Knowing your data is such a huge part of running a successful e-commerce business. Making sure you have the systems in place to collect as much data as you can will be critical to your success. Decisions you make should be informed by the data available and it should be monitored regularly to help you determine problem areas, track your progress and help you make business decisions.
There are so many data points you can track through Google Analytics and Shopify’s built in reports, but I’ve outline 7 key ones I track in my business which are a good place to start.
Conversion Rate (Total & by Source)
Conversion rate is one of the most important data points you should be checking for your online store. Knowing the percentage of the visitors to your site that actually end up converting and make a purchase is critical to knowing if and where changes should be made.
You should keep track of your conversion rate on a monthly basis, comparing it Year Over Year (YOY) and to previous months. Changes made to your website should work to improve your overall conversion rate.
Not only should you track your overall conversion rate, but you can also track conversion rates by a variety of metrics such as: Conversion Rate by Traffic Source or Conversion Rate by Landing Page. You should absolutely be paying attention to your Conversion Rate on all paid campaigns.
Knowing these numbers can help you see if there are specific areas that are outperforming (or underperforming) your average, so you can see what you can learn from it.
Average Order Value
Average Order Value (AOV) will help you see gauge shopping trends, and shopping behavior. Do AOVs get higher or lower during peak seasons, i.e. Christmas?, is there a certain customer type that tends to spend more or less than your site average?
Like the Conversion Rate, you should track your AOV by Traffic Source, Customer Type, Campaigns, Landing Pages and more. This can help you make decisions both for planning purposes, but also to optimize for higher order totals.
Obviously the higher AOV, the better in terms of margins, as a general rule of thumb, as you will save on packing materials and shipping rates by sending multiple items together.
Return on Ad Spend
If you are running any kind of paid traffic campaigns for your online store, you should be very familiar with your Return on Ad Spend (ROAS). This number is the best indicator of whether your campaigns are profitable.
You should always aim to have an ROAS for your campaigns of over $1, however the higher this number the better, and double digits, is a great place to be here.
What ROAS tells you, is for every $1 you spent, you got $X back. If your ROAS is $1, that means you broke even (not factoring in your actual product and fulfillment costs. But just accounting for ad spend and revenue.) So, if you have an ROAS of $11.37, that means for every dollar you spent you made $11.37. Or by spending $100.00, you made $1137.00.
Obviously the ROAS that you shoot for will vary widely based on what you charge for your items and what your profit margins are. You may be comfortably making money at an ROAS of $3.00 – $4.00, or you may need to shoot for higher ROAS to make your campaigns truly profitable.
While a number of other factors – for instance are your ads solely an acquisition tool, and you have a high repeat customer rate – can affect how you feel about your ROAS. But this is absolutely a number that you should be watching closely.
Cost per Purchase
If you are running paid ad campaigns to your online store for sales, another metric you should be familiar with is Cost per Purchase. In other words: How much does it cost you on average to get a new sale through your paid campaigns?
This number can vary based on your targeting and your goals for the campaigns. Is it a re-targeting campaign (cost per purchase should be lower) or are you working a cold audience (cost per purchase is probably going to be higher)?
Where you want this number to be will be different for various businesses. Your comfort level with your acquisition cost will be influenced by your AOV, margins and repeat customer rate, just to name a few. But you’ll want to optimize your campaigns to keep your Cost per Purchase as low as you can.
First Time vs. Returning Customers
Do you know what your returning customer rate is? It’s a good idea to keep tabs on this data point. No matter what you’re selling, getting the people who have already purchased from you to come back and shop again is an important step in building a profitable business.
However, returning customers can not be the only segment you focus on. First-Time customers are important to in growing and scaling your shop. Having a healthy balance between these two and noticing when one is slacking, can be important in helping you address problem areas in acquisition, marketing or customer satisfaction.
First Time Customers [divided by] Total Customers = % of First Time Customers
Percentage of Sales by Traffic Type
Knowing where your sales are coming from is another big piece of the puzzle. What percent of your orders come from Google, Facebook, Email Marketing, etc.? Knowing this information can help you determine where to spend your marketing budget and if you need to put extra work into any areas.
In a best case scenario, you would get a large percent of your sales from organic traffic sources, but we don’t live in a perfect world. Knowing the numbers and ratios can help you track your progress and measure improvements.
Top Sellers by Profit Margin
You may know what your best sellers are. And you probably know what your worst sellers are. (If you don’t, you should sort that out too.)
But, do you know which products are your top Profit drivers? If your best selling product sells 100 units in a month, while another product sells just 50 units, you might be inclined to think that Product #1 is your most important product. BUT, if Product #1 has a profit of $10 and Product #2 has a profit of $25, that isn’t going to be the case.
Product #1 makes you $1,000.
Product #2 makes you $1,250, selling half the units.
Knowing this, you might be inclined to feature Product #2 more heavily in your advertising or give it more prominent space on your website.
Profit of Product [divided by] Product Retail Price = Profit Margin Number of Product Sold [multiplied by] Profit = Total Profit
I build using Shopify
Shopify provides industry leading software for creating e-commerce websites that put user experience first – on both front and back ends. They provide excellent customer support and give you access to all the tools you need for your online business to thrive.
Learn more about Shopify