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Conversion Funnel metrics Every E-Commerce Store Should Be Tracking

Funnel Metrics E-Commerce – A zealous entrepreneur, like you, pours their heart and energy to steer their business in the direction of success. You invest your time and resources to implement robust financial and marketing strategies to attract customers and convert them in E-Commerce business.

We have created a applicant tracking excel template to easily manage and track your recruitment process

But how do you know that your efforts are headed in the right direction?

Perhaps the strategies you have applied aren’t cultivating the desired results and make your efforts go in complete vain?

Marketers use essential E-Commerce metrics to measure the performance of the business and the applied strategies. These metrics provide them with valuable data and an insight into the effectiveness of their strategies.

The reason behind the immense success of huge E-Commerce tycoons is that they’re obsessed with measuring their performance and take remedial steps if the data collected doesn’t show a favorable picture.

Data is the biggest asset for any business.

A savvy marketer can plan a thorough plan and implement it precisely according to its business needs. Having the invaluable data tracked from these metrics can provide an insight into a business’s performance, strong areas, areas that need work, and the things that are not quite going well for the company. This information provides the company with a head start to grow and expand in the market.

In today’s article, we have enlisted five eCommerce conversion funnel metrics that your business must track to monitor the performance of your business and make necessary adjustments as and when required.

But, before we proceed, let us shine a light on some of the important terms that will be extensively used throughout this article.

What Is A Sales Funnel?

Sales conversion funnel refers to a person’s journey from the point he becomes aware of your business to the point he turns into your customer. Simply, it depicts the steps a person has to take to become your consumer.

The sales funnel can be divided into four broad stages. They are:

1. Awareness
2. Interest
3. Decision
4. Action or Conversion

Every stage of the buyer’s journey requires a different approach from the company. For instance, a person will not order an appetizer after finishing his main course or ask for a dessert before the appetizer. In the same way, a company would deploy different strategies for prospects in their interest stage. It will not apply the strategy of the conversion stage, as it will not be fruitful to gain a customer.

Let’s briefly discuss each stage of the sales funnel:

1. Awareness

 

In this stage, your potential customer becomes aware of your existence in the market. He can learn about you through a Facebook ad, Google search results, a tweet from a friend, a review posted on a group, etc.

He understands who you are and what you offer to the customers.

2. Interest – Funnel Metrics E-Commerce

The second stage of the buyer’s journey is interesting. It is an important sales funnel stage; thus, marketers should be alert and implement smart strategies to convince the customer to consider his brand.

In this stage, the business doesn’t intend to make a sale; rather, it evokes customer interest in its brand.

3. E-Commerce Decision – Funnel Metrics E-Commerce

After the interest stage comes the decision stage; in this stage, the customer has made up his mind about purchasing the product and selected a few brands to shop from. For instance, a customer wants to buy a pair of sunglasses. He has considered Brand A, Brand B, and your Brand to purchase glasses from.

In this stage, marketers have to make an irresistible offer to the prospects, which tempts them to shop from you. For example, you can offer the best prices, fast delivery, free shipping nationwide, etc., to make your prospects choose you over others.

4. Action Or Conversion

In this stage, the prospect finally turns into your customer. He purchases the items from your store and becomes part of your customer base.

E-Commerce Metrics – Funnel Metrics E-Commerce

A metric is defined as a quantitative variable that defines the performance of a business or website. E-Commerce metrics can range from traffic generation to conversion rate, average order value to cart abandonment, etc.

There are numerous essential eCommerce metrics. Sources for collecting rich data for metrics include social media, Google analytics, product pages, homepages, no. of orders, cart abandonment, etc.

The 5 Conversion Funnel metrics Every E-Commerce Store Should Be Tracking

1. Product Discovery Metrics

These eCommerce metrics help marketers measure the activities that create brand awareness.

a) Impressions

Impressions are the number of times an ad or business’s content appears in front of a prospective audience. It can happen on multiple channels such as through paid ads, search results pages, social media posts, or any other platform where your ad was run, or your business was discussed.

