6 eCommerce ingredients for increased sales

You need to do better than the competition. That's why it's more crucial than ever to properly track, record and measure your eCommerce sales. In this article we're going to cover the 6 key ingredients for eCommerce sales and how to measure them. Let's dive in, and you'll be cooking with gas in no time!

Conversion Rate

First, let's talk about the most obvious KPI when it comes to eCommerce sales - the conversion rate. How many of your visitors become paying consumers? It's crucial to calculate your conversion rate and calculate it for different segments - depending on your online business's specific nature, you can, for example, calculate the conversion rate for different products separately or for different consumer segments.

So what is a good conversion rate? The answer: it varies greatly between businesses and industries. If you want to compare yourself directly with a competitor, you need to have a very similar business model and product range. In 2022, the average for the 400 biggest ecommerce sites in the US was 2,13%. In Shopify stores the average is 1,3% (Shopify is generally used for smaller, non-complex sites and a lot of startups). As a general rule we say that everything beneath 0,5% is bad, and everything above 3% is good. But the trick is to always strive to get better than your own number last month.
But what do we need it for? The conversion rate is our best KPI when it comes to measuring the effect of our different optimizations. Every time you try something new, do A/B testing, communicate differently etc, this KPI is your best way of measuring the actual effect. 

Customer Lifetime Value (CLV)

The next crucial KPI and metric is CLV. This helps you evaluate how much revenue each consumer brings during their entire lifecycle. When it comes to online and retail sales alike, there's always periods of time when sales take a hit or when they get higher (like around Christmas time). By tracking that and measuring CLV you will be able to better predict your customers' behaviour and revenue for your eCommerce business.
Knowing if the customers come back to your store, how often and how they convert over time is very important in order to tune your customer journey over time and be careful about how you nurture them.

Average Order Value (AOV)

Our list wouldn't be complete without the AOV. This metric tells you all about the average size of the buyers' purchases. Along with the CLV it's one of the key metrics to help you forecast sales and growth. While your initial instinct might be to think that the goal is for the AOV to be as high as possible, it's crucial to consider the specific nature of your eCommerce business and the eCommerce sales you make. Usually the most effective way to increase the AOV is by making sure the client is also buying accessories, maintenance equipment etc. for the products. Upsell is often the most effective way of achieving an increase in AOV. And definitely the most profitable way.

For eCommerce stores with hundreds of products, this might be a viable goal but if your eCommerce business is focused on selling high-priced items that people buy once every few years (mattresses would be a great example), you need to consider factors beyond that when looking at your AOV.

Checkout & Cart Abandonment Rates

Next, you need to measure checkout and cart abandonment rates. With online sales you can often pinpoint the exact moment or place on your website where the user decided to leave or not complete the sale for some reason. Tracking those rates will provide you with access to excellent data about your user journey and offer insights as to what can be improved for increased sales.

Customer Acquisition Cost (CAC)

When it comes to sales metrics, we can't leave out CAC. It's crucial to know how much investment is required to acquire clients. For online businesses it can be much easier to estimate the CAC than for traditional brick and mortar stores, simply because the entire user journey takes place online and can be measured using various tools such as Google Analytics. 

Ideally, your CAC should be relatively low to your net profit, however, the goal is not to minimise the CAC - as an online business you need to invest in customer acquisition in order to grow. Therefore, your goal should be to ensure your investments bring actual results.

Net Profit

Lastly, an obvious metric every business needs to take into account - bottom line, net profit. This KPI doesn't require any explanation - it's obvious why it matters and why the goal is always to increase your net profit. However, even this metric should be taken with a grain of salt sometimes. Especially when it comes to eCommerce sales, there's always going to be periods when sales are lower or higher, or moments when you spend more on digital marketing, product development etc. So keep this in mind when looking at your net sales.
The main component that drives the net profit is often campaigns. How often and how many paid campaigns do you run? Are you running predictable discounts all the time so your customers are slowly changing their behaviour into only buying in campaign periods? Net profit is in many ways the end result of all the other KPIs and represents the balance between all of them.

Tracking, Analysing, Improving

The reality for every business, not just an eCommerce one, is that in order to achieve success, you need to be measuring, analysing and improving your eCommerce store's performance all the time. In the day and age when users' tastes and preferences for brands are constantly changing, being able to adapt and optimize your store based on research and data is a key competitive advantage.
Try to think differently when it comes to how you sell and promote your products. Are you really selling them as you would in a bricks and mortar store? With a helpful and knowledgeable sales attendant guiding the customer on the way? Or are you simply offering the goods and a checkout solution to the clients?

With that said, every eCommerce business needs an excellent analytics set up to properly review their site and create excellent experiences for the end user. If you're looking for a tech partner with eCommerce sales experience that can take your online business to the next level - contact us and let's work together!


Thomas is CCO in Frontkom. His background is from the agency industry with more than 20 years as manager and senior advisor within eCommerce. Thomas is an expert at building complex customer journeys for online stores. He writes about eCommerce, customer club, integrations and how to succeed with your online store.

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