There are 1,000s of KPIs you can measure and analyse for your eCommerce business.
But you only really need to measure 4 metrics to understand your online business performance and do something about it.
The eCommerce growth formula:
(Visitors x Conversion Rate x Lifetime Value) - VC = Gross Profit
You can only grow your eCommerce business by improving one of these.
Of course you know it still isn’t that simple, what this does is give us a better way at looking at your performance and what you need to do to reach your goals.
How? Here is a quick example without variable costs keep it simple.
Online store selling cosmetics in the USA has these numbers:
10,000 x 1.3% x 78 = USD 10,140 in revenue
We know based on research that similar online stores should have at least 5.2% in conversion rate on average.
Thanks to the formula we can clearly see what we should be working on (the conversion rate) because it’s way below the expected average.
We can quickly see what kind of results we should expect:
10,000 x 5.2% x 78 = USD 40,560 in revenue
That is 300% better and what’s even better is now you have more money to spend on growth.
But before that — how can you improve your eCommerce conversion rate in this case? Or what if you had a different metrics you needed to improve?
How do you know where to start?
That’s where the goal map tree helps you visualise it for better clarity, click here to learn more about the goal map tree for eCommerce businesses.