It is important to clear one thing at this point that impressions don’t necessarily mean clicks. Sure, a prospect can click the store’s link if he sees an ad, but the other channels where there are no links, such as your business content shared by a follower on his profile.

The impression is a controllable metric. It is mostly based on the budget. The more a business spends on marketing activities, the more impressions it will earn.

b) Reach

Reach is the total sum of your followers on social media profiles, people who have subscribed to your newsletter, your subscribers on YouTube, loyalty program members, etc. It is basically the total number of people who can view the content you post.

Business reach is improved by running effective marketing campaigns on social media, integrating email marketing, increasing email subscribers and followers.

c) Engagement

The best way to explain engagement is the intersection of a business’s impressions and its reach. It tracks how many people (business’s reach) engaged with the business content (impressions).

It included both acquisition and non-acquisition-related activities. Such as click-through is an acquisition activity. On the other hand, activities such as liking the post, or commenting under, are non-acquisition activities.

2. Consideration Metrics – Funnel Metrics E-Commerce

In the consideration stage, the potential buyer knows that you exist in the market. Now, it’s a marketer’s job to pique his interests and tempt him to visit the website.

a) Email Click-Through

In E-Commerce, this metric measures how many subscribers opened the email sent by the business and clicked the link attached therein to visit the store.

You easily influence this metric by designing creative and attention-grabbing subject lines to make the customer open and read the email. In addition, don’t forget to include a powerful CTA and an irresistible offer to make it difficult for the customer not to visit the store.

b) Cost Per Acquisition (CPA)

As a marketer, you will have to implement robust marketing strategies to acquire more customers. Many marketers run paid ads, host social media contests, and even deploy email marketing to attract customers and boost sales.

But, a business needs to understand that their marketing campaigns should not outweigh the total revenue generated by the businesses.

The cost per Acquisition metric is important as it provides an insight into how much expense is incurred by a business to acquire one customer. CPAs are also of great help to understand if the average order value of a business is effective or not. For example, if CPA is $20 and AOV is $150, it is a good sign for the marketer and can continue implementing the same marketing strategy. On the contrary, if CPA is $10 and AOV is $25, a business will have to modify its strategy to develop more targeted marketing content to lower CPA and increase AOV.

c) Social Media Engagement

Social media metrics can help provide valuable information about how the audience took the promotional content posted by the business. The number of likes and comments a post received can reveal to the marketer how well the audience took the post. In addition, if the post was shared numerous times, it indicates a good sign that the content was interesting for the followers, and they promoted it further.

Conversion Metrics

The most important stage of the buyer’s journey for a business is the conversion stage. It is where all the strategies you had applied to optimize previous stages will pay off.

Use the following metrics to determine how many store visitors turn into your customers and how many quit.

a) Shopping Cart Abandonment Rate

The shopping cart abandonment rate tells how many people add products to their carts but leave the website without entering the checkout stage. It signifies to the marketer that there are certain frictions on the website that prevent the prospects to reach the checkout stage. For instance, a slow-loading website might make the buyer quit the website without placing his order.

Understanding this metric will enable the marketer to curate a seamless checkout process for buyers to enter the checkout stage.

b) Checkout Abandonment

Checkout abandonment is different from cart abandonment. Checkout abandonment is when your buyers exit the website after they begin the checkout process. If there is a high rate of checkout abandonment then an entrepreneur must focus on making its checkout process smooth and hassle-free.

c) AOV (Average Order Value)

The average order value is total sales divided by the total number of orders placed. To make it simpler, AOV is the average price your customers pay for the total items in their carts.

AOV is an important metric, and thus should be measured timely to track your average orders and come up with tips and tricks to increase them over time.

d) Sales Generated By Channel – Funnel Metrics E-Commerce

This metric provides data about which channels sent the most visitors to a business’s website that later converted to customers.

