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eCommerce KPIs: the 9 Most Crucial Metrics for Fresh Entrepreneurs

Weekly, biweekly, quarterly, or even monthly – no matter when you measure your eCommerce KPIs, measure you must. 

That said, if there‘s one difference between experienced and non-experienced eCommerce entrepreneurs, it’s unquestionably the kind of metrics they prioritize.

Instead of keeping track of every available metric, you should focus on the right metrics – ones that have a significantly positive impact on the business when optimized.

For example, when you analyse collected data about previous customer behaviour, you can neither overstock or understock your product. 

Read on as we discuss the nine most crucial eCommerce metrics that can help you understand how visitors interact with your brand.

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1. Sales Conversion Rate 

Formula: (Number of Sales / Number of Users) x 100%

Sales conversion rate indicates the total percentage of visitors who end up making a purchase from your website, which is also the ultimate goal of all businessmen. 

You can indeed differentiate this into two categories: micro conversion and also macro conversion. While the former paves the path to the final sale, such as a person clicking on a product on the category page, the latter refers to the final purchase.

A good rule of thumb with these eCommerce KPIs is to have a conversion rate between 1 and 5 percent – at least according to Marketing Sherpa.

How to Optimize this eCommerce Metric:

  • Add plenty of high-quality images to boost the visual appeal of your website.
  • Include customer-submitted reviews to your product pages to win customer’s trust.
  • Incorporate trust badges on your website to make it appear legit.

2. Website Traffic 

Formula: [(Number of Sessions from Current Year – Number of Sessions from Previous Year) / Number of Sessions from Previous Year] x 100%

It’s simple really – when you have more traffic, there‘s correspondingly a higher possibility of more sales. So if you drive your website traffic, you will increase conversions and also earn more revenue. This is why getting more traffic should always be on your priority list - and one of your main eCommerce KPIs as a result.

If you can get more organic visitors to your site without paying for them, it'll be even better. Given that the overwhelming majority of companies use organic traffic to gauge content marketing success, getting content out there to reel in traffic is consequently more important than ever.

How to Optimize this eCommerce Metric:

  • Increase social media engagement by putting up interactive and creative content. You can also use tools like Twitter automation tools, Facebook automation tools, etc. for best results on social media marketing.
  • Maximize your impact by curating your feed’s overall look and feel. Users spend more time exploring an account when it is visually striking. To achieve this, you can use photo editing apps to add distinct filters, borders, and other visual elements related to your brand.
  • Recruit authentic influencers whose interests are aligned with your brand.
  • Use search engine optimization (SEO) to rank higher on search engines.
  • Consider blogging to also encourage people to become repeat visitors to your site. It’s best to write blog posts yourself if you have the time, but there are blog writing services that manage the process for you. 

3. Revenue by Traffic Source 

Formula: Unlike the other eCommerce KPIs, there‘s no formula for this one. Instead, you need an analytics tool, such as TWIPLA, and to also set up eCommerce source tracking.

Overall, all website traffic isn’t equal. You might get more visitors from sources who eventually convert into customers as opposed to sources that send you visitors that only window shop.

Hence, you must spend money on only those sources that work and immediately also stop any expenditure on sources that don’t work well – or don’t even work at all. You can identify channels/sources that give you actual customers by measuring your revenue by traffic source.

How to Optimize this eCommerce Metric:

  • Cease expenditure on channels that don’t give you enough customers.
  • Scale-up expenditure on profitable channels.

4. Email Opt-Ins

Formula: (Number of Emails Opted In) / (Number of Users) x 100%

Considering you get $44 for every $1 invested, email marketing surely isn’t dead. 

You can also advertise and sell your products repeatedly without incurring extra expense. This is precisely why marketers and business owners equally want to expand their mailing list – plus, having enough subscribers reduces dependency on other platforms like Facebook and Google to drive traffic.

The idea here is to keep adding more subscribers to your email list. It doesn’t matter if they don’t buy your product – it’s ultimately the interest that should be there. A good email opt-in rate should be between 1 to 5 percent.

How to Optimize this eCommerce Metric:

  • Include a welcome gate or exit intent pop up.
  • Add an opt-in offer where you explain why the visitors should subscribe to your email list.
  • Bold and attention-grabbing CTAs that tell visitors to enter their names to get access to exclusive content and offers.
  • To really get the opt-ins you’re looking for, consider utilizing YouTube as a traffic source and also put one call to action in each video that leads to a landing page.  Aside from driving traffic to your site, this should also increase your Email Opt-Ins and can even become an additional way to make money for your business

5. Customer Acquisition Cost 

Formula: Amount of Money Spent on Sales and Marketing / Number of Customers Acquired

Customer acquisition cost, also known as CAC, indicates the amount of money you’ll have to spend to "buy" a customer. For instance, if you spend $1000 on sales and marketing and get 50 new customers, you spend $20 to "acquire" every customer. Understandably, you want to keep this metric as low as possible.

