The 12 Most Important Conversion Metrics & Business KPIs to Track in 2023 (Explained)

The 12 Most Important Conversion Metrics & Business KPIs to Track in 2023 (Explained)

Ecommerce moves fast. Not only are new tactics and strategies constantly popping up, but there are also new ways of keeping track of your marketing performance. Making sure that you’re always using the latest, most important conversion metrics is crucial for your success.

Instead of struggling to keep up with the “hottest trends” in digital marketing, use these metrics to get a better understanding of how your audience is actually responding to your messaging. 

You can be much more confident about how you’re spending your marketing budget when you have all the data points you need.

Let’s jump right into our list of the 12 most important conversion metrics and KPIs!

1. Interactions per visit

Interactions per visit tracks the way your incoming traffic engages with your website. Usually, a higher number of interactions per visit is good news for your average conversion rate.

When users leave comments on a blog post, spend a lot of time on a certain product page, or sign up for an email newsletter, they’re showing interest in your brand.

Knowing the types of interactions visitors are having with your site is important so that you can influence their behavior in your favor.

Once you understand what your visitors like, where they spend the most time on your website, and what type of content generates shares and reviews, you can work on providing more of that!

How to track it?

You can use tools like Hotjar or Crazy Egg to track interactions per visit.

Heatmaps can even display all the clicks that your visitors make on each page, as well as how far down they’ve scrolled. You can also watch recordings of individual visits to help you understand exactly how site visitors navigate through your website.

conversion metrics 01 - The 12 Most Important Conversion Metrics & Business KPIs to Track in 2023 (Explained)

How to improve it?

Interactions per visit is a funny stat because increasing it doesn’t directly lead to more revenue, but rather to more interactions that will potentially lead to purchases.

You should pay particular attention to which calls to action your visitors are interacting with, since these move your visitors through the sales pipeline. Get rid of the CTAs that aren’t converting and echo the more successful ones to increase interactions (and conversions) across the board.

2. Leads generated

This metric tracks how many new people are becoming interested in your products and services. You can consider someone a lead when they show interest in your brand by taking a specific action—for ecommerce businesses, this is typically signing up for an email newsletter. 

Lead generation (or lead gen) is one of the most important metrics because before people become paying customers, they’re leads! Although not every lead becomes a customer, the more leads you generate, the more potential customers you have.

How to track it? 

There are many tools that can help you keep track of your lead generation. Many of them also help you split leads into different segments so that you can personalize your messaging toward them.

OptiMonk and HubSpot both help with lead generation and also help you to track your progress.

How to improve it? 

The better the lead gen campaigns on your website, the more emails you’ll be able to collect.

Using a tool like OptiMonk, you can promote your email list with discount offers or other perks. This incentivizes more people to sign up and will raise the conversion rate of your lead gen campaigns.

3. New visitor conversion rate

“First impressions are everything” applies just as much in ecommerce as everywhere else. Your new visitor conversion rate measures how many new visitors become customers. 

This metric lets you know whether you’re successfully grabbing the attention of first-time visitors to your website. If you’re not sending the right message, you’ll lose them and your new visitor conversion rate will suffer. 

Make sure your messaging is clear, compelling and valuable to new visitors so that you make a great first impression! 

How to track it? 

Google Analytics makes it really easy to start tracking your new visitor conversion rate.

conversion metrics 02 - The 12 Most Important Conversion Metrics & Business KPIs to Track in 2023 (Explained)

Image source

How to improve it? 

Understanding what a new visitor wants to see on the first page they encounter is crucial. You can run A/B tests to find out what messages resonate best with your first-time visitors.

Keep in mind that low usability and poor design can impact this metric.

4. Returning visitor conversion rate

Returning visitor conversion rate is a crucial measurement of customer loyalty for all sales and marketing teams. It tracks how many returning visitors (i.e. people who have already visited your site) make a purchase.

Your return visitor conversion rate helps you understand whether your messaging is resonating with users who are starting to get to know your brand. It’s also a crucial test of whether your retargeting efforts are performing well. 

How to track it? 

You can check your returning visitor conversion rate the same way you’d check your new visitor conversion rate in Google Analytics.

How to improve it? 

Improving your returning visitor conversion rate hinges on getting people to make that final step, moving from consideration to purchase. 

This is the perfect time to offer a percentage discount or a buy-one-get-one-free offer. Exit-intent popups are particularly effective for converting visitors at this stage.

5. Cost per acquisition

Cost per acquisition represents the total cost of acquiring a single customer.

It’s among the most fundamental conversion metrics because it directly measures the effectiveness of your marketing efforts. If you’re spending a lot of money on social media ads, for example, you should be benefiting from lots of purchases.

How to track it? 

To calculate your cost per acquisition, all you need to do is divide your total marketing costs by the total number of unique purchasers. This tells you how much it costs to acquire a customer, regardless of traffic source.

How to improve it? 

Website personalization is the best way to decrease your cost per acquisition, since it can tailor the buyer’s journey based on each person’s needs and preferences. 