Reviewing this metric allows the entrepreneur to invest in the channel that is helpful in sending prospecting audiences to the website.

4. Retention Metrics

Acquiring a new customer is 5 times more expensive than retaining an existing one. Therefore, businesses do not let their customers go, instead, they try to retain them by providing excellent customer service, introducing loyalty programs, promoting repeat purchase campaigns, etc.

The following retention metrics should be on your radar to measure how well you are retaining customers.

a) Customer Retention Rate – Funnel Metrics E-Commerce

Retention rate is best explained as the total percentage of customers a business maintains over a period of time. The higher the percentage, the better. It signifies that a business is providing an impeccable shopping experience and services to its customers.

While calculating the customer retention rate, make sure to subtract the number of new customers acquired by the business to give you a proper number of customers retained by the business.

b) Customer Lifetime Value

Customer Lifetime Value or CLC is the amount of profit earned by the company from its customers over the length of their relationship with a company. This metric highlights how many customers are repeat customers and how often they shop from the company.

c) Ecommerce Churn Rate

Ecommerce churn rate is another essential E-Commerce metric that is used to track the turnover of a business’s customers.

It calculates how many customers a business has lost over a given time period. This metric is important for marketers to remedy the high churn rate timely and reduce it by providing top-notch services to the customer.

5. Advocacy Metrics

A business is lucky if its customers reach this stage of the E-Commerce conversion funnel. When customers remain retained over a long period of time and provided with the same quality of products and services, they turn into brand advocates. They spread good things about your business, this triggers word-of-mouth marketing which is an effective and inexpensive form of marketing for the business.

The following metrics will give you an insight into how many of your customers have turned into your brand advocates and what strategies can you apply to encourage more customers to talk about you.

a) Subscription Rate

Take into account the rate of your email newsletter subscription rate. If there are many people who have opted for an email subscription, it means they are looking forward to hearing from you, which is quite a splendid thing for the business.

A marketer can improve its subscription rate and reduce the number of opt-outs by designing highly targeted email copies and writing killer subject lines to increase open rates. Moreover, don’t forget to include strong call-to-actions (CTAs) to boost the click-through rate.

b) Program Participation Rate

If you have initiated any program for your customer, let’s say a loyalty program, the more people are part of it the merrier. The higher number of participants depicts that your customers are happy to be a part of your program. If the percentage of customers who are participants in your program is low, you can offer them incentives to join the program and become your brand advocates.

Winding Up

Familiarity with essential ecommerce metrics and eCommerce KPI benchmarks will help you identify the strong and weak areas of your sales conversion funnel. It in turn will help you to work on the weaker areas and strengthen them to attract more customers and increase your sales.

What other E-Commerce KPI benchmarks do you think are important to track? Please let us know by commenting below.

Author Bio:

 

Ricky Hayes is the Co-Founder and Head of Marketing at Debutify – a free Shopify theme, helping dropshippers build high-converting stores in minutes. He is a passionate entrepreneur running multiple businesses, marketing agencies, and mentoring programs.

E-Commerce Store  – E-commerce will undoubtedly be one of the most vibrant industries in the next few years and it presents great opportunities for aspiring entrepreneurs. What’s great about e-commerce is how accessible it is. Virtually anyone with a computer and an internet connection can get started. But that also means that the competition is fierce and that far too many inexperienced people enter the field and end up failing. If you want to start a successful e-commerce business, you have to approach it like a real business. Let’s take a look at the steps you should take to successfully start an e-commerce business.

Research Your Chosen E-Commerce Space – E-Commerce Store

There are many different ways to make money through e-commerce. You could manufacture products and sell them through your website, or an application, and you can learn how to start one here https://doit.software/blog/create-a-shopping-app. Or you could set up a dropshipping site and have your suppliers ship items directly to your clients.  Decide to sell digital goods as well.

