The 4 key Shopify store metrics to track every single week
A complete guide to the key metrics for any Shopify store.
Hello there! đ Welcome to yet another free edition of The Shopify Diaries. Iâm feeling pretty generous this summer đ Iâm Mo, and each week I write about building and growing Shopify stores đ I tackle all the challenges youâll face as a storeowner, from marketing to logistics and more.
If this post is interesting, check out my other posts đ
How to avoid killing your Shopify store within the first 6 months
How to get your first 10 customers and prepare for the next 100
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On to this weekâs postâŠ
A few days ago I realised that last week I used e-commerce lingo like âconversion rateâ without talking about what it is and why itâs important.
It reminded me of the early days when I was totally clueless about metrics. I couldnât actually tell what was going on in my store, my only metric was âordersâ.
It took some bad advice, wasted dollars and a long time before I figured out what metrics actually mattered.
The thing is, metrics really do matter. If you track the right oneâs you can understand how your store works. Itâs incredibly powerful.
Imagine looking at a few numbers each week and immediately getting an idea of what worked well and what you need to change.
The stores that track the right metrics and learn the right lessons can grow 2-3x with simple changes that can be made quite quickly.
So this week Iâm going to introduce the 4 key metrics for any store. Iâll explain why these are key and how to use them to improve your store.
1. Click rate đ±
What is it?
Out of the number of people who viewed your advert, what percentage clicked on it?
For example, if your advert was viewed by 100 people and 2 people clicked on it, your click rate is 2%. Easy.
Note, itâs also known as Click through Rate (CTR) in some places.
Where can I find my click rate?
Facebook / Tiktok / Google Ads manager
Why is click rate important?
It tells you if people are finding your advert interesting.
If click rate is high, your advert is getting people to your store. Youâve clearly hit a nerve with your audience and they want to check out your store.
If click rate is low, your advert isnât resonating.
Whatâs a good click rate?
It does really depend on your sector and the type of ads youâre running, but hereâs a rough guide:
< 1% = bad
1-2% = ok
> 2% = good
What can I do if my click rate is low?
There can so many things driving this, so take a step-by-step approach to analyse each element:
Audience - are you showing your advert to the right people? If not, it doesnât matter what you show them, theyâll never click!
Images - is your ad image interesting enough?
Headlines - are you being provocative enough (without being clickbait-ey)
Call to action - are you using the right phrase for the context?
Itâs easy to underestimate just how much these factors matter. Small changes can lead to big growth. Itâs worth spending the time to work on all of them.
2. Cost per conversion đ”
What is it?
On average, how much did it cost you to get an order on your store?
For example, if you spent $100 on Facebook ads and got 20 orders from it, thatâs a cost per conversion of $100/20 = $5.
Where can I find my cost per conversion?
Initially in Facebook / Tiktok / Google Ads manager.
As you grow, take your total ad spend and divide it by the total number of orders on your store.
Why is cost per conversion important?
Why isnât cost per conversion important! This is probably THE most important metric you can track. Your entire business model will depend on how low you can push this.
Itâs pretty simple, the lower your cost per conversion, the more profitable you are.
A high cost per conversion means youâre spending too much to get people making orders.
If itâs low, youâre on your way to having a sustainable business that doesnât rely on paid advertising.
Whatâs a good cost per conversion?
Now this is really really dependent on your sector and the size of your orders (otherwise known as your average order value, see below).
If you sell jewellery at an average of $2,000 an order, youâre probably comfortable with a cost per conversion in the hundreds.
But if youâre selling stationery at an average of $15 per order, you probably donât want to spend more than a couple of dollars.
So the way to best way to measure âgoodâ is by comparing it to your average of value.
In the early days, you donât want your cost per conversion going beyond 25% of your average order value. As you grow, you really should aim to push it to below 10% of your average order value.
Ultimately, what youâre comfortable with depends on your storeâs profitability and how much you can afford to swallow on ad investment.
What can I do if my cost per conversion is too high?
The first thing to do is stop your ads. Stop the bleeding, keep calm and analyse.
Check your click rate, and see if anythingâs going wrong over there.
If your click rate is fine, itâs one of two things.
- Your ad and website might be mismatched. For example, maybe youâre promising the world in the ad but then disappointing on the website?
- Your website isnât optimised to convert customers. Check out last weekâs post on some helpful tips to optimise your product page
3. Conversion rate â»ïž
What is it?
Out of the people who visited your website, what percentage made an order?
Itâs a lot like cost per conversion, but itâs more focussed on your website as opposed to the cost of your marketing.
Of course though, the two are linked.
Where can I find my conversion rate?
Shopify dashboard
Google Analytics
Why is conversion rate important?
Conversion rate tells you if your website is optimised for the people that are visiting your store.
If itâs high, youâve got the right website for the people visiting your store, and so theyâre convinced to make an order.
If itâs low, too many visitors are leaving your website without making an order.
Whatâs a good conversion rate?
You know the drill by now, it depends on your industry đ
Shopify is quite helpful here and itâll give you a benchmark after youâve had a few thousand visitors and a handful of orders.
For a helpful guide though:
< 2% = bad
2-4% = ok
> 4% = good
What can I do if my conversion rate is too low?
Itâs really important to analyse conversion rate by taking the full picture into account. You need to make sure that itâs not being artifically depressed. Letâs take an extreme example and say your website gets a million views from robots. Guess what, your conversion rate will be low and it probably isnât your fault! So the first thing to check is that your conversion rate is reflecting a normal scenario.
Now you can start analysing, and itâs all about optimising your website and the visitors coming to your website - very similar to cost per conversion.
4. Average order value đ°
What is it?
The average size of an order during a specific period of time.
For example, In January, you get 1,000 orders that add up to total sales of $20,000. Your average order value is $20,000/1,000 = $20.
Where can I find my average order value?
Shopify dashboard
Why is average order value important?
A bigger average order value means:
- Each customer order is worth more
- You can spend more on advertising because orders are bigger
- Your shipping cost relative to your order is much smaller
- Your customers trust you!
I canât stress how important this metric is. But you donât have to panic if itâs low. Not at all. This is one metric which you can build over time, as you gain your customerâs trust and establish yourself.
Whatâs a good average order value?
This is totally dependent on your industry đ
What can I do if my average order value is too low?
Donât panic, thatâs the first thing. The most important thing early on is to have people making orders, and growing your mailing list. If thatâs happening, and your average order value is low, thatâs totally cool (for now).
Thereâs a few classic tricks:
- Optimise your product page, see last weekâs post
- Create bundles e.g. sell a product in multiples, or bundle a few different products together
- Increase the size of your product portfolio (do this slowly and purposefully)
Iâve consciously not mentioned discounting to do this. It might be appropriate for some sectors, but typically I try to avoid it. Iâll talk more about this another time.
If you can get in the habit of checking these 4 metrics every week, and making small changes, youâll be on a great path to growing your store. Try it and feel free to let me know how you get on!
If you found this post helpful, feel free to share with your friends and fellow storeowners!
Also, I take questions every week đ Feel free to send me any questions here and Iâll offer my real world advice. If I canât answer it well by myself, I probably know someone who can.