eCommerce Optimization
How to Master Your Most Important E-commerce KPI

How to Master Your Most Important E-commerce KPI

How to Master Your Most Important E-commerce KPI

How to improve your conversion rates

Conversion Rates are crucial to any e-commerce business. It refers to the percentage of visitors to your website who complete a desired action, such as making a purchase or filling out a form. Having high conversion rates means that your website is performing well and is effectively communicating your value proposition to your customers. On the other hand, a low conversion rate may indicate that your website is not engaging enough or that there are obstacles preventing customers from making a purchase. Therefore, it is essential to continually measure and improve your conversion rates to optimize your website's performance and increase your revenue. By analyzing and optimizing your conversion rates, you can stay ahead of the competition and ultimately grow your e-commerce business.

In this article, I’m going to explain why your conversion rate is absolutely your most important KPI if you’re an eCommerce business, and what factors going into improving it. I’ll also be discussing other metrics that can hint at a conversion rate problem, and how to tell if there is room for improvement.

Define and Prioritize Your KPIs

Firstly, it is important to define and prioritize your KPIs so that you have a clear understanding of what you need to measure and what goals you are trying to achieve. Businesses should be setting SMART goals (specific, measurable, achievable, relevant, and time-bound) and aligning their KPIs with these goals.

Prioritization plays a key role, especially when it comes to data analysis. You will want to focus on the KPIs that are most relevant to your business's goals and objectives, and this should be your primary focus when analyzing your data.

In eCommerce, the most popular KPIs tend to be Return on Ad Spend (ROAS), Average Order Value (AOV), Customer Lifetime Value (CLTV), Add to Cart Rate and Conversion Rate. Most eCommerce platforms provide analytics for these metrics and will calculate conversion rates and give you an average conversion rate over time so you don’t have to worry about the math.

Monitor Your Conversion Rate

One of the most important e-commerce KPIs is the conversion rate. It is an indication of how well your website is performing and how effectively you are converting your visitors into customers. Tracking this metric provides you with valuable insights into the effectiveness of your sales funnel and can help identify areas for improvement.

But, knowing your conversion rate isn’t nearly enough. Take a look and compare it to your industry’s average to see how you measure up. Next, decide on your conversion goal, and figure out a plan for exactly how you're going to increase your conversion rate. Conversion rates are tied directly to user experience. If you have a conversion rate problem, chances are likely you have a user experience problem somewhere on your site. This is where other analytics tools and CRO tools can be utilized to help you focus on the issue, instead of making a huge mistake like redesigning your site to fix the issue.

Let’s take a look at some of the other metrics to help us diagnose where a problem is occurring on your landing page or site.

Track Your Customer Lifetime Value (CLTV)

Another important e-commerce KPI is Customer Lifetime Value (CLTV). It is the amount of revenue a customer will bring to your business over their lifetime. CLTV is a great metric to monitor as it provides insights into how much you should be spending to acquire new customers, the type of customers you should be attracting, and how to better retain your existing customers.

This can vary dramatically depending on your business model. Do you offer a subscription service in addition to products? Are people signing up for loyalty programs and taking advantage of them? Does your business model only require a one-time purchase (i.e. wedding dresses, maternity)? How long should one purchase technically last your customers? CLTV is also a measure of how long people are sticking with your business, and there can be more than one way to measure this. You need to establish a goal for your CLTV, and establish and action plan for increasing it.

Sure fire ways to do this include personalization for repeat site visitors, remarketing/re-engagement campaigns via email and sms, or loyalty programs that offer VALUE to customers for their loyalty (i.e. not just run of the mill discounts).

Keep an Eye on Your Cart Abandonment Rate

Cart abandonment is when a customer adds items to their cart but leaves the website before completing the purchase. This can be a major problem for e-commerce businesses, as it means that potential revenue is being lost. Monitoring your cart abandonment rate is crucial in identifying problematic areas in the sales funnel and taking corrective action to rectify them.

