Are You Tracking These 5 Key Marketing Metrics to Drive Growth for Your E-commerce Business?

Did you know that almost 90% of small businesses fail within the first 4 months? A key factor in this is the lack of a proper understanding of tracking stats and metrics. Tracking metrics is not just to nerd out on numbers, it is a powerful tool to help business owners and decision makers to make logical and informed decisions.

These metrics can vary between accounting, revenue, and marketing. In this blog post, we'll go over 5 key marketing metrics to track for e-commerce businesses. By focusing on these essential metrics, you can gain clarity on what's working, what's not, and where to focus you efforts to optimize efficiency and most importantly, growth.

1. Return On Advertising Spend (ROAS)

Return on Ad Spend (ROAS) is one of the most critical metrics for any e-commerce business running paid advertising campaigns. Simply put, ROAS tells you how much revenue you're earning for every dollar you spend on ads.

Why It Matters: Without measuring ROAS, you could be wasting your ad budget on bad campaigns. By tracking this metric, you get to know which ads are performing well and which need adjustments. A positive ROAS indicates that your ads are driving profitable results, while a negative one suggests it's time to rethink your strategy.

How to Calculate ROAS: The formula for calculating ROAS is simple:

ROAS = Revenue from Ads ÷ Cost of Ads

For example, if you spent $500 on a Facebook ad campaign and generated $2,500 in sales, your ROAS would be 5:1. This means for every dollar spent on ads, you earned five dollars in revenue.

How to Improve ROAS:

• Refine Targeting: Ensure you're reaching the right audience by refining your targeting settings, using tools like lookalike audiences or retargeting past website visitors.

  
  

• A/B Test Ads: Experiment with different headlines, visuals, and CTAs to see which combinations yield the best results.

  
  

• Optimize Your Landing Pages: Ensure your landing pages align with your ad copy and provide a smooth, intuitive user experience to increase conversions.

  
  

  Checkout our blog post on optimizing your landing pages here

  
  

  

• Increase Average Order Value (AOV): Upsell or cross-sell products to boost the total value of each sale. We'll talk more about AOV later on in this post.

  
  

If you're struggling to achieve a solid ROAS or want to scale up profitable campaigns, we're here to help! Click here to get a free audit on your ads strategy, or learn more about running effective campaigns if you're thinking about starting with paid ads.

2. Conversion Rate (CR)

Your conversion rate is a crucial metric that measures how effective your website or landing page is at turning visitors into paying customers. It tells you what percentage of people who visit your site are converting to customers — whether that’s making a purchase, signing up for a newsletter, or filling out a contact form.

Why It Matters: A low conversion rate means that even if you’re driving traffic to your site, you're not converting those visitors into customers. Improving your conversion rate can have a direct impact on your sales, without needing to increase your traffic. In fact, optimizing for higher conversions is one of the most cost-effective ways to grow your business.

How to Calculate Conversion Rate: The formula for calculating conversion rate is:

Conversion Rate = (Conversions ÷ Total Visitors) × 100

For instance, if you had 1,000 visitors to your store and 50 of them made a purchase, your conversion rate would be 5%. This means 5% of your visitors are turning into customers.

Actionable Tips to Improve Conversion Rate:

• Optimize Your Website Design: A clean, user-friendly design that makes it easy for visitors to find what they need can significantly improve conversion rates.

• Simplify Your Checkout Process: Reduce friction during checkout by offering guest checkout options, multiple payment methods, and minimal form fields. Make it as easy and as pleasant as possible for any visitor to make a purchase.

• Add Urgency: Use tactics like limited-time offers, countdown timers, or low-stock alerts to encourage customers to take action. Be careful with adding urgency, as it can drive visitors away if it’s too pushy.

• Use Trust Signals: Display customer reviews, secure payment badges, and money-back guarantees to build trust with potential buyers.

Improving your conversion rate can be the difference between a mediocre campaign and a high-performing one. Book your free consultation here if you're not sure where to start.

3. Average Order Value (AOV)

Average Order Value (AOV) measures the average amount spent by customers per order. This metric is important for e-commerce businesses because it directly impacts your revenue and helps you determine how to increase profits without needing to acquire more customers.

Why It Matters: Increasing AOV is one of the most effective ways to grow your revenue. Instead of only focusing on attracting new customers, raising your AOV means you’re getting more value from each existing customer. This can significantly reduce customer acquisition costs (CAC) and improve your overall profitability.

How to Calculate AOV:

The formula for AOV is:

AOV = Total Revenue ÷ Number of Orders

For example, if you generated $5,000 in revenue from 200 orders, your AOV would be $25.

