Ecommerce Metrics and KPIs You Should Measure (And Why They’re Important)

Metrics. Everyone wants them, and everyone needs them. Whether you're a high school math teacher, an NFL scout or a digital marketer, metrics are how we all observe performance and make decisions.

In comparison to other marketing channels, digital marketing offers far more visibility to behaviors and actions. You can't tell exactly how many people see your billboard along the road, but you can see the number of people coming to your website. 

You may not know precisely how many people came to your restaurant after seeing an ad in the community newspaper, but you do know how many people came to your site by clicking on a banner ad.

This visibility into your digital comings and goings has long been an industry unto itself, practically from the beginning of digital marketing itself. Measurements and terms such as Google Analytics, visitors, pages per visit, bounce rate, time on site, and conversion rate are increasingly common.

In fact, according to a study by Statista, the following are the primary metrics used by retailers to measure personalization initiatives and their success: 

However, those metrics don't always sing an ecommerce song, which has led to the development of further insightful, actionable, ecommerce-focused metrics. 

Before we get to the key metrics that can improve your store's performance, it is crucial to understand what metrics are and what you should be looking for.

A metric is any quantifiable, consistently defined measurement of website performance. 

Examples of relevant ecommerce metrics range from ecommerce conversion rate to average order value (AV0), from cart abandonment rate to traffic sources. 

The list of ecommerce metrics is long and for good reason. Google Analytics, social media, your online store, product pages, homepages, checkout and shopping carts — all of these are rich data sources that capture quantifiable data, ripe for your interpretation and trend measurement over time.

KPI stands for key performance indicator. While all metrics have their value, a KPI is especially important to keep track of as these are the numbers you track for growth.

For example, while site visits may be necessary, the orders themselves could be your KPI. Typically, a handful of critically essential numbers is how you’re being evaluated. These are your KPIs.

What’s the difference between a metric and a KPI, especially since they’re often interchanged? 

Let’s start with the fact that metrics measure processes, while KPIs measure the performance of those processes. Said differently, key performance indicators are subjective, specific targets you want your store to achieve.

For example, the average order value is a metric but not a KPI. On the other hand, an AOV target of $40 is a KPI. If we were to apply these examples to the sports world, points-per-game would be a metric, and 30 PPG would be a KPI.

It is helpful to create an index summarizing your performance across selected ecommerce marketing channels.

For example, if you are an owner of an ecommerce site, you might select four metrics from below and determine the KPIs for each of those metrics. If two of those metrics are performing at 90% of your KPI goal, and the other two metrics are performing at 100% of your KPI goal, your index would be .95.

This could be further enhanced by weighting your metrics — perhaps one of the four is more important? We’d recommend not doing that, at least not to start.

Depending on your size, your teams or team members can manage the specifics of the activities that comprise your metrics, but this index can be a helpful way to measure your performance at an enterprise level.

As we move into our list of recommended ecommerce metrics, you might be wondering how often you should check your metrics? 

The answer is the same as when asked, “How much does a red car cost?” 

That answer is: “It depends.”

Some metrics should be checked on a weekly basis to ensure that the state of your business is healthy. Examples might include website traffic, social media engagement and impressions.

Zooming out from your weekly metrics, bi-weekly metrics are those best suited for larger sample sizes, less influenced by any variations that may occur within a given week.

These bi-weekly metrics might include AOV, cost per acquisition (CPA) and shopping cart abandonment.

Monthly metrics require a longer data window due to traffic patterns or, more likely, your own marketing patterns. These monthly metrics might include email open rate, multichannel engagement, reach and add-to-cart abandonment, as well as other micro-conversions.

Quarterly metrics are the most strategic, at least as defined by these time periods.

If your weekly and bi-weekly metrics have proven that your business is healthy and surviving, these quarterly metrics will be the long-tail activities that demonstrate that your business is flourishing and growing. These might include email click-through, customer lifetime value and subscription rate.

