5 Important Ecommerce Metrics That Are Crucial For Your Success

May 18, 2022

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Ecommerce metrics play a vital role in successfully managing an eCommerce business. They allow you to make informed decisions, analyze your store performance, and help you to optimize areas that require improvement. However, it is essential to understand what metrics you should be tracking. Some do not serve a big purpose and have very little significance over your business, i.e., vanity metrics.

If you are at the beginning of your eCommerce journey, here are five essential eCommerce metrics that you need to follow:

1. Conversion Rate

This is perhaps the most significant of all and is one of the most fundamental metrics that every brand tracks.

Conversion Rate, CR can be defined as the total number of conversions (purchases) divided by the total number of visitors.

CR = ( Total number of conversions / Total number of visitors )

Even though the average conversion rates can vary according to your industry, it is vital to keep track of a benchmark to analyze your conversion rate. The process of improving this metric is called conversion rate optimization (CRO). If you find your CR decreasing, it’s time to optimize your sales funnel for a better shopping experience.

2. Customer Acquisition Cost (CAC)

CAC = ( Total costs of acquisition / Total number of new customers )

If you notice your CAC is gradually increasing with time, it is an indicator that there are issues with your product or customer experience. Investing in web traffic does not mean that all of it will get converted, so optimize your acquisition channels so that you only have to pay for quality traffic that converts. It is crucial to keep your CAC under control to maximize profitability.

3. Average Order Value (AOV)

Average Order Value is the average amount a customer spends on each order from your eCommerce store. It is calculated by dividing the total revenue obtained in a specific period by the total number of orders during that period.

AOC = Total Sales / Total Orders

Your AOV lets you understand how much your audience prefers buying your products. Ensuring a higher AOV means you’ll be reaping more profits. Cross-selling, add-on services, loyalty programs, and free delivery above specific amounts are some ways to increase your AOV.

4. Customer Retention Rate (CRR)

The Customer Retention Rate is the measure of repeat customers out of the total number of customers.

CRR = ( Number of customers with more than 1 order / Total number of customers ) * 100

Retaining customers can be far more profitable than acquiring new customers and is a core element of your eCommerce business. This metric is directly dependent on customer satisfaction and loyalty, so ensure that it is prioritized. A follow-up process after a successful purchase can be an excellent way to get started in improving your CRR. Provide loyalty programs, discounts and remind them of your offers.

5. Customer Lifetime Value (CLV)

Customer Lifetime Value is one of the most prominent eCommerce metrics that need to be stressed upon in the long run. It measures the total revenue your customers spend for you in their entire customer lifetime.

It can be calculated in three ways:

i) Predictive: CLV = AOV / Number of orders

ii) Average: CLV = Total revenue / Total number of Customers

Historical: CLV = Order 1 + Order 2….

To increase CLV, you need to increase AOV, order frequency, and customer life cycle. CLV takes a big picture approach and is a critical metric that needs to be prioritized.


The metrics mentioned above are some of the most important key identifiers that have a big impact on the success of your eCommerce business. However, they do not stop with these five and include many others that significantly impact your brand’s overall growth and stability.

Optimizing your website will require the data from these metrics and therefore, it is essential to invest in effective monitoring campaigns. Good knowledge of these eCommerce metrics will help you fine-tune your strategies and improve your store performance.

Thanks For Reading !

Author - Rithik Valsan


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