Boost your eCommerce success: marketing metrics and KPIs to measure

There is no doubt that in the world of eCommerce, the analysis and monitoring of marketing metrics and KPIs has become a key factor for its success. The ability to measure and evaluate the performance of your digital strategies not only gives you a clear view of your progress, but also provides you with the tools you need to boost the growth and profitability of your eCommerce by making informed decisions.

The importance of marketing metrics and KPIs lies in their ability to analyze the effectiveness of your campaigns, identify areas for improvement, and make data-backed decisions to optimize your marketing efforts and drive business growth.

In this article, we will explore in detail the marketing metrics and KPIs that every eCommerce should analyze, discuss the importance of their analysis, and learn how to calculate them.

Return on Investment (ROI)

Return on Investment (ROI) is a financial metric that measures the effectiveness of a business' marketing and advertising strategies by comparing the revenue generated with the cost of marketing investment. In other words, it measures the percentage of profit or loss in relation to the initial investment made. It is calculated by dividing the net profit by the cost of the investment, multiplied by 100. In other words:

Return on Investment (ROI) = ((Revenue-Cost of investment) / Cost of investment) *100

ROI is an essential metric as it allows measuring the performance of marketing strategies, identifying opportunities to maximize the efficiency of investments, as well as making informed decisions on which strategies to follow and deciding on which ones to invest more resources in.

Return on Advertising Spending (ROAS)

Return on Advertising Spend (ROAS) is an indicator that measures the performance of an advertising campaign in terms of revenue generated in relation to advertising expenditure. It is an essential metric for evaluating the profitability of marketing and advertising investments.

ROAS is calculated by dividing the revenue generated by the advertising campaign by the cost of the advertising investment and multiplying by 100:

ROAS = (Revenue generated by the advertising campaign / Cost of advertising investment) * 100

The main difference between ROAS and ROI is that ROAS refers to the revenue directly attributable to a particular advertising campaign, while ROI refers to a company's overall revenue and expenses.

It is essential to calculate ROAS as it allows to measure the effectiveness of the advertising investment made by the company, to optimize the allocation of the advertising budget, to make informed decisions by identifying which campaigns are performing better and which ones need to be improved, as well as to track advertising campaigns over time.

Bounce Rate

Bounce Rate is a metric that measures the percentage of visitors who arrive at a web page and leave the site without performing any additional action, such as clicking on internal links, filling out forms or interacting with any of the elements on the page.

The Bounce Rate is calculated by dividing the number of visits to a single page (without any additional interactions) by the total number of visits to the website and multiplying it by 100:

Bounce Rate = (Number of visits to a single page / total visits to the website) * 100

Calculating the Bounce Rate is essential to measure the effectiveness of web pages and marketing strategies, assess the user experience, analyze the quality of traffic coming to the website, as well as identify areas for improvement to avoid poor positioning in search results.

Lifetime Value

Lifetime Value (LTV) or Customer Life Cycle Value is an indicator that estimates the economic value, in terms of revenue, that a customer brings to a company during the time that it maintains a business relationship with it.

It is calculated by multiplying the average revenue per purchase by the average number of purchases per year by the average duration of the customer relationship (in years). The formula is as follows:

Lifetime Value = Average revenue per purchase * Average number of purchases per year * Average length of customer relationship (in years)

Where:

Average revenue per purchase refers to the average revenue generated by an individual sale.
Average number of purchases per year refers to the average number of times a customer buys from the store in a given year.
Average length of customer relationship refers to the average length of time a customer maintains a business relationship with the company.

Lifetime Value is a crucial metric for all companies as it allows them to assess how much money they can expect to generate from a customer throughout their relationship with the company, make informed decisions about how much they are willing to spend to acquire new customers, design effective customer retention strategies, segment customers according to their value to the business, analyze the return on marketing investments, as well as make more accurate financial projections based on what they expect to get for each customer.

Click-Through-Rate

The Click-Through-Rate (CTR) is a marketing indicator that measures the effectiveness of a specific element, such as an ad, a banner, by calculating the proportion of people who click on it in relation to the total number of people who see it.

It is calculated by dividing the number of clicks on that specific element by the number of times it is displayed, multiplied by 100:

CTR = (Clicks on the element / Impressions of the element ) * 100

Where:

"Clicks on the element" refer to the total number of times users click on the element (ad, banner).
"Element impressions" refers to the total number of times the element (ad, banner) was shown to users.

