If you are running an online retail store, you know how fast things move. It’s so easy to get distracted by daily tasks and lose track of long-term plans. Thaecommerce Metricst’s why tracking a few ROI-based metrics is so important. This post describes four of the most important metrics you need to track and explains why these four metrics will help your business thrive.

  1. Customer Lifetime Value (CLTV)

Lifetime value is the entire value that you can reasonably expect a customer to bring to you in terms of revenue over the lifetime.

CLTV is the single most important metric for understanding your customers. It helps you know how much you should spend to acquire a customer. If your upfront customer acquisition cost exceeds your CLTV, then you know you will be unprofitable.

  1. Conversion Rate

Conversion rate is the percentage of your website visitors who complete a transaction. No matter what you are selling, this one metric determines your e-commerce’s success. Your store’s conversion rate is important to understand potential scalability and profitability.

For example, your conversion rate may be low because you have a high cart abandoned rate. Here is how online retailers can reduce shopping cart abandonment and recoup lost sales.

  1. Average Order Value (AOV)

AOV measures the average amount a customer spends when they place an order on your site. To improve this metric, study your customers’ shopping behavior and find ways to put more relevant products or services in front of them. This will eventually improve your customers’ shopping experience with better recommendations.

There is the reason Amazon becomes an e-commerce behemoth: It sells lots of things and gives you a lot of easy ways to buy them. Also, it has a lot of information about you, which it uses to try and suggest other items you might like to buy. If you notice that your recommendations are frequently unhelpful, then there are some tweaks you can make inside your user account to try and improve them.

  1. Website traffic

The amount of traffic to your website usually determines how many new customers you get and how many sales you make. Because of low margins and highly competitive environments, you want to get as much traffic as possible from non-paid sources. These can include organic search results, organic social media traffic, content marketing, word of mouth and emails to existing customers.

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