Like many eCommerce store owners, you probably poured hours into reviewing and tracking the endless Google Analytics reports. Very few metrics will actually define your business, these are the ones that matter for eCommerce businesses: repeat purchases, conversion rate, and gross product margins. Study these metrics and focus on the ones that make sense to you. Let’s review:

1. Repeat Purchases

Add a new segment in Google Analytics

In Simple Terms: The number of orders from returning customers over time

Why is the repeat purchase rate important? Your ultimate growth as an eCommerce business will come from repeat purchases. The absolute number of repeat orders is a key indicator if the company is in growth mode or stagnant or simply churning new customers. These customers typically come back since you offered total value for what they are looking for – hone on this, learn this, and always strive to improve the core value your business provides.

How to Track: Setup a new segment in Google Analytics or click and import the segment into your GA. This will allow you to view a bunch of metrics filtered to returning customer. Here’s another way to track Repeat Purchase Rate in Google Analytics.

How to Improve:

Checkout our article: 10 Tips to Increase Customer Loyalty and Boost Repeat Purchases. But here are some quick tips:

  1. Make sure you remain competitive within your category over time. This includes total cost which includes shipping, taxes, and product price.
  2. It is important to think of the customer experience in a wholistic manner: from before they found your site, searching (maybe), to browsing on your site, to checkout, to order confirmation, shipping confirmation, time to arrive, open the box, quality of the product and overall value. Always strive to improve each one of your customer’s experiences.
  3. Remain relevant in your customer’s eyes. Brand awareness comes into play here. Whether you remain active in social media or if you are a die hard email marketer, it doesn’t really matter. What matters is that you keep high visibility with your existing customers and they remember to come back for more.

2. Conversion Rate

Typical eCommerce conversion rate in Google Analytics

In Simple Terms: The number of transactions over the number of visitors over time

Why is the conversion rate important? Conversion rate provides an indication that your site is functioning properly and that your customers can find products, make a purchasing decision, and make the actual purchase on your site. Conversion rates that are too low indicate a problem that needs to be fixed. High conversion rates indicate you should experiment with advertising, if calculated properly you can drive more sales by buying additional traffic in an efficient manner. Typically, you want to be at least 1.5% or higher. If your conversion rate is higher than 3% you are potentially leaving money on the table and should increase marketing efforts.

How to Track: This one is relatively simple, in Google Analytics head over to the eCommerce section where you will see conversion rate metrics ready.

How to Improve:

We recently shared how we increased conversion rates by 50% for one of our customers. Check it out. Here are some quick tips:

  1. Make sure your site is 100% functional (shameless plug: we can help). Double check on different devices (mobile, desktop) and different browsers. In some cases you may want to use better tools such as fullstory or hotjar. Keep asking your users to let you know if there’s something wrong.
  2. Are you offering as many payment options as you can? Make sure to offer all major credit cards and PayPal as payment options to start. For some specific cases you may want to consider purchase order, mailing a check, cash on delivery or any payment options that your particular customer may need.
  3. Make sure that there are no show stoppers on checkout, no hidden fees or any additional costs that are too high such as shipping or tax costs that are added after the fact.
  4. Is it easy to reach out to you during checkout? confidence and trust is really important during checkout. Make sure that you have a visible phone number or a proper way to contact someone during checkout.
  5. For some die hard penny pinchers, you may want to setup a 5% off coupon for google. It can even be a page on your site that eventually gets indexed, but unless someone specifically searched for it they won’t find it. As long as you still have a good margin, why not?

3. Gross Product Margin

source: https://www.marketingsherpa.com/article/chart/ecommerce-average-gross-margins

In Simple Terms: The amount of profit over the cost of a product in percentage.

Why is gross product margin important? Your product margin is fuel for growth. Hence, it’s important to get this right and focus on the profit centers of your eCommerce business so you can use the extra cash in marketing (increase traffic) or in additional product development (increase value).

How to Track: Ok, there’s no easy way to track it in Google Analytics. However you can produce a report in Magento by including the cost of the product as an attribute and calculating price sold minus the cost and divide that by the cost. Some experienced store owners will have this data in their POS or Quickbooks and will keep an eye on this over time.

How to Improve: there are essentially 2 approaches here: fix low margin product sales and increase high margin product sales. Some suggestions include:

  1. Reduce production or acquisition costs – reduce production costs or negotiate with the source.
  2. Reduce shipping costs for these products – Look outside of the top shipping providers, some that come to mind are GSO and OnTrac but I’m sure you can find other local shipping companies that are way more cost effective for your particular customer base than what you thought was the standard.
  3. Bundle low and high margin products together
  4. Limit availability of low margin products
  5. Add high margin products to your catalog

To summarize, any business should focus on some form of metrics. We find that the above metrics are the ones that eCommerce store owners should focus on and work to improve these metrics over time. Repeat purchase rate is key to understanding your total value offering. Conversion rate indicate health in the shopping experience and can help you determine your focus. Gross product margins is your fuel for growth, track it and learn how to improve your bottom line.

The truth is that each business is a little different so it is hard to provide more specific guidelines. However track one or all of the above metrics and work to improve them over time. Obsess about it and make small steps to win the game.

What are your key eCommerce metrics? how often do you review them? what actions do you take when the metrics go down or up?

Ron Peled

About Ron Peled

Builder of things. Builder of teams. Passion: eCommerce & Marketplaces. Magento expert. CTO Mentor.

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