List of Shopify business metrics key to online brands.
Running an eCommerce business requires more than just a fantastic product or a stunning website. It requires constant monitoring and analysis of key metrics that offer valuable insights into your business performance.
With the right Shopify business metrics, you can gain a deeper understanding of your customers, pinpoint areas for improvement, and maintain the motivation needed for entrepreneurial success.
In this article, we will delve into the essential Shopify business metrics that will fuel your motivation and pave the way for long-term success. So, let’s get started!
A metric is a quantifiable measure that helps assess our progress, compare different goals, and determine if we are achieving our set targets. It can be numbers, percentages, or even qualitative observations.
For example, conversion rates are used by eCommerce stores to understand how many website visitors end up becoming customers. A higher conversion rate generally shows that your website design and marketing strategies motivate customers to take action.
On the other hand, a lower conversion rate may suggest areas for improvement, such as optimizing your website’s user experience, refining your product descriptions, or enhancing your checkout process.
While the Shopify business metrics you measure should be entirely based on your brand’s goals and objectives, we recommend adding the following to your reports:
Let’s say you generate 1000 leads monthly but only convert 1 or 2 in sales. Poor number, right? Yet, you recklessly spend time generating more leads rather than improving your conversion process.
To avoid such poor results, a sales conversion rate helps you understand the leads turning into actual paying customers. In addition, observing this percentage will also help you understand the working sales tactics and those requiring improvement.
Sales Conversion Rate= (Number of Sales / Number of Leads) x 100
For example, if a company had 200 leads in a month and 50 of those leads resulted in a sale, the conversion rate would be 25%.
A reward program enrolment rate refers to the percentage of customers who sign up for a loyalty or rewards program. It helps you assess the effectiveness of your program in engaging customers.
Reward Program Enrolment Rate = (Number of customers enrolled in the reward program / Total number of customers) x 100
A higher enrolment rate indicates a strong interest and engagement with your rewards program, while a lower rate may signal the need for improvements or promotional efforts.
With some additional features, such as Flit’s store credit, you can successfully increase this rate. The store credit feature enables customers to earn credits based on their purchase activity or specific actions, such as referrals or social media sharing. These credits can then be redeemed for discounts or even free products.
Average Order Value (AOV) is a metric that measures the average amount spent by customers in a single transaction on your Shopify store. It indicates the average revenue generated per order and provides insights into your customers’ purchasing behavior.
Average Order Value = Total Revenue / Total Number of Orders
Monitoring the AOV over time allows you to assess the impact of pricing strategies, promotions, and cross-selling techniques on your store’s performance. Based on that, you can modify them and monitor results accordingly.
Customer Lifetime Value (CLV) estimates the total value a customer will bring to your Shopify business throughout their involvement with your company. It helps you understand the long-term revenue potential of your customers, allowing you to make informed decisions regarding customer acquisition, retention, and marketing strategies.
Customer Lifetime Value = Average Purchase Value × Purchase Frequency × Customer Lifespan
Let’s say the average amount a customer spends on each purchase (average purchase value) is $100, the purchase frequency is three times per year, and the average duration of the customer’s relationship with your business (customer lifespan) is five years. Then the CLV would be $1500.
With this Shopify business metric, you can understand the value of acquiring and retaining customers to implement strategies that drive long-term profitability.
Customer Account Page Visit Frequency is a metric that measures how often customers visit their individual account pages on your Shopify store. It provides insights into customer engagement and can indicate customers’ interest and involvement with your store.
Customer Account Page Visit Frequency = Total Number of Visits to Customer Account Pages / Total Number of Customers
If the visit frequency is low, consider ways to encourage customers, such as personalized recommendations, exclusive content, or incentives to drive repeat visits.
The customer acquisition rate helps measure the speed at which a company acquires new customers over a specific period. It helps businesses understand the effectiveness of their marketing and sales efforts in attracting new customers.
Customer Acquisition Rate = (Number of New Customers / Total Number of Customers) x 100
Flits’ social login feature can speed up this process as users can quickly connect with your store through their preferred social media platforms, such as Facebook, Google, or Twitter. In addition, this convenience can attract new customers who might be more likely to engage with your brand due to the ease of registration.
Customer acquisition cost tells you the average cost incurred by a business to acquire a new customer. It is a vital metric for businesses, especially those focused on growth and customer acquisition strategies.
