Conversion Funnel metrics Every E-Commerce Store Should Be Tracking
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.
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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 eCommerce 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 eCommerce 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:
- 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:
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.
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.
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.
A metric is defined as a quantitative variable that defines the performance of a business or website. Ecommerce 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.
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.
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.
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
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
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.
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
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
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 ecommerce 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 eCommerce conversion funnel. When customers are 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.
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 eCommerce KPI benchmarks do you think are important to track? Please let us know by commenting below.
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.