6 key Google Analytics metrics for ecommerce businesses

Google Analytics can be a hugely beneficial tool for ecommerce businesses, providing a wealth of actionable data and insights. To get the most from the tool, it is vital that you understand some of the key metrics for ecommerce businesses.

Guide

9 min read

If you don't have Google Analytics set up already, we recommend that you do. The data it collects can tell you so much about your shop - including which products are selling, which pages are most popular in persuading users, which traffic sources are driving sales, etc. Check out this article outlining how to set up Google Analytics for your ecommerce business and also see Google’s help centre for more information.

Don’t get lost in data

Google Analytics is a powerful tool that provides a large number of valuable reports on your visitors, their onsite activity, and your traffic sources. However, with all this information, the platform can seem a little overwhelming, especially at first, and it can be easy to spend time analysing metrics that may not be the most useful to your business. You don’t want to end up in ‘analysis paralysis’ (over-analysing too many reports) or basing business decisions on the wrong pieces of data. Therefore, it’s best to focus first on those that are most relevant to your situation.

Key metrics

Although the most useful metrics for you will differ depending on your business type, your goals and marketing activity, here are six key Google Analytics metrics that are relevant for most ecommerce businesses, and that it’s worth taking the time to understand and review regularly.

1. Users

‘Users’ is an obvious metric as it helps you measure the level of traffic to your site and is the basis of almost any other analysis.

Definition of ‘users’

‘Users’ shows you how many people have visited your site in a given time frame. (It is different from ‘sessions’, which shows you how many visits these users made to your site). ‘Users’ are calculated based on cookie identifiers, so does not necessarily show you individual people (as the same person could be using different devices in different locations), but is a reasonably accurate measure of them.

Users can be broken down into ‘New’ and ‘Returning’ users. ‘New’ users are people who have never been to your site before and came for the first time in your chosen date range. (Like many measurements, it will never be perfect - as it is based on Google Analytics’ tracking methods, and also includes people who are coming in from a new device or who have deleted cookies and then returned - but once you have benchmarked what is normal for your site, it will be very useful for monitoring any changes).

‘Returning users’ are people who have been to your site before and are visiting it again.

Using this metric

You will see this metric in a number of reports across Google Analytics, including in your Audience reports and Acquisition reports.

  • Applying number of users as a base for performance and engagement metrics can give you an idea of how your existing traffic is interacting with your site - including in your conversion rate.
  • Looking at total users over time can give you a top level idea of your audience growth.
  • New vs Returning users can also help give an overview of your retention, which you can tie in with other retention analysis.
  • Looking at volume of users by traffic source (marketing channel) - particularly when coupled with conversions - can help you see which marketing campaigns are driving traffic and sales.
  • If you are on a new customer acquisition journey, looking at volume of new users can give you an idea of the impact your activity is having.

2. Ecommerce conversion rate

This is a fundamental metric to help you understand how many of your users buy something from your shop.

Definition of conversion rate

Ecommerce conversion rate is the ratio of sales to users and shows you the percentage of users on your site who completed a purchase. It is one of the easiest and most valuable metrics to use in your account. It can help you gauge how your shop is working overall, and help you compare the performance of different campaigns, audience groups, devices, emails, ads, etc. against each other.

In simple terms, a high conversion rate means that lots of people who came to your site completed a purchase - which is great! A low conversion rate on the other hand could show that people aren’t buying at the rate you want, and could point to a problem (including issues with your traffic driving activity, your site design or functionality, or even your product). However this is not always the case and ecommerce conversion rate should always be understood in conjunction with the other metrics detailed below.

Using conversion rate

You will see your ecommerce conversion rate within your Conversions > Ecommerce reports in Universal Google Analytics accounts or you can calculate it as a percentage by dividing your total sales by your total users.

  • Conversion rate can help you gauge topline success of different traffic sources against each other, for example do Instagram ads convert at a higher rate than Facebook? And, if so, you can look deeper to find out why.
  • Conversion rate can also help you measure emails or ads against each other in a specific campaign, but remember to look to the other key metrics detailed here to back this up.

Generally you want to increase your conversion rate, however, do be aware that many different factors will actually lower your site’s overall conversion rate. It may seem counterintuitive, but not all of these are bad. For example, a conversion rate could be really high when you launch your site if you have only carried out a soft launch to a small number of friends and family, so you have a low amount of traffic but from a group who are highly likely to buy. As you market your site and drive more traffic, your conversion rate will go down, but hopefully your sales volume will go up, meaning more sales overall!