Personalization has the power to raise your conversion rates through the roof. Check out this article to read more about personalization.

6. Average order value

Average order value tells you the average value of each purchase.

This is one of the most important conversion metrics for understanding how your audience tends to spend money on your website.

How to track it? 

To track the average value of your orders, you need to divide your total revenue by your total number of orders. 

How to improve it?

There are lots of proven tactics for raising your average order value. You can use personalization to create tailored upsell and cross-sell offers. Other effective tactics include offering free shipping for orders above a certain threshold and offering financing for big-ticket items. 

7. Customer retention rate

Your customer retention rate tells you how good you are at keeping people who’ve made purchases in the past. Basically, it measures customer loyalty.

On average, retaining a customer is 7x less expensive than acquiring a new customer. Loyal customers are the lifeblood of any business, so you need to keep them happy!

How to track it? 

You need three pieces of information to figure out your customer retention rate:

  1. Number of customers at the end of a period (E)
  2. Number of new customers acquired during that period (N)
  3. Number of customers at the start of that period (S)

When you have this info, here’s the simple calculation you can use to get the percentage: 

Customer Retention Rate = ((E-N)/S)*100

How to improve it? 

First of all, offering high-quality products and services is the best way to keep your customers happy. Beyond that, you can encourage your customers to create an account, run a loyalty program, or improve your email outreach. 

You can also create a subscription program to encourage users to make a purchase every month.

8. Customer lifetime value

Customer lifetime value tracks the average amount of money a customer will spend from the beginning of their interaction with your brand until the end.

Lifetime value is probably one of the most important conversion metrics for measuring your success over time. As we discussed with the previous metric, retaining your customers is the best way to operate a profitable business.

Knowing your customer lifetime value helps you strike a balance between customer retention and acquisition. When you know how much the average customer will spend on your site over time, you can allocate the proper budget for customer acquisition.

How to track it? 

To track lifetime value, you need to divide the lifetime customer revenue by the total lifetime customer costs. 

How to improve it? 

There are a number of ways to increase your customer lifetime value, including:

  • increasing order frequency,
  • increasing the customer lifespan,
  • increasing average order value, and
  • developing a subscription payment model.

9. Return on investment

Return on investment (ROI) measures the amount of profit that your digital marketing campaigns bring in. 

Keeping track of your marketing ROI is important because it’s the only way you’ll know which marketing and advertising channels are the most profitable. You can double down on what’s working and stop wasting money on unprofitable marketing ploys.

How to track it? 

To figure out your return on investment, you need to subtract how much you spent on marketing from your revenue. Then, you can divide your profit by the “cost of the investment” to find your ROI as a percentage.

How to improve it? 

There’s no silver bullet for increasing your marketing ROI. However, following best practices for each particular marketing activity or channel is a great place to start.

10. Return on ad spend

Return on ad spend (ROAS) is similar to ROI, but it tracks how much profit a specific ad generated. Using this metric helps you know whether an ad generated more money than it cost to run.

How to track it?

To get ROAS, you just need to follow the same procedure as calculating your ROI, but only using the numbers for a single ad. 

How to improve it? 

The more optimized your ads are, the higher your ROAS will be. You can A/B test different versions of your ads to find out what works best. It’s also important to ensure that you’re targeting the right audience with each ad.

11. Bounce rate

Your bounce rate is the percentage of site visitors that exit your site almost immediately after arriving. 

Every customer that bounces from your page is a missed opportunity. After all, you work really hard to generate traffic for your site, so you want to maximize the average time each visitor spends there.

How to track it? 

Calculating your bounce rate requires dividing the number of people who exit your site without making a single click by the total number of visitors. 

How to improve it?

You want to start by improving your landing pages and ensuring they have a clear message that’s immediately apparent.

You can also optimize your product pages, making the user experience as smooth as possible, and ensuring your calls to action are clear and compelling.

You can read about some other techniques in this article

12. Exit pages/exit rates

Your exit page stats record which page each user was on when they left your site after viewing more than one page. Exit rates are a great way to identify where you can make improvements to your site and what you need to optimize.

How to track it? 

Google Analytics is the best tool to help you figure out your exit rate. You’ll be able to see what percentage of people are leaving each individual page.

How to improve it? 

Once again, personalization is a great way to address problems on specific pages. You can also use exit-intent popups to offer users a reason to keep browsing.

Final thoughts

So there you have it: the top 12 metrics you need to be watching in 2023!

These conversion metrics are crucial for helping you improve your website and grow your business. Unless you know what’s working and what’s not, you’re going to have trouble making those crucial improvements.

It’s important to remember that none of these conversion metrics can tell you the full story. By  combining insights from several conversion metrics, you’ll have a much better idea of what’s really going on.

Now it’s time to start tracking your KPIs and optimizing your marketing efforts! 

Share this

Share on facebook
Share on twitter
Share on linkedin

Written by

YOU MAY ALSO LIKE

2 comments

Leave a Reply

Your email address will not be published. Required fields are marked *