The 4 Best Metrics to Track to Successfully Scale Your Ecommerce Company

This post originally appeared on the Do It Better blog.

Tracking is trendy right now. Just look at the FitBits, the Apple Watch, and all other wearables out there that allow you to monitor your fitness. People love them.


By analyzing every movement you make, these wearables make it easy for you to see what is working (and what isn't) as you try to achieve your fitness goals.

Guess what: tracking certain metrics of your ecommerce business can have the same effect.

After all, what gets measured gets managed.

If you're a growing ecommerce company, you've probably reached a point where customer acquisition isn't as difficult as it was initially. Your current challenge is most likely identifying what areas to address in order to increase your revenue.

My previous ecommerce startup, Offmap, focused on providing affordable adventure travel packages that were guided by your smartphone instead of a tour guide. Just weeks into the business, I began tracking four key metrics. Because of the knowledge I extracted from this data, I was able to successfully increase my revenue just one month after I began tracking.

Let's take a deeper look at the 4 metrics I tracked, and how they can help you grow your business:

Cost Per Acquisition
One of the metrics I chose to focus on early in Offmap's life was cost per acquisition (CPA).

You can determine your cost per acquisition by taking your total marketing spend for a certain channel over a period of time, and then dividing it by the number of new customers you acquired from that channel during that span. For example, if you spend $100 on Google AdWords and acquire 10 customers from that channel, your CPA would be $10 per customer for your AdWords channel.

At Offmap, I intentionally built a plan to keep my CPA low into the social/viral part of my launch strategy from Day 1.

To get first access to our adventure packages, users were required to share a certain URL to their Facebook AND have two friends also sign up. Then, I incentivized sharing even further: the more friends they signed up, the more they got (I even gave away a free trip!).

Since Facebook sharing is free, my only costs were programming the social functionality into my site so I could validate users' access via successful shares and signups (however, it is important to note that I still incurred the cost of the "reward" I was giving away, in this case a free trip).

Though you may not have even known what CPA was when you launched your ecommerce business, it's never too late to begin monitoring this metric! A few questions to ask yourself to find where and how you can identify opportunities to lower your cost per acquisition include:
  • What are my best performing products?
  • Are my customers sharing a certain product on social media more than others?
  • Are the products on my homepage resonating with my target demo?
  • Are the people clicking on my ads being directed to targeted content?
  • Do I have channels that aren't pulling their weight?

Once you have an answer to these questions, be aggressive with your next steps. A few things you can do include implement unique tracking URLs, offering special discount codes, and placing your best performing products on your home page.

Monitor your customers' response to the changes you make, and you will gain incredible insight into what they actually want to see and buy.

Customer Lifetime Value
A customer's lifetime value can be thought of as the dollar value of a customer relationship (source). Ideally, you want to have a positive number for your CLV that is also greater than your CPA, our first metric.

Determining your CLV is typically done by answering three questions:
  1. What is my customer acquisition cost (CPA)?
  2. What is my annual profit per customer?
  3. What is my customer retention rate (CRR)?

Once you've accurately calculated your CLV, it's time to dive even deeper into the data by filtering these results by channel. Doing this will provide you with insight into which are nurturing a higher CLV.

For example, if your Facebook Ads CLV is $500 but your Instagram CLV is $800, it would be wise to increase spend in your Instagram initiative (as it's a better performing channel).

I was able to determine that my highest-value CLV channel at Offmap was Facebook, and this is what spawned my incremental rollout of sharing initiatives. As mentioned, I originally offered early access to users who successfully signed up 2 friends. Later, I began rolling out greater sharing initiatives (successfully sign up 5 friends, get an entry for a free trip). As a result my CPA lowered and my CLV increased.

But what if your product has a higher price point than most online retail websites? A typical Offmap customer would purchase once in a 12-month period (maybe twice if we were lucky). If this is the case for your business, your CLV is no less important. In fact, it's the opposite: You need to do everything in your power to please these customers and make their experience as high quality as possible so that they will return and spread the word.

Repeat Purchase Rate
Only 32% of customers place a second order in their first year as a customer. Let that sink in for a minute: 32% of your customers are buying once, and then disappearing.

Data like this suggests that many customers are coming to your ecommerce website to simply buy once and fulfill a need. Because of this, it can be hard to tell if your repeat purchase rate is healthy, or something that needs to be optimized.

To find your repeat purchase rate, you just need to divide the number of customers that have purchased from you a second time by the total number of customers.

A year into Offmap, my repeat purchase rate was about 15%. Even though this seems quite low (and would be in any other industry), companies in the travel industry need several years of data to properly analyze and improve this number. After all, most people only take one trip per year.

Despite this, I still wanted to up my repeat purchase rate. To do this, I went for the most personal space I could: The inbox.

To implement a cohesive strategy for my inbox targeting, I used three simple steps:
  1. Analyze their purchase (what are they interested in?)
  2. Segment my email list to personally relate to specific interests
  3. Implement this data into my ad campaign strategy (products with greater interest and greater repeat purchase rate should be highlighted more)

These three steps have multiple benefits. From a business development angle, learning about your customer is one of the best investments in your ecommerce business. On top of that, tracking your repeat purchase rate is crucial to lowering your costs. If I hadn't taken the time to learn what adventure packages drew my customers in and what packages were purchased repeatedly, Offmap would have drained itself of cash after the first year just in marketing costs.

Shopping Cart Abandonment Rate
Customers are fickle. Unless they are die-hard fans of your brand, chances are they will change their mind during their time on your site and abandon a cart with one or more items in it.

There are various reasons customer do this, but at Offmap I figured out it was related to the fact that they were often just 'browsing' or planning for the future. They weren't necessarily ready to buy right at that moment. They would add the trip package to their cart, browse around, maybe view their cart to see the total price, and exit.

Sale lost? Not necessarily.

I began to rethink the way I thought about my abandoned cart rate. It didn't necessarily mean I was losing that percentage in sales. I decided to attribute the percentage to users who were gathering information but not yet ready to purchase, making them qualified leads.

My channel of choice to nurture these leads was, once again, email. There's nothing more personal than a message to your Inbox. And Offmap required users to provide their email during the onboarding process, so I already had a large list to work with.

The approach that makes the most sense is building and sending abandoned cart recovery emails, so that's exactly what I did. By showing interested (but not sold) customers what they left in their cart and coupling it with a personalized message, I was able to convert 10% of my abandoned cart users to paying customers.

Though that percentage may not seem very high, keep in mind that my product price tag was significantly higher than most consumer purchases (ranging from $800 - $1,000 USD), so 10% equated to a decent amount in recovered revenue.

This exact scenario may not apply to you, but a very popular reason for cart abandonment is "sticker shock". In fact, a whopping 56% of shoppers leave a site without making a purchase because of unexpected costs.

An effective strategy to minimize "sticker shock" is to offer free shipping. Not only should you offer it, you need to make it obvious that you are giving your customers this break. Though it may not be a significant reduction in overall charges, the psychological seed has been planted that you are, indeed, consuming some cost in this deal. And that's all you need.

When the customer sees their shipping charges zeroed out in the checkout process, they are more likely to follow through and complete the purchase.

Measuring and Managing
Tracking these 4 key metrics can easily improve your bottom-line by shedding light on your customer behavior and highlighting areas for improvement. Think of these metrics as a "wearable for your business" - you're tracking its health and measuring your progress and growth. If you keep tabs on these and react appropriately to changes, this wearable will keep moving you closer to your business goals.