We’re going to shape this dialogue in a way that the highest performing ecommerce businesses tend to think about their store’s performance — the ecommerce funnel, shown in the diagram above.

Each step of this funnel has different metrics that are more relevant. Contrary to popular opinion, none of these stages is inherently more important than any other. Their relative importance is defined by your personal preference, enterprise strategies and where you are in your enterprise lifecycle — since, for example, creating advocacy is inherently difficult in the early stages of your business.

The following are likely to be the most important metrics for you to run a successful ecommerce store:

• Impressions.
• Reach.
• Engagement.
• Email click-through-rate.
• Cost per acquisition (CPA).
• Organic acquisition traffic.
• Social media engagement.
• Abandonment.
• Micro to macro conversion rates.
• Average order value (AOV).
• Sales conversion rates.
• Customer Retention rate.
• Customer lifetime value (CLV).
• Repeat customer rate.
• Refund and return rate.
• Ecommerce churn rate.
• Net promoter score (NPS).
• Subscription rate.
• Program participation rate.

It seems pretty elementary, but you can’t attract visitors to your site if you don’t create the awareness that leads to the discovery of your brand. 

These metrics will help you measure your activities that help create awareness and discovery:

Simply put, impressions are the number of times your ad or piece of content is presented to someone. Those impressions can occur via paid ads on third-party sites, search results, social platforms, etc.

It’s important to remember that an impression does not necessarily equate to a click. Your impressions will be available from any platform you’re sharing content — Google paid ads, Facebook or Instagram, as well as third-party platforms.

Impressions are one of the most controllable metrics you can have, as they’re almost entirely based on the budget you allocate to your various activities.

Put plainly, reach is the total number of your followers and subscribers — basically, the sum of all of those who will see your content. This might include your opt-in email subscribers, Facebook followers and loyalty program subscribers.

Reach is best improved by consistent campaigns — social media, email, or otherwise — to encourage subscribers, followers, etc. The better defined your brand and voice are, the more effective your campaigns will be to improve reach.

Engagement is the intersection of your impressions and your reach. Essentially: how many of your followers and subscribers (your reach) engage with your content (your impressions). 

This may include acquisition-related activities like click-through, but it may also include non-acquisition-related activities such as likes and shares.

Engagement will most benefit from continued activities to promote your brand and product. It’s important to make these efforts continuously. These efforts are much more like farming (ongoing) than hunting (one-off).

You can’t have a buyer if they don’t get to your site. Now that they’re aware of your brand, let’s define metrics that measure getting them to your site. 

There are many metrics in this phase of the funnel, so we’ll only focus on a few:

Email click-through rate is how many of your email subscribers — who’ve received the email and opened it, which are other metrics — clicked through to your site.

You can positively impact this by creating well-designed emails, including mobile-friendly design, strong calls-to-action, and good subject lines.

Do you think it’d be helpful to know how much you’re paying for acquiring first-time customers — or your customer acquisition cost (CAC)? We’ll take that as a yes, which is why it’s important to make sure that you’re not launching exorbitant campaigns that produce only a small number of customers.

As a store owner, you know you will have to invest in email campaigns, paid search campaigns, and other marketing campaigns to drive traffic and, ultimately, sales. However, if the cost of those campaigns outweighs the total revenue they’re generating, then you’re making poor use of your all-important dollars.

It’s vital to keep in mind that CPA dramatically benefits from the context of your AOV. If your CPA is $25 and your AOV is $100, that’s a good sign. On the other hand, if your AOV is $30, then a CPA of $25 doesn’t look so good.

Your CPA can be improved by segmenting your campaigns to better target customers who will best respond to your campaigns’ call-to-actions, landing pages that will help reinforce your call-to-actions and managing your campaign budgets carefully.

In the long run, you hope to attract people to your site without paying for them. It is critical to measure how many of your visitors reach the site organically, commonly available in all analytics platforms.

