eCommerce KPIs, or key performance indicators, are measurable benchmarks for retailers to track progress towards specified goals.
To advertise their products, furniture companies employ a variety of marketing methods, and tracking the outcomes can often be challenging and time-consuming. eCommerce KPIs allow organizations to define targets and monitor outcomes. This data is then used to make informed changes to the site’s layout, product offerings, descriptions, checkout process, etc. to increase overall revenue.
Here’s what you should know about the top eCommerce KPIs that online furniture retailers should be measuring.
Why Do eCommerce KPIs Matter to Furniture Retailers?
Like all retailers, furniture sellers need to be able to keep track of critical eCommerce metrics that impact their overall bottom line. eCommerce KPIs provide furniture retailers with hard data feedback about how consumers interact with their websites and how they’re making purchases. KPIs help direct what changes to make by tracking what’s working — and what isn’t. Here are the top 6 eCommerce KPI benchmarks that are most important for furniture retailers:
Top 6 eCommerce KPIs You Should Be Measuring
- Cart abandonment rate
- Customer Acquisition Cost
- Average Order Value
- Conversion Rate
- Customer Lifetime Value
- Email subscription rates
1. Cart Abandonment Rate
Cart abandonment refers to website users who add products to a virtual shopping cart but abandon it before making a purchase. Tracking this metric is critical, because it can indicate if there’s a disconnect between the shopping and checkout processes.
According to Statista, 88.05% of online shopping carts were abandoned in March 2020 across multiple industries. Overall, Truelist reports that the global average of abandoned carts is approximately 75.6%. Cart abandonment is expensive, costing online retailers to lose $18 billion annually.
This one is so important that we asked our development experts about cart abandonment.
Cart Abandonment is a serious metric often retailers miss to focus on. While shopping in-store, many customers would come in and browse various products. I can think of many reasons why more than 90% of customers leave the place without making a purchase. A few of the main reasons could be that due to lack of enough information available in-store for the products they are looking for, unable to visualize the whole furniture while trying to customize a furniture item with a single 2 x 2 swatch and retailers cannot contact these customers as that they don’t know how to contact them.
Retailers could incentivize repetitive customers, offer discounted shipping and offer other payment options like financing to reduce cart abandonment rates.
Pavan Alapati, Software Development Manager
What to Do: There are several things you can do to help reduce your cart abandonment rate. Avoid making multiple changes at one time; you want to be able to gauge which tactic is the most effective at reducing cart abandonment.
- Use remarketing tactics to target cart abandoners.
- Reduce the time it takes for your website’s pages to load. A slow-to-load site increases shopping cart abandonment by 75%, per Truelist.
- Determine where your conversion funnels are leaking and streamline them.
- Inform customers about shipping and handling fees outright.
- Consider a money-back guarantee for unsatisfied customers
- Don’t force customers to create an account to purchase from you; make a guest check-out option available.
- Make it simple to save a shopping cart for later review.
2. Customer Acquisition Cost
The term customer acquisition cost, or CAC, is an estimate of the overall cost of obtaining a new customer. Generally, it includes expenses like advertising costs divided by the total number of clients acquired. It’s an extremely important metric, because if your CAC exceeds revenue for too long, your business will become unsustainable.
FirstPageSage reports that out of 17 industries surveyed, consumer eCommerce and retail CAC is the lowest. On average, the organic CAC for the online retail industry is approximately $87 and the inorganic CAC is just $81. Compare this to higher education CAC, which tops out at just under $2,000 for its average inorganic CAC. This means that retailers in the furniture industry already have an easier time acquiring customers than other industries.
What to Do: Look for even more ways to reduce the cost of acquiring customers to increase your bottom line. For example, you could cancel low-performing newspaper ads and funnel those dollars into more effective social media marketing. If you can acquire more customers with the same budget, your customer acquisition cost goes down.
3. Average Order Value
Average order value, or AOV, is a calculation of the average value of each order placed with a retailer over a specific time period. AOV is one of the most critical parameters for online retailers to be aware of. This is because it influences multiple important business decisions, including the layout of your website, product pricing, etc. By understanding their AOV, furniture retailers can maximize each revenue opportunity.
Statista’s recent data suggests that the device on which a customer is making their purchase impacts their AOV. In Q3 of 2020, the global online AOV was just over $120 on desktops, laptops, etc. However, the same time period showed that the global AOV was hovering around $85 on tablets and mobile phones. This suggests that shoppers using mobile devices will spend less than computer shoppers.
