12 ecommerce KPIs you should be tracking (+ tips from ecom experts)

It’s the end of the quarter and time to do a health check on your ecommerce business to see how things are going. But you collect data from so many sources—how do you know which ecommerce KPIs (key performance indicators) are the most important?

As Laura Moss, co-founder of Adventure Cats, advises, “The sheer number of KPIs you can track can be overwhelming, especially if you're new to ecom or a small business owner like I am. So I'd suggest picking the few that best indicate the health of your business and focusing on those.”

When choosing the right KPIs for your ecommerce business, it’s essential to track cost metrics, such as customer acquisition cost (CAC), alongside revenue and customer retention metrics, like percent of returning customers. It’s this combination that will give you the best picture of the overall health of your company.

To help you choose the right ecommerce metrics, here are the top 12 KPIs you should be tracking based on the advice of ecommerce experts. They’re ranked by importance based on which KPIs our experts recommended most strongly.

1. Conversion rate

Conversion rate tells you the percentage of people who make a purchase after visiting your website or product page.

You can track conversion rate for your store as a whole, or you can break it down and look at conversions for specific pages or parts of a user’s journey. For example, you might look at the conversion rates for each step in an ad campaign, as well as conversions for the campaign as a whole.

This is one of the top five metrics Peter Morrell, growth marketing at WizardPins, tracks at all times. “Small increases in our conversion rate can lead to large increases in revenue on a monthly or annual basis,” says Morrell.

Conversion rate is a vital metric for ecommerce companies of all sizes. For example, beauty brands Chella and Molton Brown and clothing brand Tuckernuck all monitor it regularly. Tools like Google Analytics can help you track what number of your website visitors become paying customers.

Pro-tip: Separately track conversion rates from different sources to see where you might need to make improvements. Compare the rates for website conversion versus paid social, organic social, and other channels. Once you know which channels have the lowest conversion rates, you can focus on optimizing them.

2. Average order value

Average order value (AOV) is the average dollar amount a person spends on a single order from your store. A higher AOV leads to a higher profit margin. With a single order, you’re bringing in more revenue but only incurring transactional costs (like packaging and shipping) once.

“Ultimately, average order value boils down to increased profits and continued success for your brand,” says Alex McEachern, loyalty marketing specialist and ecommerce enthusiast at Sweet Tooth Rewards.

AOV can also help you gauge the size of the customer accounts you are attracting. Morena Simatic, VP of marketing and growth at OptimoRoute, comments that “Average order value... is valuable for showing us if we are attracting bigger or smaller customers. It always comes down to the 80-20 rule, where 20% of customers bring 80% of revenue.”

Pro-tip: Make a scatter plot of your orders each month to see if unusually high or low outliers are skewing your average order value. Outliers can have an especially significant effect if your order volumes are relatively small. The scatter plot will help show you if AOV is indicating a trend that doesn’t really exist.

3. Gross profit margin

Gross profit margin measures actual profit after subtracting operating costs like marketing and overhead. It shows how profitable your business is, accounting for both revenue and basic expenses.

“At the end of the day the only thing that matters is that you bring in (or will bring in) more dollars than it takes to run the business,” says Morrell.

By tracking gross profit margin, you can see if your cost of goods sold (COGS) is too high or if your pricing is too low. If so, you might need to adjust your pricing or make changes, so your production and sales pipelines are more efficient.

Pro-tip: Look at the gross profit margin of individual products as well as the company-wide margin.

“It’s okay to have low margin products. It is not okay to be unaware of the lack of profit those items are generating for your store,” says Meredith Boll, director of marketing at Automation Intellect.

4. Gross revenue

Gross revenue is the total dollar amount of sales for a given period. Track this metric month-over-month (MOM) to see if sales are growing (and by how much) and how effective your sales processes are.

Gross revenue is another top-five metric for WizardPins. Morrell comments that “...our fixed costs are generally the same across all our product categories. This makes revenue a simple and easy north-star to determine the overall health and growth of the business.”

If your costs are dramatically different month-to-month or across product categories, you may get a better picture of company health by tracking cost-inclusive ecommerce KPIs like gross profit margin.

Pro-tip: Track gross revenue alongside the number of sales each month. Laura Moss comments that the number of sales “was especially important when we [Adventure Cats] were working with a fulfillment company because there was a minimum we needed to maintain.”

Even if you don’t work with a fulfillment company, tracking the number of sales will show you if gross revenue growth comes from an increased number of customers or increased order values.

5. Percent returning customers

Percent of returning customers is the percentage of total customers who have previously purchased from you. This metric helps measure customer satisfaction and quantify the success of your customer retention strategies.

Retaining customers costs less than acquiring new customers, and repeat customers typically spend more and have a higher customer lifetime value.

“Returning customers for us spend roughly 2x as much per purchase as new customers. Moreover — they are becoming brand advocates for us by referring their friends and coworkers,” notes Morrell.

Keep in mind that this KPI is more relevant for some industries than others. Fashion brands, for example, are likely to see more repeat customers than home appliance brands because consumers tend to purchase more clothing than appliances.

Pro-tip: Track customer churn rate alongside percent returning customers. Together, these ecommerce KPIs will help you see how often customers return to place additional orders.

6. Customer acquisition cost

Customer acquisition cost (CAC) is how much you spend to get a new customer. It includes marketing, sales, overhead, and salaries for marketing and sales teams.

