B2B E-commerce Metrics: Which KPIs Truly Drive Business Growth?
Published: November 7, 2023 | E-Commerce Strategy, Retail & Commerce
As the e-commerce industry continues to grow, businesses must keep up with the latest trends and innovations to stay competitive. One way to do this is by tracking key performance indicators (KPIs) that can help businesses understand their performance and make data-driven decisions. In this article, we will explore the most important B2B e-commerce KPIs that truly drive business growth.
- Customer Retention Rate (CRR)
Customer retention rate is a crucial KPI for any e-commerce business. It measures the percentage of customers who return to make a purchase again. A high CRR indicates that customers are satisfied with the products and services offered by the business, which can lead to increased revenue and profitability.
To calculate CRR, divide the number of customers who made a repeat purchase by the total number of customers and multiply by 100. For example, if a business had 100 customers and 20 of them made a repeat purchase, the CRR would be 20%.
To improve CRR, businesses can offer loyalty programs, personalized recommendations, and exceptional customer service.
- Average Order Value (AOV)
Average order value is another important KPI that measures the average amount of money customers spend per order. A high AOV indicates that customers are willing to spend more money on the products and services offered by the business.
To calculate AOV, divide the total revenue by the number of orders. For example, if a business had $10,000 in revenue and 100 orders, the AOV would be $100.
To increase AOV, businesses can offer upsells and cross-sells, bundle products, and provide free shipping for orders over a certain amount.
- Conversion Rate
Conversion rate measures the percentage of website visitors who make a purchase. A high conversion rate indicates that the website is effective at converting visitors into customers.
To calculate conversion rate, divide the number of orders by the number of website visitors and multiply by 100. For example, if a business had 1,000 website visitors and 50 orders, the conversion rate would be 5%.
To improve conversion rate, businesses can optimize their website design, simplify the checkout process, and offer social proof such as customer reviews.
- Gross Merchandise Value (GMV)
Gross merchandise value measures the total value of goods and services sold on the e-commerce platform. A high GMV indicates that the business is generating a significant amount of revenue.
To calculate GMV, multiply the number of orders by the average order value. For example, if a business had 100 orders with an average order value of $100, the GMV would be $10,000.
To increase GMV, businesses can offer promotions and discounts, expand their product offerings, and improve their marketing strategies.
- Return on Investment (ROI)
Return on investment measures the profitability of the e-commerce platform. A high ROI indicates that the business is generating a significant return on its investment.
To calculate ROI, divide the net profit by the total investment and multiply by 100. For example, if a business had a net profit of $10,000 and a total investment of $100,000, the ROI would be 10%.
To improve ROI, businesses can reduce costs, increase revenue, and optimize their marketing strategies.
Tracking the right KPIs is essential for any e-commerce business that wants to drive growth and stay competitive. By focusing on customer retention rate, average order value, conversion rate, gross merchandise value, and return on investment, businesses can make data-driven decisions that lead to increased revenue and profitability.
If you want to learn more about how to optimize your e-commerce platform and drive business growth, reach out to geekspeak Commerce today. Our team of experts can help you develop a customized strategy that meets your unique needs and goals.
