Ecommerce success doesn’t happen by accident. Building sustainable long-term profits requires a commitment to ongoing planning. But how do you ensure that even the best laid plans are achieving the results you need?
It all comes down to consistent measurement. Measure ecommerce success across a range of metrics to reveal where your ecommerce business is succeeding — and where there’s room for improvement.
Get started with these four key metrics…
#1. Net profit
It sounds obvious, but it’s essential to keep a close eye on your net profit consistently throughout the year. Net profit is essentially what’s left over when you subtract your expenses from your revenue — that is, what’s in your pocket at the end of the day.
It’s important to remember that an increase in sales doesn’t necessarily guarantee the same increase in net profit. Downswings in net profit can alert you to mounting expenses or other financial pressures that might be tightening your profit margin.
#2. Conversion rate
Okay, so you’ve invested in a shiny new website, have sorted out your search engine optimisation (SEO), and you’re attracting a good flow of traffic to your website. This is all great news, but it’s really only half the battle. You also need to think about what people are doing when they get to your website.
Your conversion rate tells you what portion of visitors to your website actually become customers. Any dips in you conversion rate may signal that the user experience on your website needs some work, or that there may be other barriers to sale holding your ecommerce business back. Excessively high prices, substandard product descriptions and slow page load times are all common barriers to sale.
#3. Cart abandonment
Cart abandonment occurs when someone has arrived at your website, placed an item in their shopping cart, then left before finalising the sale. This is an important metric and any sustained increases in your cart abandonment rate may tip you off to an issue in your checkout pipeline.
Expensive shipping rates and long delivery timelines are also common factors that may drive up your cart abandonment rate. Be sure to shop around to ensure you’re giving your customers the best available shipping rate and delivery timeline. And if your cart abandonment rate remains high, you might want to consider looking into a remarketing campaign to win those abandoned carts back.
#4. Average value per transaction
You’ve no doubt put time, money and effort into attracting people to your website, optimising the user experience and removing barriers to sale. So it follows that you’ll want to see the best possible return on that investment.
To achieve that, you want each customer spending as much as possible per transaction. Measuring your average value per transaction will provide a good baseline you can use to monitor the success of any cross- or up-sell campaigns, or other promotions that are designed to boost the average value per transaction.
Using these four key metrics to consistently measure ecommerce success will ensure you’re on the right track to achieving sustainable long-term results. And it will act as an early warning system that will help you identify and address minor issues before they turn into major problems.