Ecommerce metrics and KPIs: Beyond overall conversion rate
Measures of success in the retail space are shifting as dramatically as the ever evolving and disruptive marketplace.
With more shoppers migrating from physical stores to digital ones, key performance indicators (KPIs) are getting as tuned in to consumer behavior as they are to product performance.
Just six years ago, when retail industry research firm, RSR, asked enterprise retail brands what metrics they valued most, the top two picks were comparable store sales and average transaction value. Thanks to ever-increasing commoditization and competition, customer satisfaction has emerged the single most important measure of success in 2021.
The focus today, RSR finds, is on net promoter scores (NPS), customer satisfaction scores (CSAT) and customer effort scores (CES). Sustainable success requires more than getting product and delivery right. It’s all about delighting the customer at every step of the shopping journey.
When we think of customer experience, we still tend to think about connecting online and offline experiences. But now, we need to also start incorporating the full range of digital experiences where commerce can happen.Deanna Traa, CMO, Bold Commerce
The North Star of customer experience
Given how quickly retail trends and shopping habits are changing, customer experience metrics need to keep pace.
“We can no longer just consider the traditional metrics around customer satisfaction,” says Deanna Traa, Chief Marketing Officer at Bold Commerce. “We must think of the North Star — the connected seamless journey across multiple browsing and shopping experiences, which span devices and channels.”
In other words, unified is the new bar for great customer experience. “There’s a distinction between multichannel and omnichannel,” Traa says. “Multichannel just means you sell through a number of different channels. Omnichannel refers to your ability to create a seamless experience across those channels and have them unified and connected.”
It is this shift that current metrics and KPIs need to start reflecting. “When we think of customer experience, we still tend to think about connecting online and offline experiences. But now, we need to also start incorporating the full range of digital experiences where commerce can happen – desktop, mobile, voice, IoT, wearables, etc.,” she adds.
When measuring the cohesiveness of customers’ digital journeys and how they impact conversion rates, brands should aim to pinpoint where the friction is — meaning where the drop-off happens. If shoppers don’t add anything to their cart, there’s a likelihood, Traa says, “that you’re not offering what they’re seeking. Or you’re not making it easy to discover and consider.”
The checkout metrics checklist
If the drop-off, on the other hand, is detected during the checkout stage, you need to consider where the breakdown is happening and why:
- Is the purchase experience clunky or complicated?
- Are there too many form fields to complete?
- Are shoppers being forced to create an account?
- Do the pages load too slowly?
- Are delivery options like buy online pick up in store and split order fulfillment available?
- Do you offer preferred payment methods including digital wallets and BNPL?
The goal is to center the checkout experience around convenience, relevance and personalization.Deanna Traa, CMO, Bold Commerce
For greater insights, Traa says brands need to unlock the next layer of granularity.
For example, when a brand looks at the demand and utilization of new payment types, it’s also important to determine how many options are too many. For when it comes to seamless customer experience, even too much of a good thing could be a distraction. The goal, Traa adds, is to center the checkout experience around convenience, relevance and personalization.
Given the multiplicity of devices, the checkout experience needs to be optimized and tested separately for each channel. Checkout for mobile devices or wearables, for example, needs to adapt to the limits of a small screen. Checkout could also differ by customer segment. Brands can differentiate by providing a more personalized checkout experience to logged in users, or to VIP customers.
Checkout efficacy, then, lies in providing a seamless, unified experience across all shopping interfaces, while facilitating distinct flows optimized for each device or segment in the backend.
Creating and optimizing multiple checkout experiences, however, poses a challenge for legacy platforms designed to have a single checkout for a website. But that limitation can be overcome by leveraging an API-first headless approach, which is worth considering given that checkout is the last and most vital stage in the purchase funnel.
“If you’ve provided an intuitive, elegant, personalized experience through search, discovery and consideration, only to offer a vanilla checkout that’s complicated, confusing, or forces customers to enter information multiple times – that’s a letdown. The trust you built all along the journey could break at that point,” Traa says.
Evolving customer metrics
Traa envisions a whole new dashboard of customer metrics that look different from conventional ones. “I’d take traditional KPIs around sales, basket size, gross margin and profitability and turn them on their side by applying a customer lens,” she says.
“For example, rather than focus on comparable store sales, brands need to focus on comparable customer sales”, she says. This metric pays attention to individual customers and their buying behaviour over time, rather than just overall growth in sales. Brands that successfully collect and dissect this data can also gain valuable insight into accompanying metrics such as loyalty, retention, customer lifetime value and share of wallet.
While customer lifetime value weighed against the cost of acquiring that customer helps direct sales and marketing efforts, share of wallet determines how much of their spend customers give to your brand, versus your competitors. As Traa puts it, “I can see how important you are to me as a customer — by the value of your total spend with me — but I can’t tell how important I am to you as a brand. If I knew that, I’d definitely treat you differently.”
Are omnichannel shoppers more profitable than others?
With shopping behaviours evolving, measuring your customers’ channel adoption rates is also key to uncovering opportunities. In her experience leading and doubling growth for a portfolio of fashion apparel brands, Traa reveals the most profitable growth didn’t come from acquiring new customers. It came through customers who had traditionally been in-store shoppers only, adopting digital shopping as well. “We found customers who shopped with us in more than one channel had higher overall spend and greater profitability,” she says.
Offering customers a variety of ways to purchase, increases the convenience and ease of sales, thus boosting engagement, loyalty and profit. In fact, recent research shows businesses that adopt omnichannel strategies achieve 91% greater year-over-year customer retention rates compared to businesses that don’t.
Insights such as these are a derivative of customer metrics, rather than comparable store sales.
Putting a focus on shoppable moments in mediums other than branded websites or apps, could also unlock revenue growth. Content-rich brands, for example, are only just now wading into commerce. Most of their traffic doesn’t live on an ecommerce site; but rather in blogs, videos, and other more engagement-driven content formats. Traa recommends these brands consider checkout directly from their blog rather than forcing shoppers to navigate away from that content experience into a traditional ecommerce checkout flow.
With online cart abandonment rates still sitting at an alarming 78%, achieving top line sales growth is increasingly challenging for most brands. Those that have pursued a seamless, integrated and omnichannel approach are alleviating friction while serving up new ways to shop. Expanding traditional KPIs to embrace customer metrics across the shopper journey goes hand in hand with this evolution in shopping.
Download “Retail ecommerce in context: the next iteration,” sponsored by Bold Commerce, here.