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Helpful Ecommerce Metrics to Know

 

A successfull online business needs to evaluate the value of all its activities and gain an idea of the key ecommerce metrics that really influence long term success.  Some of these we already should be doing, like tracking transaction value in tools like Google Analytics. This gives us a bog-standard idea of average order size (per transaction). Also, % New Customers, and ROI of AdWords spend.

Measure Life Time Value of Your Customers

There are several *more* worth tracking. One is to know you average life-time value per customer. Ecommerce campaigns that focus on short term sales may only give a modest ROI. But if 1 in 10 new customers have a high life-time value with your company then the actual ROI can be much higher than it appears. Since many of these clients will come back directly you will not be able to attribute this revenue to campaign activities. So, it is important to obtain the average.

Looking through your customer accounts, an average can be obtained. Obtain the revenue as

Gross margin % = (Revenue – Cost of goods) / Revenue

and obtain your average for all customers.  This can be multiplied against new customers you are aquiring each month to give an idea of its true worth.

But these values are fixed. You have control over the life time spend of customers, with good re-engagement campaigns such as offers, email etc.

Increasing the average lifetime value will pay off in the long term.

Enhance Re-engagements – Lower Churn

Another variable that can change, is the percentage of new customers who dont buy again, also who come off email lists. This is termed as churn. Churn is surprisingly important in terms of proffit. A few percent increase in the loss of new customers can impact profit drastically over 5 years. This is because it accumulates to a drastic reduction in the number of active customers and reach on your re-engagement campaigns, such as email lists. Churn impacts you life-time customer value as well as number of customers.

We would suggest that once anybody purchases, that you have a seperate and dedicated campaign to maintain engagement with these individuals. Also, you should incorporate the average life time value in your evaluation of the ROI of aquiring new customers. This is so you can grow the number of active customers profitably.

Reducing churn takes work, especially great customer service. But it has often the largest impact on long term profitability of your marketing activities. Do not confuse Churn with % New Customers. Generally, a high % of new customers and low churn means maximal growth.

Increase Average Order size

Another important way to raise ROI in the short and long term is to increase the average order size, by segmenting high performing campaigns that target high spending clients as well as improved bulk offers and promotions.

In conclusion it is essential to have an idea of these key ecommerce metrics. With some thorough analysis you can identify the average lifetime value of new customers gained from all your different campaign channels.

If you need any help with measuring and optimising your performance, or in analytics, then please get in contact with us here at Network Intellect.

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