Knowing your CAC will allow you to allocate your total marketing budget more effectively, while also helping you identify the number of customers you should acquire in a specific time period.

This makes it one of the top eCommerce KPIs if you're chiefly looking to really dig into your costs.

How to Optimize:

  • Encourage word of mouth publicity and setting up a referral system.
  • Prioritize customer retention.
  • Build SEO content that includes informational and also transactional search intent based on your buyer personas.
  • Improve sales conversion rates.

6. Average Order Value 

Formula: Total Revenue / Number of Orders Placed

Average order value refers to the average amount a customer spends while purchasing from your website. 

Imagine there are two stores, Store X and Store Y. While the former gets 1000 visitors a day, the latter receives 100, and both have a sales conversion rate of 1 percent. So Store A makes 10 sales every day, and Store B makes 1.

The catch here is the average order value for both is very different. 

The average order value for Store X and Store Y is $20 and $200, respectively. As a result, both have a total revenue of $200 despite Store B having lesser traffic. Therefore, you‘ll make more profit if your customer purchases more in every order. 

As you may have realized, you get an accurate picture of your business by measuring this metric.

How to Optimize this eCommerce Metric:

  • Give discounts on minimum purchases.
  • Upsell your products by making customers buy things at a more expensive rate or by equally complementing products.
  • Also offer free shipping (learn how to reduce shipping costs).

7. Shopping Cart Abandonment Rate

Formula: 1 – (Transactions Completed / Shopping Carts Initiated) x 100%

Every eCommerce business owner’s biggest peeve, cart abandonment rate indicates the rate of shoppers who add items to the shopping cart but leave the site before making a purchase.

It's certainly a frustration. Nearly 70% of shoppers end up abandoning their carts, which is way above the optimized rate of 20%.

But by considering these amoung your eCommerce KPIs, you will quickly find ways to lower this figure significantly.

How to Lower this eCommerce Metric:

  • Simplify the checkout process.
  • Send cart abandonment emails.
  • Install progress indicators on the checkout page
  • Implement Google autofill function to also save your shoppers’ time.

8. Net Promoter Score

Formula: Percentage of Promoters – Percentage of Detractors

This one feels markedly different from the other eCommerce KPIs.

The whole idea of calculating your net promoter score (NPS) is to determine customer loyalty and brand sentiment. You can measure your NPS by asking your users a simple question: “On a scale of 0 to 10, how likely are you to recommend our product to your friend or acquaintance?“

You can group your answers into three categories:

  1. Detractors: Users who answer between 0-6 and are unlikely to purchase again from your website.
  2. Passives: Users who answer between 7-8 don’t feel any strong emotional connection with your brand but are likely to buy your products.
  3. Promoters: Users who answer between 9-10 are your biggest fans and will even recommend your products to others.

Think of the whole system as your customer loyalty spectrum. 

How to Optimize this eCommerce Metric:

  • Take the initiative to connect with detractors and passives.
  • Reward promoters by giving them exclusive discounts, complimentary gifts, and so on.

9. Percentage of Returning Customers

Formula: (Number of Returning Customers) / (Total No. of Customers) x 100%

Getting new customers is obviously a priority, but this doesn’t mean we should neglect your existing customers. In fact, retaining customers and encouraging them to buy again (and again!) from the website is actually better and cheaper than acquiring new customers.

As such, this is one of the most important eCommerce metrics for you to follow.

How to Optimize this eCommerce Metric:

  • Consistently send newsletters and also emails.
  • Send handwritten notes or digital gift certificates.
  • Set up a customer loyalty program.
Website analytics - TWIPLA

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Our advanced website intelligence solution will enable anyone to grow their website quickly - all while also staying data privacy compliant!


That's Your Key eCommerce KPIs Explained

Measuring and optimizing specific eCommerce metrics will help you make reliable business decisions that drive sales. You can use TWIPLA to keep track of all your website analytics, while also being data privacy compliant. New eCommerce features will be launched within the app in the course of 2021, so you’ll be able to strategize effectively using the collected data and actionable insights, which, in turn, can also ensure long-term growth.

You‘ll instantly see the positive effects that understanding and also tracking metrics can have on your business’s bottom line – provided you do it right. After all, knowledge is power, and if you use the power correctly, it’s your business that will ultimately thrive.

This article is a guest post by RefferalCandy.

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