CAC = Total Marketing and Sales Costs / Number of New Customers Acquired
With CAC, businesses can efficiently allocate their marketing budget. Moreover, understanding the cost of acquiring customers can help businesses forecast their financials and plan growth strategies accordingly.
It’s common to see customers adding their favorite products to their carts and forgetting about them. The cart abandonment rate helps measure these incomplete purchases and enables you to understand the rate at which potential customers leave the checkout process without converting.
Cart Abandonment Rate = (Number of abandoned carts / Number of initiated checkouts) x 100
With these insights, you can understand the effectiveness of your checkout flow, pricing, and overall user experience.
The checkout abandonment rate measures the percentage of customers who initiate the checkout process but abandon it before completing the purchase on your Shopify store. It focuses explicitly on abandonment during checkout, providing insights into potential barriers preventing final transactions.
Checkout Abandonment Rate = (Number of abandoned checkouts / Number of initiated checkouts) x 100
Monitoring the checkout abandonment rate will help you identify and correct potential pain points in your checkout flow, such as complicated forms, technical issues, and unexpected costs.
We all love customers who keep coming back to our stores, right? The repeat customer rate keeps up with them by measuring the percentage of customers who make more than one purchase on your Shopify store.
Repeat Customer Rate = (Number of customers who made more than one purchase / Total number of unique customers) x 100
A higher repeat customer rate suggests that you have a loyal customer base that values your products or services and is likely to generate recurring revenue. It also highlights the effectiveness of your customer retention strategies and the quality of the overall customer experience.
The customer retention rate measures the percentage of customers who continue to purchase and remain engaged with your Shopify store over a specific period. It helps you assess the effectiveness of your customer retention strategies, which is essential as you are 60% to 70% more likely to sell to an existing customer.
Customer Retention Rate = (Number of customers at the end of a period – Number of new customers acquired during that period) / Number of customers at the start of the period) x 100
With a higher customer retention rate, you can reduce customer acquisition costs and increase revenue from repeat purchases. Therefore, prioritizing customer retention helps optimize marketing budgets and allocate resources more efficiently.
No matter how hard we try, some customers will stop returning to our stores. The churn rate measures the percentage of such customers who stop doing business with you or cancel their subscriptions over a specific period.
Churn Rate = (Number of customers lost during a period / Total number of customers at the beginning of the period) x 100
A high churn rate indicates problems like poor customer experience, lack of value in your offerings, or your competitors having an edge. Keeping an eye on it helps you identify areas of improvement before any severe damage to your sales. Moreover, if you identify the problems early on, you still have a chance to retain or re-engage those customers.
The time between purchases refers to the duration between two consecutive purchases a customer makes. It measures the average time it takes for a customer to return and make another purchase, providing insights into their buying behavior.
Time Between Purchases = (Total time elapsed between purchases for all customers) / (Total number of purchases – Total number of customers)
Based on the time between purchases, eCommerce businesses can tailor their marketing efforts, re-engage customers, and encourage repeat purchases.
Average session duration helps you measure the average time visitors spend on your e-commerce site during a single session. It provides insights into user engagement, the effectiveness of your content and design, and the overall user experience. A longer average session duration indicates that users find your website compelling, engaging, and relevant to their needs.
Average Session Duration = Total Duration of All Sessions / Number of Sessions
With Flits, you can further enhance user engagement and improve the overall user experience through its customer account page feature. The customer account page allows customers to create and manage their accounts, view order history, track shipments, and easily update their personal information. Eventually, all these functionalities will encourage customers to spend more time on your website during each session.
Inventory turnover is a financial metric used to measure how efficiently a company manages its inventory. It represents the number of times a company’s inventory is sold and replaced during a specific period, typically a year.
Inventory Turnover = Cost of Goods Sold (COGS) / Average Inventory
Here COGS represents the cost of goods sold during a specific period, and average inventory is the average value of inventory held during the same period.
It’s time to identify and focus on the Shopify business metrics most relevant to your specific business objectives. Regularly measuring these metrics can gain valuable insights and enhance your Shopify store’s overall performance.
One effective way to gather data and gain insights is through your customer account page. Utilizing a customer account management tool like Flits can provide a comprehensive view of your customer’s activities, preferences, and behaviors.
So, don’t wait anymore, and start your free trial today!