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1. Conversion Rate
A conversion rate is a key metric, which gauges the share of site visitors that end up as buyers. Conversion rate indicates the success and effectiveness of the website in convincing the visitors to be customers. Calculate the conversion rate by dividing the number of completed transactions by the total number of website visitors to yield a value of 100. Tracking and improving the conversion rate will make it possible to notice shortcomings in the sales funnel, website design, and user-friendliness.
When comparing for example Printful vs Printify, understanding the impact of each platform on conversion rates is essential. Factors such as product quality, fulfillment speed, and shipping options can significantly influence customer satisfaction and, consequently, conversion rates.
2. Customer Acquisition Cost (CAC)
The cost of acquiring a new customer must be understood to sustain profitability. Customer Acquisition Cost (CAC) refers to all the costs, including marketing, advertising, and promotional costs, used in acquiring a new customer. CAC is derived by dividing total acquisition costs by the number of new customers during a certain duration. Hence, a lower CAC represents better marketing strategies and higher profitability. E-commerce organizations therefore need to constantly monitor CAC so that they can optimize their marketing efforts as well as allocate their resources better.
3. Average Order Value (AOV)
An important metric known as Average Order Value (AOV) provides insight into how much customers spend on average in one deal. Divide of total revenue and the number of orders gives you an AOV. Keeping track of AOV supports e-commerce by understanding and identifying upselling and cross-selling chances. These may include selling products together (bundling), or giving an extra discount when ordering large quantities. This increases revenue per customer and has a positive effect on the general profits.
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4. Customer Lifetime Value (CLV)
CLV is one of the most important KPIs used in predicting the entire gross revenue that a company might achieve at any time, from all the customers with whom they do business throughout the relationship. Establishing this requires multiplying the average purchase value, the average purchase frequency, and the average customer lifespan. Higher CLV reflects strong customer loyalty and implies more profitable customers in the long run. E-commerce can achieve long-term growth by concentrating more on improving customer satisfaction and retention to maximize CLV.
5. Customer Retention Rate (CRR)
Customer Retention Rate (CRR) displays the percentage of customers who stay and continue to buy products in a given period. A high CRR indicates that the store is successfully retaining its customer base and securing their loyalty. This can be the result of quality service, personalized offers, strong customer relationships, and creating a positive shopping experience. A low CRR can indicate problems with customer retention. This can be due to a lack of customer loyalty, poor customer service, high prices, etc.
CRR is an important metric because retaining existing customers is usually less costly than attracting new ones. A high CRR allows the store to reduce CAC (customer acquisition cost) and increase CLV (customer lifetime value), which contributes to the profitability of the business.
6. Cart Abandonment Rate
One of the most common challenges faced by online retailers is cart abandonment, which necessitates monitoring the Cart Abandonment Rate to understand users' behavior. This key performance indicator is the rate of shopper basket abandonment. High abandonment rates could be a result of problems in checkout processes, unexpected costs, or lack of trust. E-commerce companies can detect what led them not to purchase and enhance their site to achieve the same objective of improving the user's experience.
7. Gross Margin
Gross margin is an important economic indicator that demonstrates the success of a business. The financial health of a company is measured in a variety of ways, including gross margin and profit. Margin shows the difference between a company's total revenue and the variable costs of producing goods or providing services.
Calculating gross margin will show whether a business can cover all of its expenses with sales revenue. The ratio also helps to understand:
- whether the company is using its money properly;
- what shareholders get if the company pays dividends out of its profits;
- how competitive the company is.
8. Return on Investment (ROI)
The ROI metric is an all-encompassing way of measuring which marketing and advertising campaign is the most profitable. It shows the net profit incurred out of a certain campaign against the total expenditure on the campaign. Positive ROI shows that a campaign was profitable and negative ROI indicates that the returns were not sufficient. ROI analysis enables e-commerce companies to utilize their budgets effectively while identifying the most productive marketing channels and enhancing their overall marketing strategy.
9. Social Media Engagement Rates
Social media engagement refers to likes, comments, clicks, and other actions that users take with content. A high level of engagement on social media helps to increase brand awareness. Reposts play a special role here, which can attract additional traffic to your website. Posts with an option to buy, such as those on Instagram, also help increase conversions.
Whether social media engagement levels are one of your main ecommerce KPIs depends on how active you are on social platforms. Adventure Cats, for example, are very active on social media. Instagram and Facebook are their main drivers and the company closely monitors the engagement rate.