 Welcome to The Journey. Today we're going to talk about which e-commerce KPIs you should focus on. Launch your e-commerce business. Most of your time and your resources will go into setting up the site and facilitating orders. However, as you get more comfortable, which you will, you'll want to start focusing on how to optimize and improve your e-commerce store. And that is where e-commerce KPIs come into play. And when considering what e-commerce KPIs to measure, don't get too distracted by the vanity metrics that only serve to make sure that your website looks good. Let's go through our top five key performance indicators that you should be focusing on, starting off with average order value. So this average order value or AOV really provides information on the typical amount of money that a customer spends every time they visit your website. So it's important in e-commerce KPIs to track because it could be manipulated by your marketing efforts. For example, a survey by the National Retail Federation found that 75% of consumers expect shipping to be free on orders below $50. This means that shoppers might bounce they have to pay for shipping and by setting a free shipping threshold for say $35, $50 or $100 depending on your average order, you can encourage customers to spend more. And if your average order value is say $85, you can set free shipping threshold to $100. This is going to encourage most customers to want to spend the extra $15 in order to save money with the free shipping. I save so much money, I'm broke. Another KPI that you want to focus on, cart abandonment, right? And I actually have an interesting story that happened to me recently. I was going to purchase a t-shirt and a new hat because you know, protect your skin from the sun. And I decided, oh, I shouldn't spend money right now. And so I was about to abandon my cart. And this website must have been doing the strategy of exit intent discount because as I started to leave, they were basically like, there was this pop up and it's like leaving already. And I'm thinking, yeah, but then they offered me a discount free shipping if I continued with my order on the items that I had in the cart. So again, that was a really cool strategy that they did. But basically the cart abandonment rate, it tracks the percent of people who add items to their carts without completing the purchase. And this number varies by website and also varies by industry, but the universal average for 2020 is 69.57%. So about 70%. And this means that after all of your efforts to bring people to your website and promote your products, nearly 70% of people who add items, they're not going to buy them. That's alarming, right? So cart abandonment can shed light on issues that are in your e-commerce business, right? Such as a long convoluted checkout process. I know that always deters me from going further. It's like, I'm just ready to purchase and I'm on yet again, another page, I'm going to lose patience. And generally, most e-commerce experts suggest keeping the checkout process as streamlined as possible, including but not limited to allowing guest checkouts. Another personal favorite. I don't want to sign up for an account. I just want to buy this t-shirt and hat. Another way to streamline it is to automatically use the same address for billing and shipping and adding one click pay options like PayPal or Amazon Pay. I absolutely love the exit intents. It's not obtrusive. It's like a, hey, wait, don't go yet versus the ones that just go as soon as you go to a page and there's a pop-up saying, hey, get this discount. It's too early. Those exit intents, in my opinion, are the best way to go if you are going to do a pop-up on your website. Another KPI you want to focus on is your conversion rate. So along with tracking those abandonment rates, you'll definitely want to look at this. This is the total number of people who purchase versus the total number of people who have the opportunity to purchase. It's basically people that visit your website. This percentage can indicate a few takeaways such as whether you're attracting the right audience, whether you have technical issues with your site, and if you need to optimize your pages better. From a high level, you can look at your conversion rate out of everyone who lands on your site or drill down to a specific product page. So every time someone goes to your cool hat page on or whatever you're selling on your website versus how many times people are actually clicking that add to cart button. Another great KPI cost per acquisition. A successful e-commerce business will balance sales with their operational costs. So the price of materials, manufacturing, and marketing efforts will take away from the profits from your site. Makes sense, right? And at the highest level, you want to take your total marketing cost for the month and then divide it by the number of sales over the same period. And if your site spends, let's just throw out a number, $2,000 in marketing and attracts 100 customers, then your CPA is 20 bucks. And CPA is an e-commerce KPI that is often broken down by marketing channels. So let's say, for example, you're curious about making a marketing investment in Twitter versus Instagram. Which one, right? Well, then you should look at the CPA. And our last KPI that you'll want to focus on, especially as you start growing as an e-commerce business, is customer lifetime value. The easiest way to track this metric is to take your average order value and multiply it by the number of customer visits per year and their average time spent with your company. So every company has its own unique customer lifetime value. Bookstores and clothing retailers might get visitors monthly while a car dealership only might see their customer once a decade. But that customer lifetime value will help when tracking your cost per acquisition. And at first, it might not seem profitable for that coffee shop to spend $30 to get a $7 customer. If you're like me and you spend most of your life in a coffee shop, that loyalty can pay off in droves. And he's not kidding about spending most of his time in a coffee shop. I feel like every time I see Nealey, he's holding a coffee cup. But anyways, once you have an idea for which e-commerce KPIs are the most important to monitor the health of your site, simply develop a process to check them regularly. Don't forget about this. And some companies accomplish this through Google Analytics reports and develop their own reporting tools that provide Windows into the information that they need. So test different views so you can get the most value from your data. And remember, tracking and measuring e-commerce KPIs is just the first step. Now you need to start setting goals. But hey, your journey isn't over. We have over 200 episodes to help you with your small business. Be sure to like, comment, subscribe. This is The Journey. We'll see you next time.