The Top Metrics & KPIs Every eCommerce Store Owner Needs to Track
If you have an eCommerce site, the metrics and KPIs (key performance indicators) you track can drive the difference between running a successful business or managing one that struggles.
The right metrics and KPIs can help you improve sales, grow your customer base, lower costs, and increase profits.
However, knowing which metrics you should measure or how best to monitor them can be challenging.
In this substack, I've outlined some of my favorite metrics for measuring eCommerce sites and how each relates to your business goals – whether you prioritize gaining more customers or increasing sales volume per visitor.
What is a KPI?
A KPI (key performance indicator) is a metric that an organization studies to measure its success. You can use them to determine whether your business is on track with its goals and objectives, or if you need to make changes.
Let’s get started…
Average order value (AOV) 🛍️
Average order value (AOV) is the average amount a customer spends on each order. The best way to get this number is to divide your total revenue by the number of orders placed during a period, say October through December.
AOV can also measure how much customers typically spend with your company, and it can help you calculate Lifetime Value (LTV). From my perspective, this makes AOV one of the most critical metrics for eCommerce businesses.
Customer lifetime value (LTV)
Customer lifetime value (LTV) is the total value of a customer's purchases over their lifetime.
It's a key metric for understanding how much revenue a single customer brings in, and it can help you create more personalized offers based on their past purchases.
Calculate for your LTV by dividing the sum of all future revenue from that customer by dividing it by the number of months remaining as a customer.
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