Tips to Increase AOV:

• Upsell and Cross-Sell: Offer customers higher-value products (upselling) or related products (cross-selling) during checkout. For example, if someone is buying a pair of shoes, suggest shoe polish or socks.

• Offer Volume Discounts: Encourage larger purchases by offering discounts on bulk orders or free shipping when a minimum order threshold is met.

• Create Bundles: Package related products together at a discounted rate, encouraging customers to buy more in one transaction.

• Loyalty Programs: Reward repeat customers with exclusive discounts or points that can be redeemed on future purchases, increasing their likelihood of buying more.

4. Cart Abandonment Rate

   
   

Cart Abandonment Rate tracks the percentage of customers who add items to their cart but leave without completing the purchase. For e-commerce businesses, this is a crucial metric because it directly impacts your potential revenue.

Why It Matters: A high cart abandonment rate means that even though you’re attracting customers and getting them to consider making a purchase, something is preventing them from completing the transaction. This could be anything from a complicated checkout process to unexpected shipping costs. Understanding and addressing cart abandonment is key to improving your conversion rates and maximizing sales.

How to Calculate Cart Abandonment Rate:

The formula for calculating this metric is:

Cart Abandonment Rate = (Abandoned Carts ÷ Total Carts Created) × 100

For example, if 100 customers added items to their cart, but 60 abandoned the checkout process, your cart abandonment rate would be 60%.

Tips to Reduce Cart Abandonment:

• Simplify the Checkout Process: Reduce the number of steps to complete a purchase, offer guest checkout options, and minimize form fields.

  
  

• Offer Multiple Payment Options: Ensure that your store supports popular payment methods like credit cards, PayPal, or even newer options like Apple Pay or Google Pay.

  
  

• Send Cart Abandonment Emails: Follow up with customers who abandon their carts through automated emails, offering them a reminder or even a small incentive to complete the purchase.

• Provide Clear Shipping Information: Make sure shipping costs are transparent from the beginning. Unexpected charges at checkout are a leading cause of cart abandonment.

  
  

• Show Trust Signals: Display security badges, money-back guarantees, and customer reviews to reassure visitors that their information is safe and they’re buying from a trusted source.

  
  

Reducing cart abandonment can have a significant impact on your overall sales. Small improvements to the checkout process can lead to more completed purchases and ultimately boost your bottom line.

5. Engagement Rate

Engagement Rate is a metric that measures how actively your audience is interacting with your content on social media, emails, or your website. It gives you insight into how well your audience is connecting with your brand, content, and messages. Higher engagement often translates to stronger brand loyalty and higher chances of converting followers into customers.

Why It Matters: A high engagement rate means that your audience is interested in what you have to offer, which is a good indicator that you’re reaching the right people. This is especially important in e-commerce, as engaged followers are more likely to make a purchase, share your products with others, or return for repeat business.

How to Calculate Engagement Rate:The formula to calculate engagement rate can vary depending on the platform, but a common calculation is:

Engagement Rate = (Total Interactions ÷ Total Impressions or Followers) × 100

For example, if a post on Instagram receives 100 likes, 20 comments, and 10 shares, and it has 1,000 followers, the engagement rate would be: (100 + 20 + 10) ÷ 1,000 × 100 = 13%

Tips to Boost Engagement Rate:

• Post Consistently: Regular content keeps your audience engaged and reinforces your brand message.

• Use Interactive Content: Polls, quizzes, and live streams can encourage your audience to engage with your content more actively.

• Encourage User-Generated Content: Run contests or ask your customers to share photos of them using your products, and feature them on your social media.

• Respond to Comments and Messages: Make your followers feel heard by engaging with their comments, messages, and posts. This helps build community and trust.

• Leverage Hashtags and Trends: Use relevant hashtags and join trending conversations to increase your content’s visibility and engagement potential.

A high engagement rate is more than just a vanity metric; it’s a sign that your audience is invested in your brand. By focusing on increasing engagement, you can build stronger relationships with potential customers, which ultimately leads to more conversions and sales.

Tracking these key metrics may seem complicated at first, but it’s not as daunting as it appears. In fact, once you start monitoring them regularly and making improvements based on the insights they provide, you’ll begin to see results over time. The key is consistency and small, continuous adjustments that lead to big improvements in your e-commerce performance.

If you’d like to explore ways to streamline this process and make data-driven decisions for your business, feel free to book your free consultation. Let’s chat about how you can implement these strategies and start seeing measurable growth in your business.