Learn the basics, then hire an Ecommerce Consultant

Key Metrics For Web Store Performance

Understanding the key performance indicators (KPIs) for your company is essential to the success of any business, and E-Commerce stores are no different. Once you understand the variables that affect sales and ROI (return on investment), you can then start to manipulate those levers on your website to get the desired results.

There are 3 primary areas of focus that an ecommerce consultant can study to affect a store’s performance: Traffic, Sales Conversion Rate, and Average Order Value (AOV). Or to put it more simply, how many people are shopping, how many of those people purchase, and how much do they spend. Within each of these buckets there are a myriad of factors that drive success or failure. Knowing how to identify and affect these factors can take years of in-the-weeds web store management.

Important! Before making major changes to your web store, it’s important to keep in mind that some levers are more sensitive than others. That is, dramatically adjusting some variables can provide instant results but can also provide a negative affect on ROI. For example, dropping your prices significantly (relative to the competition) will likely increase your sales quickly and dramatically (terrific!) but surely will kill your ROI. Understanding the balance between the levers and how to manipulate them effectively (in concert with ROI) is where we come in. I have more than 15 years of experience developing and/or managing dozens of online stores. Make sure you hire an experienced ecommerce consultant.

E-Commerce Metric #1: Visitor Traffic

The success of an online store begins with visitors (or shoppers). In our modern world of off-the-shelf web design templates and all-in-one ecommerce shopping cart solutions, the barrier to launching an ecommerce website is lower than ever. Anyone can build a web store, but then what? Driving qualified traffic – web surfers in buying mode who are searching for specific products or services – to your store is key. That’s my specialty as an ecommerce consultant.

There are many creative ways to drive traffic to your web store, but most visitors find online stores based on the results of a search for specific keywords on Google or another search engine (Google is the most used search engine in the world with more than 65% of all Internet searches). The most common ways for websites to obtain first page search result listings are either via paid advertising (Pay-Per-Click, a.k.a. PPC), or Search Engine Optimization (SEO). PPC campaigns can be developed and implemented fairly quickly, but if they’re not set up and managed properly, can also lose money fairly quickly. SEO is a more ideal way to drive traffic on a profitable, long-term basis due to the fact that clicks on your organic listings don’t cost anything (there are no costs per click like PPC). However, SEO is best configured by an ecommerce consultant or an expert in the field who keeps up with the ever-changing search engine algorithms.

E-Commerce Metric #2: Sales Conversion Rate

The sales conversion rate reflects the percentage of visitors to your store that complete a purchase. So if your store gets one hundred visitors, and three visitors make a purchase, your sales conversion rate is 3%. Many web store owners are surprised to learn that only a handful of visitors out of every hundred actually make a purchase. But keep in mind that there are a variety of reasons people browse the web (often for research) and that some traffic sources are more qualified than others.

Standards for E-Commerce conversion rates vary by industry and product category, but often correlate to a website’s average order value (AOV). The AOV is the average amount that a customer spends per purchase. My experience as an ecommerce consultant is that web stores with higher AOVs (over $500) tend to expect conversion rates of between 0.25% to 1.5%. Stores with lower AOVs tend to range between 1.5% to 4%. Obviously, the higher your conversion rate, the lower your marketing costs will be as a percentage of gross revenue, so the idea is to convert as many visitors to paying customers as possible without sacrificing profitability.

E-Commerce Metric #3: Average Order Value

The average amount that each customer spends per transaction is your web store’s Average Order Value (AOV). It doesn’t take an ecommerce consultant to know that this metric is important and can have a direct correlation to profitability, specifically in relation to marketing costs as a percentage of gross revenue.

AOV can be manipulated in a variety of ways. Merchandising higher-priced products prominently, offering discounts and incentives for purchasing multiple units, and linking suggested items and accessories to product pages are common ways to drive higher average order values.

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As an Ecommerce Consultant I have developed best practices for easy action items that can immediately improve store performance. Contact me now for a FREE ecommerce consultation.

Josh finds the best vendors and the products we want, at terms that guarantee the site’s profitability. As profitable online stores are our business – Josh is a key team member.

Cathy Adcock Buyer, Hayneedle.com

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