use your spreadsheet to address concerns within your customer funnel and find areas where you can improve your business and your marketing.
There’s a fine balance to checking your KPIs and metrics. Doing so too frequently or not often enough will prevent you from being able to see the whole picture.
Looking at top of the funnel metrics more frequently can allow you to focus on attracting new customers. If your priority is retaining customers, then focus on the bottom of the funnel metrics.
Start Using Your Key Metrics To Make Money Online
It’s never been easier to access loads of data that will provide you with deep insights that can help your e-commerce business succeed.
Carefully picking key e-commerce metrics that support your business’s strategies and goals is a great step to helping scale and grow your business.
If you haven’t started your dropshipping store yet or you need help make to sure read our Ultimate Guide to Dropshipping to help you on your dropshipping journey.