The Essential Ecommerce KPIs Every Store Needs to Track (and How to Use Them)
If you’re running an ecommerce business without tracking these key performance indicators (KPIs), you’re flying blind. Understanding the right metrics can mean the difference between steady growth and wasted ad spend. But which KPIs actually matter?
Let’s break down the most critical ecommerce KPIs you should be tracking and how to use them to optimize your strategy, drive sales, and boost profitability.
1. Conversion Rate (CR)
💡 What It Is: The percentage of website visitors who complete a purchase.
📊 How to Calculate: (Total orders / Total site visitors) x 100
🚀 How to Improve It:
- Optimize product pages with better images, compelling descriptions, and reviews.
- Simplify the checkout process to reduce friction and cart abandonment.
- A/B test different call-to-action (CTA) buttons and page layouts.
- Improve on-site personalization to show more relevant content throughout the shopping experience.
2. Customer Acquisition Cost (CAC)
💡 What It Is: The amount of money spent to acquire a new customer.
📊 How to Calculate: Total marketing & sales cost / # of new customers acquired
🚀 How to Improve It:
- Focus on organic marketing channels (SEO, email marketing, social media).
- Optimize ad targeting to reach high-intent customers.
- Improve retention strategies to maximize customer lifetime value (CLV).
3. Average Order Value (AOV)
💡 What It Is: The average amount spent per order.
📊 How to Calculate: Total revenue / Total orders
🚀 How to Improve It:
- Introduce bundled product offers.
- Offer free shipping for orders above a certain threshold.
- Display “frequently bought together” recommendations.
- Add buy now pay later as a checkout option, like Klarna.
4. Customer Lifetime Value (CLV)
💡 What It Is: The total revenue expected from a single customer over their lifetime.
📊 How to Calculate: Average order value x Purchase frequency x Customer lifespan
🚀 How to Improve It:
- Implement personalized email marketing to keep customers engaged.
- Offer loyalty programs and incentives for repeat purchases.
- Upsell and cross-sell relevant products at checkout.
5. Cart Abandonment Rate
💡 What It Is: The percentage of shoppers who add items to their cart but don’t complete the purchase.
📊 How to Calculate: (1- (Completed transactions / Shopping carts created)) x 100
🚀 How to Improve It:
- Use abandoned cart email sequences to bring customers back.
- Offer discount codes or free shipping as incentives.
- Simplify the checkout process with guest checkout and fewer form fields.
6. Return on Ad Spend (ROAS)
💡 What It Is: The revenue generated for every dollar spent on advertising.
📊 How to Calculate: Revenue from ads / Cost of ads
🚀 How to Improve It:
- Use retargeting ads to convert warm leads.
- Focus on high-performing ad creatives and test different ad copies.
- Optimize landing pages for better conversion rates.
7. Email Open Rate & Click-Through Rate (CTR)
💡 What They Are:
- Open Rate measures the percentage of recipients who open your email.
- Click-Through Rate (CTR) measures the percentage of recipients who click a link in your email.
📊 How to Calculate:
- Open rate = (Emails opened / Emails sent) x 100
- CTR = (Clicks / Emails delivered) x 100
🚀 How to Improve It:
- Personalize subject lines to increase open rates.
- Use clear CTAs and engaging visuals to boost CTR.
- Segment your email list to send more targeted offers.
Final Thoughts
Tracking ecommerce KPIs isn’t just about collecting data… it’s about using insights to drive smarter decisions. By focusing on these key metrics and continuously optimizing, you’ll increase sales, lower costs, and create a better shopping experience for your customers.
📊 What’s the most important ecommerce KPI for your business? Drop a comment below!