Guest Post: What are important metrics for e-commerce companies?

Image taken by flickr.com/photos/polycart/
Image taken by flickr.com/photos/polycart/

The majority of companies are aware of how important metrics are in evaluating the effectiveness of their enterprise. The main challenge lies in deciding which are the most important of them, because success has different criteria and depends largely on the industry or even the particular company.

It is still, however, useful to be aware of what the standard metrics for achieving success in e-commerce are, so here we give an outline of the main ones used today:

  • Conversion rate for new visitors – The majority of e-commerce companies do not distinguish between the conversion rates for returning and new visitors. But by effectively isolating the conversion rate for new visitors you’ll be able to see much more clearly what is actually happening when a completely new visitor lands from ad campaigns or search engines.
  • Conversion rate for return visitors – Not every customer will buy something on their first visit, so it’s important to incentivise them to return. By analysing this rate, you’ll be in a better position to determine how well you convert return traffic.
  • Pageviews per visit – This metric directly reflects how well your audience engages with the site. With interesting content, the figure will increase. On the other hand, it could also indicate that there may be unforeseen complications in product browsing for example.
  • Average order value – The value of the target average order will clearly vary depending on the industry, but it is usually useful to monitor it over time and hopefully witness a year on year increase.
  • Bounce rates – A bounce happens when a visitor lands on your page and immediately leaves. If you’re experiencing a high bounce rate this could be down to a number of possibilities. Irrelevant content, long loading times and unattractive design are just a few of them. Bounce rates therefore need to be monitored on your top entry pages such as PPC and SEO landing pages, and obviously the home page as well.
  • Traffic sources – These can usually be reduced to three sources: direct visits coming from typing your URL directly into a browser bar, and traffic from search engines covers PPC and SEO visits. Other traffic will come from referrers, which are any websites that link directly to yours. The relative numbers of visits from these three sources will vary between sites. As your brand gains a higher profile, however, you will hope to see the number of visitors typing your URL straight in to increase, as these will on the whole tend to convert better.
  • Shopping cart abandonment rate – You should monitor each separate step in the checkout process to see at what points shoppers abandon the process. How many of them drop out after they’ve added items, for example, or after adding credit card details? If the abandonment rate is excessively high this often indicates a serious problem with the checkout process.

These are some of the most important metrics to keep an eye on when you’re starting up in e-commerce, and to continue monitoring as the enterprise grows. There are plenty of others, which will vary depending on your particular line of business.

Carlo Pandian
Carlo Pandian

Carlo Pandian is a freelance writer and has worked for the tech startup Adzuna. He is currently writing an Ebook on small business bookkeeping software by Intuit and has previously published for several start-ups blogs such as New Startups, Killer Startups and Under30CEO.

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