Investment in ecommerce is one area that does not seem to have been affected by the downturn in the economy.  Many companies are investing their reduced budgets online as it can be one of the best ways to increase sales with comparatively little investment.

I have built many ecommerce sites from the ground up over the years, I have worked with many ecommerce software packages and I have experienced ecommerce from a user’s perspective.  In my view whenever a company makes an investment in ecommerce or makes changes to their online store there are only a few key metrics that need to be tracked.

Number of new visitors

The number of new visitors shows how well your marketing/ advertising/ multi-channel approach is working.  Attracting new visitors to your site is the key is growing your online revenue.

Number of repeat visitors

Not everyone buys on the first visit, very often customers will come to your site, store items in their basket and come back another time to purchase.  You will also have a number of people who become repeat customers and order regularly.

Conversion rate

The number of people visiting your site is of little value unless they actually make a purchase.  The higher the conversion rate the better. It is also useful to track the conversion rates of new and repeat visitors separately to get a clearer picture of your conversions.

Checkout abandonment rates

Once a customer has decided to buy then the checkout process is the key to your conversion rate. You need to have a clear view of each of your checkout steps and the abandonment rates at each stage (i.e. the number of people that fail to move the the next step). Using this information you can then try to improve/ optimise the stages with the largest abandonment rates.

Average order value

While your target average order value will vary greatly based on your industry, ideally you would like to see a year on year increase.  Many companies will have an average order value that they need to achieve in order for their online operation to be successful.  I attended a job interview with Tesco a few years ago and as part of my assessment they asked me to estimate the breakeven order value for Tesco.com. My rough calculation showed it to be around £40.

Orders per customer

If your online store has a good CVP and has good usability you would expect to see that your customers make many repeat orders. This obviously depends on the industry and the product, but for the majority of online stores repeat orders have the highest profit as the average customer acquisition costs are lower.

Summary

Of course there are many, many more metrics that you can track but in my view these are the key ones.  Even small changes in any of these metrics can have a big impact on your ecommerce bottom line.

After more than 10 years of growth e-commerce still only accounts for about 8% of total commerce in the US. Clearly, we have a long way to go in moving more commerce online so there is still a lot to be gained from investing your corporate budget in ecommerce.