Over the last decade, e-commerce has changed to reflect the explosive growth of the digital world. New frontiers, including social media, have evolved to allow consumers to purchase goods directly through digital platforms. Retailers have adjusted their strategies to cater to this new version of shopping.
The past two years have also shown legions of new consumers buying online due to challenges facing traditional brick-and-mortar retail. Brands beginning to monitor an influx of online presence and (hopefully) sales may be wondering how to accurately do so. With a complicated web of e-commerce data to sort through, it’s important to know which metrics to focus on. Studying performance indicators behind an online store’s efficiency can provide a brand with valuable information about consumer behavior, e-commerce features, and what’s working or missing the mark.
Below are a few key metrics retailers can track to measure e-commerce effectiveness:
Online shopping has grown increasingly complex as the market expands to offer large and often more expensive purchases. Because of this, the typical consumer spends more time researching the product, leading to higher cart abandonment. Cart abandonment has always been an important metric to track when looking at an online store’s effectiveness, but brands shouldn’t over-index on it given the growing trend of virtual window shopping. This habit was picked up during the pandemic by bored consumers at home, and it’s led to a reported 94% cart abandonment rate over the last year. Despite this seemingly alarming rate, the numbers don’t tell the entire story as consumers are still interacting with the products which can lead to sales and long-term customer relationships over time.
Average Order Value
By tracking the average dollar amount spent each time a customer places an online order, brands can better monitor varying types of incorrect merchandising, such as pricing a product at $1.00 instead of $100.00. Although the (AOV) can vary wildly depending on product and offer mix, it’s considered a key performance indicator (KPI) to help brands measure and understand their customers’ purchasing habits. Through analyzing the AOV over a period of time, brands can better forecast consumer behavior and properly realign goals and merchandising strategies.
Payment Authorization and Failure Rates
A basic e-commerce transaction usually involves a customer entering their digital payment in the form of a credit or debit card. Every time a customer enters the required information and completes the transaction, it moves on to be properly authorized. A successful authorization shows that the customer has sufficient funds or line of credit to obtain the product or service being purchased. If there’s a lack of funds or if the payment processing system doesn’t catch mistakes (such as incorrectly inputted card information or billing details), the transaction will be declined.
The authorization rate of an online store indicates the number of transactions that are successfully completed. Obviously, a high number is desirable. A low number could indicate a need to dig a little further at a regional level or by payment. It’s important to remember authorization rates can vary based on local area and whether a transaction is cross-border or truly local.
Fraud Reject Rates
Limiting fraudulent transitions is another key concern of merchants. However, equally costly are “false positives,” or when an order is rejected by the fraud prevention system for what’s likely a legitimate customer. Not only do these rejections create an expensive problem for brands over time, but they also put a potentially long-term relationship with a customer at risk. Unless the retailer is truly being hit by a fraud ring, spikes in fraud reject rates as well as feedback from your customer service channel should be monitored closely to evaluate if flagged false positives are potentially playing a role in rejecting valuable customers.
Customer Service Inquiries
Not everything should be measured through online data. Brands shouldn’t overlook the quantitative and qualitative data that can be sourced from a customer service center. Poor online experiences or areas of improvement can be identified based off trends being monitored at a call center. Calls are typically exchanged between consumer and customer service when a complaint is being made — it’s the quickest way to identify an exception from buyer satisfaction.
Building a successful online store can pay huge dividends for brands, as the expansion of e-commerce has allowed merchants of all sizes to sell to consumers across the world. Thankfully with so many opportunities to track performance, retailers can take the appropriate steps to cut through the digital noise and help contribute to their online store’s success.
Connect with Digital River to learn more about how you can optimize and grow your online store to reach new customers around the world.