3 eCommerce Metrics every online business should be monitoring

3 eCommerce Metrics every online business should be monitoring


We will study 3 eCommerce metrics every online store must measure to increase sales and profits. Ofcourse defining the objective of the business may be important. For example if you are a funded startup you may be willing to concentrate on traffic over other metrics. Some metrics drive others, so understanding which metrics to measure will be important.

There are many eCommerce metrics defined for the online business world, some for example Pete Williams’ 7-levers of business give a numerical method to grow your business. In this article we will look at what we think are the top 3 metrics every ecommerce business needs to monitor to make a successful profitable business online.

eCommerce vendors also need to understand the sales funnel and which metric is more meaningful in what part of the funnel.

eCommerce Metric 1 : Traffic

eCommerce vendors spend a lot of time figuring out what will drive traffic. Traffic is a metric that represents the bottom end of the funnel. While it follows that larger traffic will lead to more sales, optimizing higher ends of the funnel is more critical than the lower end.

The problems of concentrating on increasing the lower end of the funnel – traffic.

  1. Ads are expensive and continue to drive up costs of customer acquisition.
  2. Some traffic sources will drive traffic and conversions but not long term retention – flash sales sites or coupon sites for example.
  3. If you depend on growing traffic for increasing your business, your growth will be constrained by the count of new customers you acquire.

When measuring this metric, ensure you measure a secondary parameter with this – conversion. This will give you attribution for each source.

eCommerce Metric 2 : Lifetime value of a customer

Repeat customer is the key requirement in any business that wants to grow. It represents a metric in the very high end of the sales funnel. A 10% increase in average lifetime value of your customer will increase profitability by upto 30-50%, depending on your cost of customer acquisition as a % of your profits.

In order to improve this metric, you can consider some of the following strategies

  1. Customer profiling and personalization. In an earlier article we had shown that customers buy from you based on a 80/20 power curve – the top 20% customers give you the most returns. If you improve the experience of these customers, the average lifetime value of your customers will grow.
  2. Using remarketing on google or facebook. But ensure you retarget with products that will drive them to the site – for example, do not show products to customers who have already purchased. Refer this list from google.
  3. Send the customer back to the shopping after checkout! Using the success page or the order confirmation email, drive the customer back to the store to purchase more. This strategy may include coupon codes that are customer specific and time bound. Amazon does this very well. Their success page is almost bottomless.


eCommerce Metric 3 : Value of a cart or a checkout.

Having spent the money to acquire a customer it is very important to help the customer buy more from the store on the visit. This metric is also a top of the funnel metric and an increase in 10% in the average value of the cart can increase your profits by 20-50% depending on your cost of customer acquisition. Some of the strategies to improve this metric

  1. Up sell. 80/20 tells us that 20% of the people visiting your site would be interested in a meaningful upsell. The keyword here is meaningful though. If the product you sell can be sold in a bigger size for a higher price, that is a natural upsell. However, other upsells may include bundles.
  2. A high quality suggestion based on the buyers known interests is key here. With today’s technology it is not very difficult to give a custom featured products list. Zullily (www.zullily.com) is possibly the best example.

In this article article we talked about 3 eCommerce metrics every online store should have.

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