Basic Terms and Metrics that are Important in Running Ecommerce

Selling through online stores (e-commerce) is one of the practical ways that many people choose to market their products. Not only limited to physical products, products in the service sector are starting to take advantage of the use of e-commerce.

The use of e-commerce does not merely involve moving product catalogs to a website. There are various features that can be used to monitor sales to make them more popular. Like a physical store, various marketing efforts can be made to attract buyers.

When switching to e-commerce, there are many metrics that can be calculated quantitatively to discover consumer behavior. Through various different metric calculations, you can track and find target consumers who need your product.

What are e-commerce metrics?

Metrics are important data and analysis that can help measure overall business success. The data that can be obtained from these e-commerce platforms will show how many customers you get, how often customers return, and even the number of people who leave items in their online baskets.

Several metrics can help a brand to measure the popularity of a product. Of course, this can also help your business to develop production and marketing strategies in the right markets in the long term.

Various e-commerce metrics terms

When using e-commerce, several terms will appear that continue to develop. Not only for needs on certain platforms, you can also use these metrics to develop your business to a larger scale, including the following:

1. Conversion rate

Conversion rate will be one of the most important metrics to pay attention to. For e-commerce sellers, conversion rate is the most important benchmark. Your conversion rate should remain stable or preferably increase over time.

If you notice a big drop, it might be a good time to investigate the cause. This decline can provide momentum to ensure your website or strategy on your e-commerce platform is still functioning properly.

Simply put, you can measure conversion rate (CVR) as the number of people who make a purchase out of the total number of people who access your website. The percentage formula looks like this:

CVR (in %) = (number of Purchases / number of Sessions) x 100

2. Customer lifetime value

Customer lifetime value (CLV or CLTV) is the total revenue a business can expect from one customer over its lifetime. This number will vary by industry and product as well.

The customer lifetime value of a $25/month SaaS product could be as little as $900 if the average customer stays for three years. Meanwhile, the customer lifetime value of an aromatherapy candle shop can be much more than that if customers keep coming back every month and throughout the year.

3. Average order value

Customer lifetime value (AOV) tells you the average amount a customer spends at one time in your store. AOV is a metric that can help you measure revenue and create realistic goals for new customers with the formula:

AOV = Total Revenue / Total Number of Orders

4. Customer acquisition costs

Customer acquisition costs (CAC) tell you the average cost of acquiring a new customer. This is another metric you should calculate for yourself based on your allocated marketing budget for generating customers with the formula:

CAC = Amount Spent on Marketing / # of New Customers

5. Bounce rate

Bounce rate is a metric that anyone with any type of website needs to pay attention to. Bounce rate is the number of people who open a site, but leave without taking any action, whether clicking to another page, filling out a form, checking out a product, etc.

The average bounce rate for an e-commerce website is 20% - 45%. So, try to maintain that number or even lower. To reduce the bounce rate, make sure the website design and navigation are attractive enough. This can encourage visitors who are potential consumers to find out about the product when they visit.

6. Click-through rate

Click-through rate (CTR) is the ratio calculated when someone clicks on an email, ad, social media post, and lands on a website. To calculate click-through rate, use the following formula:

CTR = (# Clicks / # Views/Impressions) x 100

Overall, CTR tends to be a fairly low number. If you see a CTR of 2% or higher, it means the value can be done quite well.

7. Sessions

Sessions can usually be viewed and analyzed based on the amount of traffic. This figure will show the number of visitors who come and how they access it. The most common traffic sources are:

Search (search): Website visitors who land on si

your website after clicking through the search results

Direct: Website visitors who land on your website after typing it directly into the URL field

Social: Website visitors who land on your website after clicking through from a social media platform

Email: Website visitors who land on your website after clicking through from an email newsletter

Looking at these statistics can help you gauge which marketing channels are most popular for your business. For example, you may want to improve your SEO strategy or increase your email list to increase email visits.

Based on appropriate metrics, you can create the right strategy to develop your online business focus. Not only that, you can also connect it with offline strategies as an integrated marketing effort.