It is essential to calculate the CTR as it allows determining the effectiveness of the ads, optimizing marketing campaigns, having a positive impact on advertising costs, since advertising platforms reward ads with a high CTR, reducing the cost per click (CPC), evaluating the relevance of the content of the element (ad, banner) and segmenting the audience.

Cost-Per-Click (CPC)

Cost-Per-Click (CPC) is an indicator used in digital marketing campaigns that measures the cost an advertiser pays for each click on an ad.

It is calculated by dividing the total cost of the campaign by the total number of clicks. The formula is as follows:

Cost-Per-Click (CPC) = Total Campaign Cost / Total Number of Clicks

Where:

"Total Campaign Cost" refers to the total investment of money that was made in an advertising campaign in a given period of time.
The "Total Number of Clicks" refers to the total amount of clicks that users made on the ad during that same period of time.

Calculating the Cost-Per-Click is essential as it allows you to evaluate the profitability of your advertising investment, compare different marketing strategies and focus efforts on those that generate the most benefits, adjust budgets for appropriate bids on pay-per-click advertising platforms, optimize ads and make improvements in content and design, as well as control advertising expenses.

Customer Acquisition Cost (CAC)

Customer Acquisition Cost (CAC) is an essential marketing metric that measures the average cost a company must invest to acquire a new customer. In other words, it allows to evaluate the effectiveness of a company's marketing strategies.

Customer Acquisition Cost is calculated by dividing the total cost of customer acquisition during a given period of time by the number of new customers obtained in that same period of time. The formula would be as follows:

Customer Acquisition Cost (CAC) = Total Customer Acquisition Cost / Number of New Customers Acquired

Where:

"Total Customer Acquisition Cost" refers to marketing related expenses (advertising, marketing campaigns) and the cost of acquiring customers during a certain period of time.
The "Number of New Customers Acquired" is the total number of new customers acquired during the same period of time.

It is essential to calculate the Cost of Customer Acquisition as it allows to evaluate the financial sustainability of the company, to assess the efficiency of the marketing strategies being implemented, to optimize customer acquisition strategies and thus focus on those that generate a greater number of customers at a reasonable cost, and to make strategic decisions on resource allocation and campaign planning.

Email Open Rate

The Email Open Rate is an indicator widely used in marketing to measure the performance of an email campaign. That is, it measures the number of recipients who have opened the email campaign compared to the total number of emails that have been sent.

It is calculated by dividing the number of emails opened by the total number of emails that have been sent, and multiplied by 100 to express it as a percentage. Therefore, the formula would be as follows:

Email Open Rate = (Number of emails opened / Total number of emails delivered) * 100

Where:

"Number of emails opened" refers to the number of users who have opened the email.
The "Total number of emails delivered" is the total number of emails that have been sent.

The importance of calculating the email open rate is that it allows you to measure the effectiveness of the email subject line, as this plays a crucial role in whether or not the recipient will open the message, evaluate the relevance of the content, segment audiences, optimize sending strategies by determining the most effective days to send emails, and analyze the overall performance of the email marketing campaign.

Average Time on Site

Average Time on Site is a metric that measures the average time visitors spend on a website during a given visit. In other words, it is a metric that analyzes the user experience and the relevance of the website content.

The average time on the website is calculated by dividing the total time all visitors spent on the website by the total number of visitors. The formula would be as follows:

Average time on website = Total time of all visitors /Total number of visitors

Where:

"Total time of all visitors" is the sum of the times each visitor spent on the website in a specific session.
"Total number of visitors" refers to the number of visitors who accessed the website during a given time period.

Calculating the average time on site metric is essential as it allows you to evaluate the effectiveness of your content and identify areas for improvement, examine usability issues and improve the overall user experience, measure the effectiveness of calls to action on your website, as well as, the performance of your marketing strategies.

Social media engagement rate

The social media engagement rate is an indicator that measures the level of engagement and interaction of users with the content published on a social media page or profile. In other words, this metric allows you to analyze the effectiveness of a social media strategy, and the impact of the content on users.

The social media engagement rate is calculated by dividing the total number of interactions (likes, comments, shares) by the total number of followers, and multiplying it by 100 to express it as a percentage. Therefore, the formula would be:

Social media engagement rate = (Number of Interactions / Total number of followers) * 100

It is essential to calculate the social media engagement rate as it provides a quantitative measure of the performance of the content and allows to identify successful content to replicate that strategy, allows to know the level of engagement of the followers, evaluate the effectiveness of the social media strategy, as well as measure the return on investment (ROI).

How RITMO Insights helps you analyze your marketing KPIs

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