What to Do: Look for ways to improve your AOV by bundling products together, offering discounts for purchases over a certain amount, etc. Upsell customers on matching accessories, or design your website to have a “related products” section at the bottom of each product page. Address low AOV on mobile orders by offering mobile-only discounts that bundle products or require a minimum order value.
4. Conversion Rate
The term “conversion rate” refers to the percentage of website users who execute a desired action. For example, a furniture retailer’s desired action might be to fill out a contact form or to make a purchase outright.
Conversion rates are computed by dividing the total number of website users that convert by the total number of website visitors overall. Then, that number is reduced to a percentage. Conversion rates are a good tool for furniture retailers to compare and contrast the results of different advertising strategies.
Smart Insights indicates that the average conversion rate in January of 2021 in two home-related categories was just under 2.5%. For comparison, the industry with the lowest conversion rate was baby and child, with just 0.99% of leads converting. The industry with the highest conversion rate was arts and crafts, at 3.79%.
What to Do: Improving conversion rates is an ongoing endeavor for all retailers; the work truly never ends. To continue driving sales, furniture retailers should always be evaluating their conversion rates, eliminating low-performing ad campaigns and launching new ads while gauging consumer response via split testing. These metrics are usually in constant flux, but following trends can help you optimize your company’s conversion rates.
5. Customer Lifetime Value
The term customer lifetime value, or CLV, refers to a customer’s entire value to a company over the course of their business relationship. It’s a critical metric to keep track of, since keeping existing customers typically costs less than acquiring new ones.
Calculating your CLV is relatively easy. Subtract the cost of acquiring and serving a customer from their overall lifetime revenue.
For example, say your company sells $1,200 of new furniture to loyal customers every year and you keep customers for an average of 5 years. In this case, your overall lifetime revenue per customer is $6,000. Say your CAC to acquire and keep a customer for 5 years is $1,500 in advertising, customer service, maintenance, etc. This equates to a net CLV of $4,500.
You should be mindful of your CLV compared to your CAC. If it costs more to acquire a customer than the value they are expected to provide over the lifetime of the relationship, your business may lose money.
What to Do: Increase the lifetime value of each customer by creating additional sales opportunities. Follow up with customers who have purchased from you with special offers. Create loyalty programs that encourage customers to continue shopping with you. Create relationships with customers by sending coupons on their birthdays or by calling to check if they’re happy with their purchases.
6. Email Subscription & Unsubscribe Rates
A powerful advertising strategy for furniture retailers is email marketing. It’s vital to keep a consistent eye on your email subscriber lists. Tracking how many website users subscribe and unsubscribe after sending out an email helps identify key issues.
For example, a high unsubscribe rate suggests you’re targeting the wrong demographic. If more people subscribe to your email list after a blog post, you can assume the content in the blog resonated with your audience.
Campaign Monitor reports that in 2020, the average email open rate was 18%. For the retail industry specifically, however, that metric dips to just 12.60%. The average unsubscribe rate for the same time period was 0.1% overall, and 0.00% for the retail industry. Furniture retailers should pay special attention to their email subject lines to ensure they are enticing and clickable.
What to Do: Split test emails to determine the best subject lines, open rates, and click-through rates. Halt low-performing email marketing campaigns and put more into successful campaigns. Use creative subject lines to make emails more exciting to open, such as teasing about a discount or an exclusive subscriber-only product deal.
Bonus: Content Page Word Count
We asked our digital marketing expert Nathaniel Smathers what lesser known metrics are important for eCommerce success. Here’s what Nate said in our interview.
Why building enough content matters and I am not just talking about adding more products to your site.
One of the toughest challenges for any brand that wants to grow its e-commerce is generating enough content to compete with the increased competition and Google’s ever-changing algorithm. With record e-commerce competition, customer acquisition costs are rising. SEO is the best overall investment for an e-commerce website where content is king. Between March of 2020 – March of 2021, I have seen 30:1 returns from SEO traffic.
Through our research, the average content length of top ranking pages in Google articles contain 2,300+ words. We have also concluded that our top e-commerce websites create at least a blog a week and weekly participate on three social platforms.
Consistently matters more than frequency, so planning accordingly will help e-commerce sites in 2021 and on.
-Nathaniel Smathers, Director of Customer Digital Marketing
How to Start Tracking Important Ecommerce Metrics
Everything in this article starts by measuring what matters. And the first measurements of eCommerce KPIs come from your analytics and website platforms. Staying on top of your data means choosing the partner that will offer those tools for your retail store to measure frequently. To learn more about eCommerce website platform features that retailers need, contact MicroD.