You can improve your organic traffic by ensuring that your on-site/technical SEO remains true to best practices — proper tagging, good response time, etc. — and that your off-page SEO performs well.

Social media metrics can provide a lot of value to your ecommerce company. These are the top social media engagement KPIs you should track regularly:

• Likes per post: “Likes” is a catch-all metric for people who have upvoted your social media posts. These will come in the form of Likes, thumbs-ups, favorites or +1’s. To calculate it, you will need to collate likes on each social media platform and divide it by the number of posts on the individual platform.
• Shares per post: “Shares” is a catch-all metric for “shares,” “retweets” and “repins.” This metric is indicative of the average number of times posts are shared over a given amount of time.
• Comments per post: “Comments” is a catch-all metric for mentions and comments to your social media posts. This metric gauges how much of a community your brand is garnering on social media.
• Clicks per post: The clicks per post metric measures link click-throughs from social media posts over a given period. To calculate this metric, collate the number of clicks from your social media posts over a specific period (typically over a month) and then divide it by the number of published social media posts over the same period.

Now that you’re lucky enough to have a visitor to your store, how can you measure your performance in converting them from a store visitor to a paying customer, adding products to their shopping cart and checking out? 

These metrics should help you do just that:

Abandonment can be measured in a few different ways, which is helpful to measure site behaviors.

Shopping cart abandonment measures how many people add something to their cart but leave your site without making a purchase. This measure is vital to see if there are hitches in the site or cart process before getting to the checkout process.

Separately, checkout abandonment is a critical metric of how many people leave your site without making a purchase, but only after they begin the checkout process. 

While similar to shopping cart abandonment, it’s important to measure them separately to see if the checkout process is the root cause of abandonments or if the problem is something else entirely.

Your abandonment rates can be improved primarily by intuitive cart management, including persistent pages, urgency messaging, saving customers' carts, etc.

This is an interesting approach to identifying activities of particular importance for measurement. Micro and macro conversions are small (micro) activities that lead to larger (macro) activities.

These are similar to the abandonment rates but can give you an opportunity to measure activities you consider essential to your funnel, such as the number of visitors who click on a product detail page or the number of visitors who opt-in as an email subscriber.

Your average order value (AOV) is the average price your customers are paying for the items in their cart when they check out. It can, and should, be measured over time to determine how it evolves. It’s an important measurement to know as it relates to measurements of marketing effectiveness.

Your AOV can be increased by selling add-ons, loyalty programs or other, more fundamental business model questions like pricing, product quality etc.

Sales conversion rates are the total number of orders/sales divided by the total amount of sessions to your store.

Understanding this number is critical to determining how much traffic is required to generate your target sales.

That said, just like your sales data, you need to understand conversion rates more granularly.

Here are key ways to dissect your conversion rate metric:

• Set conversion rate by channel: e.g., AdWords, SEO, Facebook, etc.
• Set conversion rate by category of products: Some categories may have higher conversions than others.
• Set conversion rate by campaign: As an example, working with affiliates or influencers.
• Aim to optimize your sales conversion rates in your campaigns: If you have a channel or category performing well, consider putting more behind it. If something is underperforming, maybe there’s a fix that would boost the rates, or perhaps the campaign should be terminated — sometimes it’s best to cut your losses. Conversion Rate Optimization (CRO) can maximize growth for a campaign

Depending on the source, acquiring a new customer is anywhere from five to twenty-five times more expensive than retaining an existing one. This data strongly indicates the value in retaining those customers you’ve converted.

Note that each of these retention-focused metrics will benefit from a common theme — good customer service, loyalty programs, repeat purchase campaigns and a true investment in customer satisfaction.

Customer retention rate is best defined as the percentage of customers you maintain as customers over a period of time. The higher this number, the better you’re doing in servicing your customers. 

When calculating this, it’s important to remember to subtract your new customers from the customer count. Those new customers are essential, but this metric focuses on how well you’re retaining existing customers.

