Congratulations! You've launched your online store and made those first few sales. Now it's time to really grow and scale things up.
But how exactly do you do that?
There are so many different metrics and key performance indicators (KPIs) to track for an ecommerce business. It can get overwhelming fast. You don't just want vanity metrics either - you want actionable data that will actually help you make strategic decisions.
The truth is, there are a few hidden ecommerce metrics that most entrepreneurs overlook or underemphasize. These metrics may not seem flashy, but tracking them consistently can give you the keys to exponential growth. They'll help you better understand your customers, optimize your marketing, increase conversions, and ultimately sell a whole lot more.
Intrigued? Read on for the top hidden metrics that can supercharge your online store and take it to the next level.
Customer Lifetime Value
You're probably tracking metrics related to customer acquisition already, things like:
- Cost per click - CPC
- Bounce rate
- Conversion rate - CVR
These are all useful, but they only tell you how effective your marketing is at attracting initial interest and one-time purchases. To really grow in a scalable way, you need to shift to a customer-centric mindset.
That means emphasizing customer lifetime value (CLV): how much revenue a single customer will generate for your business over their entire relationship with you.
The higher the CLV, the more you can afford to spend on marketing to acquire each customer. Think about Amazon Prime - Amazon loses money on most people's first purchase, but makes it up over time thanks to the insane loyalty Prime inspires.
To calculate CLV, first figure out:
- Average Order Value - The typical amount spent per order
- Purchase frequency - How often the average customer buys
- Customer lifetime - How long a customer remains active
Then multiply those numbers together. For example:
Average Order Value: $50
Purchase Frequency: 3 orders per year
Customer Lifetime: 5 years
CLV = $50 x 3 x 5 = $750
This shows that the average customer is worth $750 to your business over the long-term.
Now you can calculate how much you can invest in customer acquisition. If your CLV is $750 and your profit margin is 30%, you could spend up to $225 acquiring each customer and still break even.
Of course, you want marketing ROI to be higher than 100% so you turn a profit. But you get the point - CLV transforms what you can spend on marketing and growth.
To increase CLV, try:
- Driving repeat purchases with promotions, loyalty programs, and email/SMS marketing
- Getting existing customers to increase order sizes over time
- Lengthening customer lifetime with excellent service, interactive features like reviews, and valuable content
The higher you can push CLV, the faster you can scale. It's one of the most powerful levers for growth.
Customer Acquisition Cost
While we just covered CLV, you still need to know your customer acquisition cost (CAC) too. This is the average amount you spend in marketing to acquire a new customer.
CAC = Total acquisition marketing spend / Number of new customers
Knowing your CAC lets you determine which marketing channels are worthwhile. As a rule of thumb, you want LTV to be at least 3-5x higher than CAC. If the ratio is any lower, you're overspending on acquisition.
Say your CLV is $750. In that case, you'd want CAC to be around $150-250 or less for healthy scaling.
It's common for CAC to start low but increase over time as you exhaust easier acquisition tactics. Keep an eye on CAC so you can spot rising costs early and double down on the highest ROI marketing tactics.
Some ways to lower CAC include:
- Optimizing Google/Facebook ads for higher conversions
- Negotiating lower costs per click with ad platforms
- Focusing on retention to get more value from each new customer
- Letting existing customers organically attract new ones through word-of-mouth
The lower you can keep CAC relative to LTV, the faster your customer base will snowball.
Customer Churn Rate
Now we come to customer churn rate - the percentage of customers you lose in a given period. This directly impacts CLV and lifetime.
Churn rate is calculated as:
Churn rate = Number of lost customers / Total number of customers
A 5% monthly churn means you lose 5% of your entire customer base each month. Yearly churn would be the percentage lost per year.
Ideally, you want to see churn decreasing over time. A high churn rate indicates dissatisfaction or lack of loyalty. That means you're pouring more and more resources into re-acquiring the same fickle customers.
Reducing churn is all about understanding why customers leave and addressing those pain points. Common reasons for churn include:
- Shipping delays, errors, or high costs
- Poor customer service experiences
- Lack of post-purchase communication and nurturing
- Confusing site navigation or checkout process
- Lack of interactive features like reviews and Q&A
- Customers simply trying your brand once out of curiosity
Here are some proven ways to decrease churn:
- Offer free shipping with minimum order sizes
- Follow up via email after 30 days with special offers for return customers
- Make it easy to self-serve with an online knowledge base
- Set up a loyalty program or VIP benefits
- Offer high-touch service like live chat
- Send a feedback survey after every few purchases
- Provide an interactive community forum for engagement
Reducing churn boosts CLV, lowers CAC, and gives your marketing dollars maximum mileage. The loyalty you build makes growth far more efficient.
Visitor to Customer Percentage
Let's switch gears to look at your website metrics more closely.
One website metric that gets overlooked is the visitor to customer percentage - what portion of your overall site traffic becomes paying customers.
This shows how effective your site is at turning casual visitors into buyers. It's a critical conversion benchmark.
To find it, divide total orders in a period by total site sessions. For example:
500 orders / 10,000 sessions = 5% visitor to customer percentage
That means 5% of your site traffic is converting.
How does your percentage compare to others in your niche? Here are some typical conversion benchmarks:
- Apparel - 2-3%
- Consumer electronics - 1-2%
- SaaS - Around 5%
- Info products - 10%+
Ideally, you want your visitor to customer percentage consistently trending upwards over time. That likely means your site experience, product selection, and targeting are improving.