Research these different business models and the pros and cons of each. You might’ve been excited at the idea of starting a dropshipping business, for instance, but you have to know about things like returns, chargebacks, and unreliable suppliers tarnishing your reputation too. This is why you can’t just jump in, register a domain, and open a Shopify account.

Speaking of which, you might also want to start researching different platforms that you can use. Shopify is one of them, but if you want to sell digital products, you could also use a tool like Magento or WordPress with e-commerce plugins like WooCommerce.

Shopify can be a great platform, don’t get us wrong, but it has its limitations. For one, you won’t be able to move your site from their server no matter how big it gets, so you’ll always be at Shopify’s mercy. You will also be limited in your design choices and have to pay a lot of money for extra features.

WordPress, on the other hand, can be customized as you please. This is a better platform if you have some technical experience. If you don’t, however, then Shopify might indeed be the best option for you. The more you know about these platforms, the less likely you’ll be hit by nasty surprises later down the line as your business is expanding.

Choose a Domain Name

Having a catchy, memorable, and easy-to-recognize domain name is very important. If you have a domain name that is difficult to search for or remember, people won’t be able to find you.

Here, you should forget trying to be descriptive. If you look at the biggest e-commerce sites out there, most of them have short catchy names that don’t mean anything. Take Amazon, for instance, or eBay. There’s nothing in those names that says what they’re about, but they’re still very effective.

Another thing you’ll have to consider is whether you’ll be using a dot-com domain or a different suffix, or a top-level domain (TLD). It’s usually not recommended to go with a .net, .biz, or .io domain. You might be able to make a few savings per year on your domain registration, but it won’t be worth it as you’ll get less recognition. Not only that, but some people will see a website with an alternative top-domain as less reliable and trustworthy.

The only exception here is if you find the absolute best name on the planet but it isn’t available. In this case, you can look for a less popular TLD or look to see if the name you want is actually attached to a real website. If it is, it’s unlikely that the owner will agree to sell the domain to you. And if they do, the cost will probably not be worth it.

If the domain is parked, meaning that it’s sitting idle and still on the registrar’s main server, then there will usually be a procedure you can follow to make an offer on that name. It’s up to you to see if the name’s branding power warrants its asking price.

Know that buying a domain is an extremely simple process and very cheap. You can get .com domain names for as little as $8 these days and they will have to be renewed every year. You should also spend a bit more on WHOIS guard protection. WHOIS is a directory that can give you information on various domains, including the name and address of the person who registered it. If you don’t want that information to be public, then get WHOIS Guard. It’s only a few bucks and the protection you’ll get will be worth it.

Get Good Hosting – E-Commerce Store

One area where you need to be very careful is web hosting. If you’re going with a platform like Shopify, this isn’t something you’ll need to worry about. But, if you want to host your website on your own, performance will be very important.

Do not make the mistake of going for one of these dirt-cheap shared hosting plans out there. A shared server is no place for an e-commerce store. Shared hosting literally means that you’re sharing server space – and bandwidth – with other websites you know absolutely nothing about. If one of these gets a sudden surge in traffic, your site’s performance might suffer and people might not even be able to access it.

Consistent performance is extremely important not only for clients but for search engines as well. Search engines love sites that are reliable and fast, and, if you go with a cheap plan with slow loading speeds, your rankings will suffer and you’ll be all but invisible to a wide majority of users.

So, take the time to get a real hosting plan that will allow you to scale. If you need something reliable but don’t want to spend on a dedicated server, go with a virtual private server. While you will still be sharing the server with other users, they will all have their dedicated resources and won’t encroach on other websites.

Learn the Different Marketing Methods

Proper marketing is essential for any e-commerce business. Marketing approach will be very different than with your traditional business. So, if you are coming from a marketing or business background, you might want to consider getting some e-commerce marketing courses. If you have a bachelor’s, then we would suggest you look at something like Emerson University’s online masters in digital marketing program. This will not only teach you about all the different online marketing methods that you can use.  Also how to gather, analyze, and compare data to gauge the impact of your campaigns and make the proper adjustments.

