Top 15 Growth Metrics for Ecommerce Businesses To Track

For many businesses, the road to profitability necessitates growth—recent customers, recent products, recent sales channels. But how do you recognize if your growth is sustainable? And how do you recognize if your customers are faithful, and if you can count on them for upcoming sales? 

When CEO Brad Charron took the reins of the plant-based protein brand Aloha in 2017, he looked carefully at the corporation’s existing customer base. Then he asked a critical question: How could Aloha operate differently so that customer relationships could keep growing over period? Starting over proved to be the correct shift because, today, Aloha is thriving, with well over $100 million in annual income. A lot of that income growth had to do with a growth-centric way. 

A growth way starts by charting metrics and key act indicators (KPIs) that document your income, monthly spending, and entire connection with your customer base. Most of these metrics draw from figures likely already in your existing bookkeeping systems, making them straightforward to compute. 

What are growth metrics?

Growth metrics are key act indicators that assess how well your business is scaling and achieving its strategic goals over period. Tracking growth metrics—like customer purchase expense (CAC), income growth rate, customer churn rate, and user engagement—can assist you monitor your business’s advancement and chart a path toward upcoming achievement. 

Why should ecommerce businesses track growth metrics?

As an ecommerce commence-up founder, tracking growth metrics is essential to boost valuable insights into trends, customer behavior, and the effectiveness of your strategies. For example:

• Customer purchase costs and customer lifetime worth (CLV) reveal whether your marketing efforts are expense-effective and sustainable.
• income growth metrics and conversion rates empower you to adjust strategies to maximize profitability. 
• Your customer retention rate offers a window into the customer encounter, showing whether existing customers remain faithful to your brand or turn to a competitor.

By tracking these metrics and using them to navigator your way, you can optimize operations, make informed decisions aligned with your long-term goals, and remain competitive. At the same period, you may identify inefficiencies in your business strategies, which you can address to unlock your growth potential.

Top growth metrics for ecommerce businesses to track

• Customer purchase expense (CAC)
• Customer lifetime worth (CLV)
• Conversion rate
• Average order worth (AOV)
• Cart abandonment rate
• income growth rate
• Repeat purchase rate (RPR)
• Net Promoter Score (NPS)
• Bounce rate
• Customer churn rate
• Email open rate
• Customer retention rate
• Monthly recurring income (MRR)
• Annual recurring income (ARR)
• Monthly burn rate

When Brad took over Aloha, he had a straightforward mantra. “Instead of measuring profitability on ad spend, we started measuring profitability on profitability,” he says on an episode of the Shopify Masters podcast. “Because it’s not about being wealthy. It’s about being able to propel the trip forward.” 

You may receive a similar way in your own operations. Growth isn’t so much about affluence and fame as it is about keeping your business thriving for many years to arrive.

Here are significant growth metrics to assist you track your corporation’s act:

Customer purchase expense (CAC)

• How to use it. Use this key metric to assess the efficiency of your marketing efforts. For example, if your ecommerce store spends $10,000 on ads and acquires 500 recent customers, your CAC is $20 per customer. Lower your CAC by optimizing your ad campaigns to better target potential customers.
• How to compute it. Divide your total marketing and sales outgoings by how many customers you’ve acquired.
• Formula. CAC = expense of acquiring recent customers / Number of recent customers acquired

Customer lifetime worth (CLV)

• How to use it. CLV helps you comprehend how much income you can expect from a single customer over period. For instance, if a customer spends $100 monthly for two years, their CLV is $2,400. When combined with other income metrics, CLV lets you flag high-worth customers and budgetary schedule for upcoming income based on income from your current customer base.
• How to compute it. Multiply the average purchase worth of a customer by their purchase frequency, and multiply that by customer lifespan.
• Formula. CLV = Average purchase worth × Purchase frequency × Customer lifespan

Conversion rate

• How to use it. Use your conversion rate to monitor the efficacy of your sales pipeline—especially its final stages. A low conversion rate may be due to impoverished website design or checkout flow issues. Understanding customer intent and improving your web pages to better align with those intentions can assist boost your conversion rate and earn more income. 
• How to compute it. Divide the number of conversions (sales) in your ecommerce store by the total number of visitors, and then multiply by 100.
• Formula. Conversion rate = (Conversions / Total visitors) × 100

Average order worth (AOV)

• How to use it. Average order worth is the average amount spent by customers per deal. Knowing this can assist you identify opportunities for upselling or bundling. For example, offering free shipping on orders above $50 encourages paying customers to boost their cart worth. You have to eat the expense of the free shipping, but ideally, this will be outweighed by the additional income you generate. 
• How to compute it. Divide your total income by the number of orders.
• Formula. AOV = Total income / Total orders