This is why conversion rate is a key metric, but not the only one you should focus on.

3. Average order value

Average order value (AOV) helps you understand how much income you typically generate from each customer.

Definition of AOV

Average order value shows you how much money people spend per purchase, on average, in your shop. This is a hugely important metric that you can use alongside ecommerce conversion rate to gain a better idea of your shop’s performance. Using both ecommerce conversion rate and average order value will help you better compare different groups of traffic or performance over time.

Understanding your average order value and how it evolves can also help you develop strategies on how to maximise your income per customer.

Using this metric

You will see your average order value within your Conversions > ecommerce reports in Universal Google Analytics accounts or you can calculate it by dividing your total revenue by the number of transactions.

  • Compare average order value by customer cohort (such as location, device, demographic, traffic source, new vs returning, etc.) to better understand who is spending more, and why.
  • Compare average order value and ecommerce conversion rates of different traffic sources, to understand which marketing is driving high value customers.

4. Customer Acquisition Cost

Calculating your Customer Acquisition Cost (CAC) is key to setting strong KPIs and targets for your ecommerce marketing. CAC helps you assess how much it costs to get a new customer and can help you determine what you can afford to spend on advertising.

CAC Definition

Cost per customer acquisition is a calculation of how much money it cost for you to acquire your customers (which should encompass all of the advertising costs and other costs associated with driving your converting customers to your shop). Rather than extracting it from Google Analytics, you will need to calculate it manually by dividing the total cost to gain your customers by the total volume of paying customers.

Using this metric

As with any selling, ecommerce success comes down to making a profit - that is taking in more money than you spend. When you are planning your marketing activity it is important to know how much you can afford to spend. Also when you are analysing the performance of each channel, it is useful to understand how much it cost you to acquire that customer, and whether that is profitable or not.

  • Compare your total cost per customer acquisition against your average order value to assess profitability of your site.
  • Set firm CAC targets for each marketing channel to keep you on the right track (note each channel will likely have a different CAC depending on its role in acquisition, retention, etc.).
  • Compare CAC of one marketing campaign against another to gauge profitability and highlight any improvements that can be made.

5. Return on advertising spend

Return on Advertising Spend (ROAS) can help you understand which areas of your marketing generate the most income.

ROAS definition

ROAS shows you how much revenue each advert has delivered, so is the total revenue from that ad, divided by advertising spend. For example if you are running a Pay Per Click campaign, you will see how much budget you spent on each ad or campaign vs how much revenue that activity delivered in your shop.

Using this metric

You can see this metric within Google Analytics, however it is not in your ecommerce reports but is within Acquisition reports. Go to Acquisitions > Campaigns > Cost Analysis to see your ROAS for your key paid channels.

  • Compare ROAS with your CAC targets to gain an understanding of how those ads are performing.
  • Compare ROAS from different ads within a campaign to see if any promotions or messaging are more profitable than another.
  • Compare ROAS across your paid advertising to see where improvements could be made.

6. Abandonment Rate

Abandonment rate can help you understand blocks to conversion within your site or your shopping cart

Definition of abandonment rate

Abandonment rate is the percentage of users who start a purchase but don’t complete it. Abandonment rate is expected in an ecommerce shop - you will always have users who start a purchase but for whatever reason are not ready to or no longer want to complete it.

However, shopping carts generally have several steps involved in the process from ‘adding to basket’ to ‘order completion’. Although a drop-off throughout this funnel is expected, analysing abandonment rate between these steps can be key to helping you understand if there are any steps in the process that are putting your customers off, which could potentially be streamlined to improve purchase completions.

Using this metric

If you have enhanced ecommerce settings enabled in Universal Google Analytics, you can see abandonment rates in the Conversions > Ecommerce > Shopping Behavior report. You can also set the steps of your cart as a ‘funnel’ within an Analytics goal and you can see the drop offs in Google Analytics within the Conversions > Goals > Funnel Visualization report (see our article on setting up Google Analytics for more information on setting these up).

  • Look at abandonment rate at each stage of the process - if one seems much higher than others, investigate why this could be. Is the content confusing? Is there a surprise cost?
  • Analyse abandonment rate after any significant changes to your site to see if there is any impact.

Once you’ve mastered these metrics it is worth investing time to understand all of the reports that you can use within Google Analytics. For more information on any metrics have a look at Google’s help section and the Google Analytics guides within DigitalBoost’s online resources.

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