One of the most important marketing methods you’ll need to master is SEO. SEO is the science of building maximum visibility on search engines. There are two main aspects to SEO: on-page SEO and off-page SEO.

On-page SEO is all about making your site’s content as relevant as possible, offering the best experience to visitors, having great site performance, and using the right keywords properly. Off-page SEO is about releasing content that people will want to read and share through the right channels. It’s also about building links back to your site and mentions of your brand as organically as possible.

PPC is another marketing method you’ll need to understand. It is probably the most powerful online marketing tool for e-commerce as it allows you to get highly targeted traffic to your site on command.

PPC allows owners to bid on keywords that are related to their product. They can then have their ads displayed whenever someone searches for that term in search engines. You can also choose to have your ads displayed on related sites that are part of the search engine’s advertising program.

In addition to PPC and SEO, you will need to get familiar with things like social media marketing, email marketing, and content marketing.

Have a Business Plan

One of the best things about starting an e-commerce business is that it doesn’t have to cost a lot of money upfront. This means that you don’t necessarily need to seek financing. For this reason, many owners are under the impression that they don’t need a business plan. There’s this idea that business plans are only good if you want to get a loan from a bank, but that’s a very dangerous assumption to make.

A business plan is like a road map, and no one should go on an uncharted trip without a map. A business plan will give you direction. If you ever lose track of your goals, one look at your plan will get you back on your original path. You don’t necessarily have to follow a pre-set itinerary. A business plan is not about organizing every single detail of your business. It should give you a general idea of where you want to go, how you need to get there, and milestones along the way.

E-Commerce Store

The very first thing you have to do when building a business plan is to clearly identify your goals. It can’t be just releasing some product and wishing people will buy it. Is there a certain need that your products aim to fill? Are your products trying to solve a specific problem? You need to speak about what pushed you to get into that business and what’s sellable about your idea as well.

You will then need to lay out general information about your business and identify members of your core team and their competencies. See where there could be skills gaps to fill and what approach you’re going to take to fill them.

You’ll then need to add information about your products. Your target market, which marketing strategies you’re intending to use, and the current state of your finances. You may also start etching out some of your processes.

Look at Payment Providers – E-Commerce Store

Payment providers play a very important role in e-commerce. If you go with the wrong provider, your customers won’t be able to pay you or you may have difficulty accessing their funds when they do pay. Choosing the right payment provider will facilitate cash flow, lower fees, and keep everyone’s information secure.

When picking a payment provider, don’t be too impressed by people who offer rock bottom fees. 3% to 3.5% is average, and you should beware of anyone who offers anything much lower than that. Anyone who offers outlandish fees is probably not offering the best service or might hit you with hidden fees later on.

Take Your Site Live – E-Commerce Store

The next and final step is to take your website live. From this point, you will need to use all the tools at your disposal to properly track its performance. You will need to look at things such as conversion rates and bounce rates. How much time people are spending on different pages, and shopping cart abandonment rates, among others.

Be prepared to do a lot of testing at the beginning. You might have to test different fonts, colors, navigation, calls to action, etc. This can be done by doing some A/B testing. You’ll be showing alternate versions of your site to different visitors and see which ones work the best.

When doing A/B testing, however, you have to be careful to only test one or a few elements at once. You will not be able to see which elements are responsible for your customers’ responses.

As well as this, you will need to provide sound customer service to customers. You can limit your interactions to email only. You’ll have better results if you have a toll-free number and free chat. Getting a 1-800 number is not that expensive. You will have to set money aside for customer service staff, whether you work with a subcontractor or hire in-house.

This is all you need to know to start an E-Commerce Store in 2021. Don’t let the low barrier of entry fool you. Learn as much as you possibly can about the industry before you make the jump. Consider getting some higher qualifications. You can measure your marketing efforts and have a better understanding of where your business is going.