Martin Gontovnikas, SVP of marketing and growth at Auth0, says that “Customer acquisition costs can make or break a business. The more it costs to acquire a customer, the more value businesses have to get from that customer to make a profit.”

Keeping a close eye on acquisition costs will help you see where you might need to make cuts before high CAC poses a threat to your company’s profitability.

Pro-tip: Track CAC by channel and overall average CAC to see if you need to make sales or marketing more efficient for any particular channel. For example, if your CAC on Facebook is high, you may need to re-optimize your ads on that platform.

7. Revenue by traffic source

Revenue by traffic source tells you how much income comes from each channel, such as social, paid search, organic search, or email.Use Google Analytics ecommerce tracking to see a breakdown of revenue from all traffic sources in one location.

Tracking revenue by traffic source shows you where to concentrate your resources.

“Channels that generate high income should be targeted for growth. For example, a seller might double down on Facebook ads if they see that social networks are a high-conversion, high revenue channel,” comments Michael Ugino, co-founder and CMO of Sellbrite.

Pro-tip: Good marketing doesn’t mean advertising through as many sources as possible. Focus your energy and resources on the channels that offer the highest return on investment.

8. Shopping cart abandonment rate

Shopping cart abandonment rate tells you what percentage of visitors add items to their carts but leave without purchasing. High abandonment rates could point to issues with your check-out process, indicating that it’s too complicated or that customers think it’s not secure enough.

According to Moss, abandonment rate is an ecommerce KPI every business should track, especially alongside abandonment email open rate.

Pro-tip: Set up automated abandonment campaign emails so that customers receive notifications soon after abandoning their cart. Retargeting emails perform best if sent one hour or less after abandonment.

9. Customer lifetime value

Customer lifetime value (LTV) tells you how much revenue you get from a single customer during the entire time they are with your business. For ecommerce, this means adding up all the purchases they have made from your site.

Simatic comments that LTV is a key metric for OptimoRoute: “Customer LTV [is] the best indicator of how valuable our product is and how much benefit it brings to customers and this helps us define our product roadmap more clearly.”

Morrell says it is a top KPI for WizardPins as well: “Although we like to ‘break-even’ on the first purchase a customer makes, that is not always the case. It is vital that we track monthly cohorts to get a pulse of how much our customers are worth 6, 12, 18 and 24 months down the line.”

Pro-tip: Track LTV:CAC ratio either on average or by individual customers to see if revenue is balancing cost.

10. Return on ad spend

Return on ad spend (ROAS) measures the rate of revenue return on paid advertising campaigns. It is usually shown as a ratio of revenue to spend. If your ROAS is less than one (expressed as 1:1), your ad spend is higher than your income.

Return on ad spend (ROAS) helps you see whether you need to cut down on or optimize advertising costs, or if you can invest more.

Morrell comments that “[ROAS] is our most important metric as a young and rapidly growing company...The only way we can be confident in the long-term sustainability of our model is by having a positive return on ad spend in the short term.”

Pro-tip: ROAS offers a clearer picture of profitability when placed in context. Track it alongside metrics like profit margin to see how ROAS contributes to the company’s overall growth. As Morrell puts it, “...a business with a high margin can accept much lower return on advertising spend and still be more profitable than the business that has excellent return and very thin margins.”

11. Email engagement rate

Email engagement rate tracks how often people open your emails, click links, and make purchases from email campaigns. It measures the success of email marketing campaigns and points to the next steps you can take to encourage even more engagement.

This ecommerce KPI is a top metric for Adventure Cats. “We always promote the store in our monthly newsletter, so we track those opens, clicks, and sales. Mailchimp provides us numbers on how individual newsletters contribute to product sales,” says Moss.

Tracking the overall engagement rate helps measure the success of email campaigns as a whole. Still, it’s also useful to track open rate, email conversion rate, and click-through rate separately. Each of these will indicate a different step you might take to improve your emails. If your open rates are low, for example, you could A/B test multiple subject lines to see what appeals to your audience.

Pro-tip: Dig deeper into your emails with the highest engagement rates to see what you can replicate for future emails. Look at the time of day you sent it, the length or tone of the subject lines, and topics covered in the email to check for patterns.

12. Social media engagement rate

Social media engagement looks at likes, comments, clicks, and other actions people take on your social media posts. High social engagement helps boost brand awareness, especially shares, which can drive traffic to your site. Shoppable posts, like those on Instagram, also help drive conversions.

Whether social media engagement rate is one of your top ecommerce KPIs depends on how active you are on social platforms. Adventure Cats, for example, is very active on social, and platforms like Instagram and Facebook are major drivers for them. As a result, the company tracks social media engagement closely.

Pro-tip: Check to see if your product posts with the highest engagement rates correspond to products with high sales. This will help you determine the connection between social engagement and actual sales. If high engagement isn’t leading to sales, you might need to make purchasing from social easier by setting up shopping within the platform. Social commerce platforms like Curalate can help with this.

Keep ecommerce KPIs top-of-mind with a data dashboard

After identifying your top ecommerce KPIs, surface them in real time for your team with an ecommerce dashboard. With a dashboard, every team member can easily see current orders, outstanding requests, top-selling items, and other data. This transparency helps drive decision-making and shows teams where to focus their time and resources. Share the dashboard in Slack or via a sharing link to connect and motivate remote or distributed teams.