Customer lifetime value (CLV) is the total revenue an ecommerce business earns from an individual customer over time and takes into account every one of their orders. It is an excellent metric to size up your average customer satisfaction, loyalty and a brand's viability. 

The CLV metric provides a picture of the business's long-term financial viability. High CLV indicates product-market fit, brand loyalty and recurring revenue from returning customers. It is recommended that ecommerce businesses monitor and optimize customer lifetime value if they are looking for steady growth.

Repeat customer rate is easy to measure and critical to do so. You want to know what percentage of your customers have made multiple purchases. 

This is another way to measure how well you’re servicing your customers because if you’re servicing them well, they’ll be back.

Refund and return rates can be a plague for ecommerce websites. Even high revenue online stores can ultimately be done in by high refunds and returns. Depending on your industry, returns might be widespread and already baked into your financial models, or alternatively, they may be infrequent.

Returns can also be a powerful driver to entice potential customers to hit 'buy now.' If a customer knows your store offers free returns or exchanges, it can alleviate worries about buyer's remorse. Use returns and refunds as fuel to drive your business, not burn you.

Tracking these metrics is vital to the health of your store. Is your refund rate spiking on a specific section of your store? It might be time to investigate where that's coming from.

Churn rate is a metric to track the turnover of your customers. It measures the number of users lost over a given period. 

Depending on your industry and sales approach, you may have a long investment time into each user experience. Whatever your churn rate is, it’s essential to measure and work on strategies to delight your customers when they’re around. It’s always easier to resell to a current customer than to gain a new one.

This part of the sales funnel is inarguably the most overlooked, which is unfortunate.

These customers are your goldmine, so you better treat them as such.

These metrics will help you measure the efforts you take to show them you care.

A net promoter score (NPS) is defined by how likely your customers would be to refer you to others. Based on their numeric answer, customers fall into one of three categories 

1. Detractors.
2. Passives.
3. Promoters. 

The more promoters you have, the better your score will be. It’s important to note that different industries have different scales of good and bad NPS scores. Your NPS will benefit from the combination of everything in your business, from your product quality to your customer service quality, from the customer experience you provide to the quality of the employment experience you offer your employees. NPS measures everything and is an incredibly valuable tool.

As email marketing remains high-value, knowing what percentage of your visitors have opted-in for your email lists is essential. This signals that your customers want to hear from you — which is a great sign. 

By ensuring a good email communication experience (know your brand, be consistent in messaging, don’t “spam” your list with endless or unnecessary messages), an easy subscription experience, and strong calls-to-action, you can improve your subscription rates. 

On the flip side, the unsubscribe rate is as important as new subscriptions. If you’re seeing vast swaths of users fleeing from your emails, it might be time to reconsider your approach.

Unsubscribes will always be around, but it’s important to minimize it, aiming for less than 0.5% — and less than .25% is excellent.

As ecommerce technologies and practices have matured, more and more merchants have turned to advocacy programs like loyalty programs or review platforms. There are numerous solutions in both realms, but let’s use loyalty programs as an example, which may be more pertinent to you if you are a more brand-intensive merchant.

If you have a customer loyalty program, what percentage of your total customers are members of it? The higher that percentage, the greater your ability to treat them with care, make them feel special and improve many other metrics we’ve discussed — such as CLV, repeat customers, etc.

Your program participation rate can improve by first starting one. Beyond that, do so in a way with actual benefits to inclusion. It is critical to realize that foregoing some margin in exchange for treating these customers well will pay off over time. 

Remember our earlier metric that it’s somewhere between five to twenty-five times more expensive to acquire a new customer? That’s especially important to keep in mind when thinking of program participation rate.

Operating a successful ecommerce store requires your attention in many ways — from building your store to defining your brand to creating your product to offering high-quality customer service.

Familiarity with the ecommerce metrics mentioned above will help you identify how well you’re performing those activities and highlight those areas in which you can fine-tune your strategies and tactics to improve your store’s performance and bottom line.