Your cart abandonment can some sometimes feel like a war of attrition. Your cart abandonment may be on par with industry averages, but take a look at what percentage of visitors are viewing your product pages. We’ll often see that PDP views are extremely high, while add-to-cart is average. For reference, eCommerce industry averages for sessions with a page view are about 43%, while sessions with an add-to-cart are around 14%. This is where the war on attrition comes into play. If your PDP views are 60%, and your add-to-cart is 5%, then you’ve just diagnosed a PDP issue. 

eCommerce Conversion Funnel Benchmarks

Google Analytics is a helpful tool for tracking conversion funnel drop-off, and helping diagnose if you have a Cart Abandonment problem, or a PDP problem. Cart abandonment in a vacuum can usually be handled by personalized remarketing campaigns to customers to encourage them to checkout. However, take the time to analyze your checkout process to make sure the user experience is on par with customer expectations. Check out our article on Cart Abandonment to learn more about a conversion optimized checkout experience.

Are You Unhappy With Your Conversion Rates?

Book a Strategy Session and learn how Media Contour can help you increase:

  • Conversion Rates
  • Return on Ad Spend
  • Revenue
  • Customer LTV
  • Profit Margins
  • Average Order Value
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Analyze Your Traffic Sources

To make informed decisions in your business, we highly recommend that you analyze your website traffic sources. Traffic from different sources can have a variety of conversion rates, customer lifetime value, and even return rates, hence its significance. Tracking your traffic sources and the data that follows will give you insight as to where the majority of your sales are coming from and which sales channels might need to be optimized.

Make sure your marketing messages are consistent across all channels. You don’t want to confuse potential customers who see an ad on Facebook with one message, and a completely different message on YouTube. That’s a big no-no.

If you really want to go above and beyond, try personalized messaging for visitors from specific traffic sources based on their existing behavior on site. Visitors from social media vs. direct traffic may have completely different behavior and interests, so tailor your messaging specific to where they are coming from. This requires a lot of work and audience intelligence, but the up side is well worth it.

Track Average Order Value (AOV)

By analyzing this metric, you'll be able to identify trends and make informed decisions about pricing strategies, promotions, and product offerings. A higher AOV means you're effectively getting more value out of each transaction, which can lead to increased profits.

If your AOV is considerably lower than the average cost of your products, then it’s probably time to think about revamping your upselling and cross selling strategies. A lot of times these are placed in horrible positions on the PDP, and are rendered ineffective. Test different placements, strategies, and bundles to entice visitors or let them know that they experience could be enhanced for a marginal increase in spend.

Track Your (and Your Competitor’s) Bounce Rates

Bounce rates are black sheep of eCommerce KPIs, but often times it’s where we start. Bounce rates can give you a holistic view of your site’s user experience issues, and let you know where you stand against the competition. A poor bounce rate is typically indicative of poorly performing copy, confusing navigation, or busyness bordering on chaos, or all of the above. This metric is easy to gain access to for your competitors, which is why we recommend it as a starting point for evaluating your performance within your industry and niche.

The Name of the Game is Audience Intelligence

All of these issues we’ve listed above can be resolved by getting in-depth intelligence about your target audience and site visitors. We’ve found the best companies don’t sit back and passively collect information about their visitors. The best companies are actively engaging with their audience to create insights that lead to focused strategic decisions that are verified through A/B testing.

Understanding your audience, especially the ones visiting your site, means understanding what they want and need when they arrive, and speaking to the emotions they experience before and after a purchase is made. It means understanding and alleviating the pain points they encounter during their user experience, and using that information to make better decisions in your marketing, customer service, operations, and supply chain.

Are your Product Pages a mess, or do you need some pointers on how to improve them?

Download our FREE High-Performance Product Page PDF to see what you’re missing or may not need, and improve your:

  • Conversion Rates
  • Return on Ad Spend
  • Revenue
  • Customer Lifetime Value
  • Profit Margins
  • Average Order Value


Key Performance Indicators are critical performance measures that should be monitored, analyzed and reported regularly. By understanding and utilizing the metrics we have touched on in this post such as eCommerce conversion rate optimization, conversion rates, customer lifetime value, cart abandonment, traffic sources and prioritization of your ecommerce KPIs, your business is on the right track to achieving a data-driven approach that will allow you to make informed decisions and steer your e-commerce business downstream to success.