With so many moving parts and channels to monitor in e-commerce, teams can get distracted by things that won’t necessarily contribute to growth. And if your team is distributed, it’s even harder to keep everyone focused on what’s important.
This is where a handful of carefully chosen numbers can come into their own. But which numbers should you track and how can you keep them front of mind for your team?
I’ll try to answer both questions in this article, based on the metrics our customers are tracking and Geckoboard’s experience in data communication.
Some numbers will make your team feel good, but they won’t make a meaningful difference – i.e. vanity metrics, such as Facebook Likes. Other numbers will lead your team up the garden path, and be costly for your business. That’s why it’s so important to base your numbers on an overall strategy.
In some e-commerce companies, the overall strategy takes the form of a North Star Metric: a single number that embodies their unique value for customers. For example, in the early days of Facebook, they famously had ‘Number of Users Adding 7 Friends in the First 10 Days’ as their North Star Metric.
If you can find one for your business, it can be a powerful way to rally and inspire your team. They’re challenging to isolate though and have their downsides, so they’re not for everyone. Here’s a detailed guide on how to discover your business’ North Star Metric.
However you arrive at your strategy, the main thing is to have one, communicate it clearly to your team, and link any numbers to it. This way your team will know exactly what they’re striving for.
For help on refining your overall strategy, I recommend these books:
Good Strategy/ Bad Strategy by Richard Rumelt – a straightforward guide that explains what strategy is and isn’t.
Lean Analytics by Alistair Croll and Benjamin Yoskovitz – although this is geared mainly towards startups, it’s helpful for anyone who wants to break their strategy into things that can be measured.
As I said above, not all numbers are useful. Your team will be far more engaged if they have just a handful of metrics that are carefully considered and based on your overall goal.
Ideally, these metrics should be tailored to your business, but here are some fundamental metrics that e-commerce experts recommend:
Shopping Cart Abandonment Rate is the percentage of online shoppers who put items in their cart but then leave before purchasing. A high abandonment rate may point to user experience issues which, when solved, can make a huge difference to your profit.
[1 - [# completed purchases / # shopping carts created]] x 100 = Shopping Cart Abandonment Rate (%)
This is the average amount your customers spend when they buy something from your website. If you can increase it, you have a good chance of increasing your profit.
($) total revenue / (#) orders placed
= ($) Average Order Value
Gross Profit Margin
Sometimes known as Gross Margin, this is the percentage of revenue that’s actual profit – before you’ve adjusted for operating costs like marketing and salaries. It’s important to track as you might come up with an initiative that makes you more money yet doesn’t increase your profit because of the associated overheads.
[[ ($) total revenue - ($) cost of goods sold ] / ($) total revenue] x 100 = (%) Gross Profit Margin
This is the ratio of people who made a purchase and then came back to make a second, third, or fourth purchase – the percentage of repeat customers. It’s a useful metric for most businesses, as it’s generally easier to persuade existing customers to buy again than to acquire new ones through expensive advertising etc.
[(#) Returning Customers / (#) Total Customers]
x 100 = (%) Percent Returning Customers
This is the average expense of acquiring a single customer. It should include all expenses in attracting and converting visitors into customers, such as marketing, sales, salaries, and overheads. Aside from product/market fit, it’s one of the most important metrics for startups as they can easily underestimate their acquisition costs and fail to recoup them in profits.
($) Total sales and marketing expenses /
(#) new customers acquired = ($) CAC
This gives a breakdown of total revenue by channel such as social, organic search, paid search, referral etc. It tells you which sources are bringing the most traffic to your e-commerce site, which helps you decide where to spend your marketing budget. It can also highlight new trends in consumer behaviour.
Rather than just giving your team a set of numbers, involve them in the process of choosing the metrics. Ask them what they think you should be tracking, and set the metrics and targets together.
This should make them more engaged from the start, and encourage them to take ownership. It’s also an opportunity to explain how the metrics are calculated, which will aid their understanding of the business.
Your chosen numbers should tell a story in their own right, but it’s still helpful to have regular discussions about them and explain what’s happening.
Startups are fond of morning “stand-up” meetings where teams quickly summarise their progress and say what their priorities are for the day. This is a great time to weave in the numbers and mention any recent developments, such as new orders or shipments that have come in overnight, or any issues with the website.
In your longer meetings and planning sessions, you can have in-depth discussions about the numbers. Point out any interesting trends or anomalies you may have spotted, and invite questions from your team. For example, why is the Shopping Cart Abandonment Rate so high? This will help you work out what’s happened, and what you might do differently. It can also open up some interesting debates.
Finally, you can remind your team of the core metrics that matter to the business in your all-hands meetings, and discuss the company’s overall performance. This is a good time to praise individuals who’ve played a key role in moving certain numbers – like Top Ticket Solvers.
On a Monday morning, your team could have a sweepstake on where certain numbers will be by the end of the week. For example, you could bet on how many products you’ll sell that week, how many website visitors there’ll be, or which of your best-selling items will be the most popular.
Another idea is to introduce a bit of friendly competition in customer support, with a leader board for ticket solvers. Or you could offer rewards (doughnuts or pizza always go down well!) for the whole team if they hit the threshold on a certain number.
All these approaches are designed to be fun and engaging, but they’ll also give your team a sense of what’s “normal” from week to week.
As a metrics-nerd, I’m a bit biased, but I genuinely believe that a dashboard is the best way to keep your team engaged with their numbers.
Right now, your team probably relies on reports and spreadsheets which are time-consuming for you to create. And if they want live data, they may have to delve into multiple tools like Google Analytics and Zendesk – likewise time-consuming, and potentially misleading as the raw data can be interpreted differently.
An e-commerce overview dashboard, created using Geckoboard.
An e-commerce dashboard lets you compile key metrics from all your everyday tools, like
Zendesk, Google Analytics, and Shopify, and track them in a single place. You can then share the dashboard with your team in several different ways: on a big screen in your office, via a live sharing link that they can keep open in their browsers, or by sending regular screenshots over Slack.
This will give your team immediate access to live e-commerce data, helping them stay in control wherever they’re working. Specifically, it will help them to:
Keep an eye on tickets, and respond to customers faster
Check that the website is running perfectly
Track orders, and watch out for bottlenecks
The dashboard above is an overview dashboard with fundamental e-commerce metrics. You can also make separate dashboards, dedicated to your website analytics or customer support metrics. Learn more about e-commerce dashboards here.
What’s engaging for one team won’t work for another type of team or culture, so experiment with different approaches and ask your team for feedback on the numbers. As long as the “spirit” of your metrics is about learning and improvement – rather than catching anyone out – you can’t go far wrong.
For more inspiration on which numbers to track, explore our e-commerce KPI examples. These explain the pros and cons for each metric, and give detailed instructions on how to calculate them.
Laura Kukula is a content marketer at Geckoboard: a dashboard company that helps businesses share key data with their teams. As part of her job, she enjoys interviewing startup founders, and dissecting the language of metrics. When she’s not writing about data, she’s probably making miniature stuff or rewatching Alan Partridge.