If the percentage is decreasing, it could point to issues like:
- Confusing navigation, checkout, or product pages
- Low quality traffic sources
- Failure to build trust and credibility
- Pricing or shipping costs turning visitors away
Here are some proven tactics to increase your visitor to customer percentage:
- Simplify your navigation - use visitor analytics to see where they get stuck
- Make mobile optimization a priority
- Feature high-converting products prominently
- Add trust symbols like security badges and testimonials
- Use exit intent popups to capture abandoning visitors
- Retarget visitors with customized ads
- Offer free shipping or discounts for first purchases
Remember, a small improvement in conversion rate can mean hundreds or thousands more sales. The higher you can push this metric, the more growth you'll see.
Repeat Purchase Rate
We've talked a lot about customer loyalty. Now let's look at one of the simplest metrics for tracking it: repeat purchase rate.
This is the percentage of customers that come back to make another purchase within a defined period of time. Typically you'd look at repeat rate over 30, 60, or 90 days after the initial purchase.
Say you have 1,000 new customers in a month. If over the next 30 days 200 of them make another purchase, you have a:
20% 30-day repeat purchase rate
This shows that 20% of new buyers are returning within 30 days.
You should benchmark your repeat purchase rate against others in your niche. But in general, you want to see this percentage rising steadily. That shows your retention efforts are taking hold.
Some proven tactics to increase repeat purchases:
- Email/SMS cart abandonment sequences
- Discounts or free gifts for signing up for subscriptions
- Loyalty programs with points or tiered benefits
- Re-engagement emails like reviews requested and order follow-ups
- Retargeting ads showing previously viewed products
- Recommending complementary products at checkout
- New product announcements for existing customers
Don't neglect your return customers - getting them to re-purchase more frequently has a massive impact on long-term growth and profits. Keep a close eye on this metric.
Average Profit Margin
Now let's switch to the financial side of things.
Your profit margin per order - the amount you pocket after costs - has a huge effect on scalability. After all, profits fuel growth and innovation.
To find your overall profit margin, first calculate it for each product:
Product profit = Sale price - (Cost of goods sold + Any fulfillment costs)
Say you sell a product for $100. It costs you $50 to manufacture, store, and ship it. In that case, your profit margin is:
(100 - 50) / 100 = 50% margin
Do this for each product and take the average.
If your average is 30%, then on a $100 sale you'd earn $30 in profit.
Benchmarks vary widely by industry, but as a baseline aim for 30-50%+ margins.
If your margins are on the lower side, some ways to improve them include:
- Negotiating lower costs with suppliers and 3PLs
- Transitioning to cheaper packaging and shipping materials
- Reducing storage and fulfillment overhead costs
- Bundling products to sell them together at a premium
- Cutting free shipping costs with minimum order sizes
- Automating processes to reduce labor costs
- Adding financing options to increase order values
Building up your margins gives you more cash to re-invest in growth or pad your emergency fund. And it's what enables disruptive ecommerce brands to undercut competitors on pricing. Keep a close eye on margins.
Supercharge your ecom business with AI Explore Prooftiles
Gross Merchandise Volume (GMV)
Let's look at the big picture metric - Gross Merchandise Volume or GMV.
This is the total sales dollar value of merchandise sold through your store in a given period:
GMV = Total sales revenue excluding returns and discounts
If you sold $50,000 worth of product last month, your GMV is $50,000.
Monthly or yearly GMV shows the raw momentum of your business. You want to see it growing steadily if you are scaling successfully.
Shoot for at least 25-50% GMV growth quarter-over-quarter. Healthy ecommerce businesses often double GMV annually in their early years.
If GMV stalls or declines, it's a sign of major issues like:
- Google algorithm penalties harming organic traffic
- Loss of promotions sending conversion rates down
- Supply chain or inventory management problems
- Declines in customer retention and refurchase rate
- Brand reputation problems and negative PR
Rapidly increasing GMV is great, but not at the expense of profitability. Find the right balance for sustainable growth.
Here are some proven strategies for growing GMV:
- Expand your product selection and variety
- Offer tiered pricing for premium options
- Increase average order value with bundles and kits
- Upsell with smart recommendations
- Improve conversion rate through testing and optimization
- Reduce churn and build loyalty programs
- Double down on your highest lifetime value marketing channels
GMV is the big kahuna - making it a priority will drive all other aspects of growth for your ecommerce business.
Those are our picks for the most overlooked and impactful ecommerce metrics you should be tracking. Let's do a quick recap:
- Customer Lifetime Value - The long-term revenue per customer that dictates marketing budgets
- Customer Acquisition Cost - How much you spend to acquire each new customer
- Churn Rate - The percentage of customers lost each month or year
- Visitor to Customer % - The percentage of site traffic that converts
- Repeat Purchase Rate - How many new buyers return for another order
- Profit Margin - The amount earned per order after costs
- Gross Merchandise Volume - Your total sales revenue and growth
Master these hidden ecommerce metrics and you'll gain incredible insights into your customers and business. You'll be able to make data-driven decisions to optimize every aspect of your operations.
So don't just rely on vanity metrics like site traffic and social media followers. Track these hidden performance indicators consistently - it's the key to accelerating growth, boosting profits, and creating a customer-centric ecommerce powerhouse.
Boost your AOV with AI Explore Prooftiles
Time to put these metrics into action! Pick 1-2 top priorities and set some targets for the next quarter based on your current baseline numbers. Our advice? Focus first on improving conversion rate and reducing churn. Those two metrics alone can rapidly impact growth and profitability.
The keys are all here. Now get tracking - and get ready to scale your online business to new heights!