Cart abandonment rate

• How to use it. Cart abandonment occurs when a customer adds items to their shopping cart but does not complete the purchase. Use this metric to identify friction points in the checkout procedure. A high cart abandonment rate may indicate unpalatable shipping rates or overly complicated forms that deter potential customers. 
• How to compute it. Divide the number of abandoned shopping carts by the total number of initiated checkouts, then multiply by 100 to obtain a percentage.
• Formula. Cart abandonment rate = (Abandoned carts / Initiated checkouts) × 100

income growth rate

• How to use it. Your income growth rate reflects your business’s budgetary health, indicating achievement or stagnation. For instance, a 20% income growth suggests successful product launches or marketing campaigns. Negative income growth, on the other hand, may indicate that you require to reevaluate your revenue strategy.
• How to compute it. Subtract the income of the previous period from the current period’s income. Next, divide this amount by the previous period’s income, and multiply by 100 to obtain a percentage.
• Formula. income growth (%) = [(Current revenue − Previous revenue) / Previous revenue] × 100

Repeat purchase rate (RPR)

• How to use it. RPR helps you comprehend how many customers are returning to your product after making a first purchase. This is particularly useful for businesses with quick repeat buys, like buyer packaged goods. Use this metric to comprehend whether customers have returned to your product or moved on to a competitor. High RPR indicates satisfied customers who have developed an affinity for your product.
• How to compute it. Divide the number of repeat customers by your total number of customers.
• Formula. RPR = Customers who make repeat purchases / Total number of customers

Net Promoter Score (NPS)

• How to use it. NPS measures customer satisfaction and the likelihood of referrals. Many businesses depend on word-of-mouth referrals to attract recent customers, making your NPS a valuable metric for assessing marketing efforts.
• How to compute it. Using customer survey data, subtract the percentage of detractors (scores 0–6) from promoters (scores 9–10).
• Formula. NPS = % Promoters − % Detractors

Bounce rate

• How to use it. A bounce rate measures how many website visitors leave after visiting a single page. A high bounce rate indicates impoverished user encounter or irrelevant content in your ecommerce store. High bounce rates often run hand-in-hand with impoverished sales act. To correct this, optimize your landing pages and pepper them with calls to action (CTAs)—like “Add to cart” or “Sign up now.”
• How to compute it. Divide the number of single-page sessions by total website visits and multiply by 100 to obtain a percentage.
• Formula. Bounce rate = (Single-page sessions / Total website visits) × 100

Customer churn rate

• How to use it. Churn rate measures how many customers you’re losing in a particular period. A high churn rate means you’re losing customers—too many to be offset by the number of customers acquired during the same period. High churn is particularly problematic for subscription-based services that often have high customer purchase costs with the expectation that customers stick around. Identifying churn causes, such as impoverished customer back or unmet expectations, can assist you reduce customer setback.
• How to compute it. Divide the number of customers lost during a period by the total customers at the beginning of that period.
• Formula. Churn rate = Customers lost during a specified period / Total customers at the commence of that period

Email open rate

• How to use it. Your email open rate tracks the effectiveness of email campaigns, and subject lines and targeting influence this. This email marketing metric can provide valuable insights about what messages and products resonate with customers.
• How to compute it. Divide the number of opened emails by the total number of emails sent and multiply by 100 to get a percentage.
• Formula. Email open rate = (Opened emails / Total emails sent) × 100

Customer retention rate

• How to use it. Customer retention rate measures the percentage of customers who remain over a given period of period. A high retention rate indicates powerful user engagement and a pricing model that works for your core customers. If your rate is low, you can experiment with recent business tactics—such as holding more sales or employing a customer achievement throng—and track advancement over period.
• How to compute it. Subtract the number of recent customers acquired from the total number of customers at the complete of a period. Then, divide that amount by the total number of customers at the beginning of the period. Finally, multiply by 100 to obtain a percentage.
• Formula. Customer retention rate = (complete customers − recent Customers) / Starting number of customers

Monthly recurring income (MRR)

• How to use it. If you run a subscription-based business, use MRR to track how much boost you generate over a given period for a snapshot of your budgetary stability. For instance, a monthly subscription box service with 1,000 customers paying $20 each generates an MRR of $20,000. To boost your MRR growth rate and generate more income in the same timeframe, boost your number of subscribers or raise your average income per user.
• How to compute it. Multiply your total number of energetic subscribers by your average income per user (ARPU) per month.
• Formula. MRR = energetic subscribers × ARPU

Annual recurring income (ARR)

• How to use it. ARR is particularly useful for companies where customers sign annual contracts like SaaS licenses. If your subscriber base remains the same between the beginning and complete of the year, you can compute ARR by multiplying your MRR by 12. However, if you have subscriptions for varying durations, and misplace or boost recent customers mid-year, you may desire to adjust for that. An boost in MRR and ARR can be key indicators of increased customer loyalty, which is crucial for potential investors analyzing your business act over period.
• How to compute it. Multiple your energetic subscribers each year by the average income per subscriber for the year. If you have a stable subscriber base, multiply your MRR by 12
• Formula. ARR = MRR × 12

Monthly burn rate

• How to use it. Your burn rate measures how much money you’re losing every month. Burn rate is a critical metric for ecommerce startups monitoring their budgetary health and runway. declare your business spends $50,000 monthly but earns $40,000. This means your burn rate is $10,000, requiring you to dip into existing liquid assets reserves or borrow from a lender or investors. A high monthly burn rate signals the require for operational expense reduction or income growth.
• How to compute it. Subtract your total monthly outgoings from your monthly income. 
• Formula. Burn rate = Monthly income − Monthly outgoings