Much like a compass helps navigate a journey, data can help brands and ecommerce merchants navigate a path to success. Tracking the right subscription metrics and ecommerce trends can gauge the overall health of your business, highlight areas for improvement and help brands and merchants make data-driven decisions for the future. The numerous benefits of tracking data include:
Understanding Customer Behavior: Merchants can analyze data to gain insights into customer behavior patterns such as what products customers are interested in, how long they stay on the website and what factors influence their purchasing decisions. This can help in tailoring the website and marketing strategies to meet customer expectations.
Personalization Opportunities: By studying customer preferences and purchase history, merchants can send targeted promotions and recommendations — ultimately enhancing customer engagement and leading to higher conversion rates and customer loyalty.
Inventory Management: Analyzing sales trends allows merchants to forecast demand accurately, ensuring that popular products are adequately stocked while preventing overstocking of slow-moving items. This efficiency reduces costs and maximizes profits.
Enhancing User Experience: By tracking user interactions, merchants can identify pain points, streamline the checkout process and optimize website navigation. A seamless user experience leads to higher customer satisfaction and repeat business.
Optimizing Pricing Strategies: Ecommerce platforms can dynamically adjust prices based on real-time data analysis to stay competitive. Monitoring competitors’ prices and adjusting their own prices accordingly helps merchants attract price-sensitive customers without compromising profits.
Fraud Detection and Prevention: Data analytics can identify unusual patterns and detect fraudulent activities. Merchants can implement security measures based on these insights, preventing unauthorized transactions and ensuring a secure shopping environment for customers.
No matter the industry, there are several metrics critical for all ecommerce stores to improve their business intelligence. These are the top metrics brands and merchants should consistently measure. Learning how to measure ecommerce success should be a top priority for merchants looking to increase revenue, enhance their customer experience and extend their customer lifetime value.
The amount of revenue a company earns from an advertising strategy or campaign.
Formula: Revenue ÷ Advertising Cost
Projected revenue that a customer will generate for a company during their lifetime.
Formula: (Recurring Average Order - Cost of Goods Sold) ÷ Churn*
Percentage of website visitors who place an order.
Formula: Orders ÷ Website Visits
Average total of every order placed over a defined period.
Formula: Gross Revenue ÷ Orders
Average number of days to receive a shipment confirmation from fulfillment.
Formula: Mean # of days to ship
*There are several ways to measure Customer Lifetime Value. See other formulas here.
The successful subscription business model relies on customer loyalty to produce recurring revenue. Track these metrics to determine if your brand has a strong subscription strategy.
Percentage of initial orders (Cycle 0) that convert to a rebill (Cycle 1) order.
Formula: Rebill Orders ÷ Initial Orders
Percentage of orders that cancel the same day as purchase.
Formula: Day 0 Cancelation Orders ÷ Orders
Percentage of transactions that are approved.
Formula: Orders ÷ Transactions
Percentage of revenue that is successfully collected after an initial decline.
Formula: Declined Revenue ÷ Recovered Revenue
Percentage of revenue that is refunded.
Formula: Refunded Revenue ÷ Total Revenue
*An order is a successful transaction. A decline is an unsuccessful transaction.
Once you begin tracking the metrics above, consider also keeping a close eye on the following measurements to keep your business well-rounded. The sections highlighted in orange only pertain to subscriptions.
Amount of money spent to acquire a new customer.
Formula: Acquisition Cost ÷ Orders
Percentage of visitors that get to checkout page, but exit before completing a purchase.
Formula: Orders ÷ # Visitors From Checkout Page
Percentage of orders marked as fraud.**
Formula: Orders Marked as Fraud ÷ Orders
Percentage of order refunded.
Formula: Refunds ÷ Total Orders
Percentage of customers who stop their subscription.
Formula: Lost Unique Customers ÷ Starting Unique
Percentage of orders that shipped.
Formula: Orders ÷ Shipped Orders
Percentage of returned orders.
Formula: Returns ÷ Orders
Average revenue generated for each active customer.
Formula: MRR ÷ Active Customers
Percentage of transactions that successfully charge at the first attempt.
Formula: Natural Orders ÷ Natural Attempts
Average recurring revenue for each month.
Formula: Customers x Average Billed Amount
*Often referred to as Customer Acquisition Cost (CAC).
** Includes orders manually marked as fraud and orders caught by risk mitigation providers.
Subscription metrics are useless unless you act on the findings. For example, if churn analysis reveals customers stop engaging with a brand after four purchases, then brands need to strategize how to motivate customers to make a fifth purchase. Moreover, high fraud ratios and low recovered revenue ratio could mean money is being left on the table and it could be time to explore revenue maximization tools within an ecommerce platform.
It is also important to keep in mind that simply gathering this data should not drain valuable time and resources. Brands and merchants serious about these metrics should leverage an ecommerce and subscription management platform that provides high-level overviews of key metrics, and then drills down into trends or individual customers and transaction. Remember, the whole point of tracking metrics is to learn, adjust and grow your business.
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We’ve compared subscriptions vs. one-time purchases for health and beauty ecommerce to help merchants like you understand the pros and cons of each model.
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Discover the past year’s subscription trends to inform your 2024 ecommerce strategy. Our research with PYMNTS.com covered consumer behavior for each quarter of 2023.
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Watch episode eight of The Ecommerce Minute to learn the metrics you should measure to ensure long-term success for your ecommerce business.
