If you haven't set up Google Analytics yet, we suggest that you get it done. The information gathered can provide valuable insights about your store – such as which products are performing well, which pages are most effective in converting visitors, and which traffic sources are generating sales, among other details. Explore this article that details the process of setting up Google Analytics for your ecommerce venture, and don't forget to visit Google's help centre for additional insights.

Stay focused and avoid getting overwhelmed by data
Google Analytics is an essential tool that offers a wealth of insightful reports about your visitors, their activities on your site, and the sources of your traffic. Nonetheless, with all this information, the platform might feel a bit daunting, particularly in the beginning, and it can be tempting to focus on metrics that may not be the most beneficial for your business. Avoid getting stuck in 'analysis paralysis' by overanalysing numerous reports, and ensure your business decisions are grounded in the right data. Hence, it is advisable to prioritise those that hold the greatest significance for your circumstances.
 

Essential metrics 

While the most valuable metrics may vary based on your specific business type, objectives, and marketing efforts, here are six essential Google Analytics metrics that are pertinent for many ecommerce ventures, and it's beneficial to invest time in understanding and regularly reviewing them.

1. Customers 

‘Users’ is a clear metric that enables you to gauge the amount of traffic to your site and serves as the foundation for nearly all other analyses.

Understanding the term 'users' 
‘Users’ indicates the number of individuals who have accessed your website within a specific period. (This differs from ‘sessions’, which indicates the total number of visits these users have made to your website). ‘Users’ are determined using cookie identifiers, which means it may not reflect individual identities accurately (since the same individual might access from various devices and locations). However, it serves as a fairly reliable metric for understanding user engagement.

Customers can be categorised into ‘new’ and ‘returning’ customers. ‘New’ users refer to individuals who are visiting your site for the very first time within the specified date range. (As with various metrics, achieving perfection is unattainable since it relies on Google Analytics’ tracking techniques and also accounts for users arriving from new devices or those who have cleared cookies and returned. However, once you establish a benchmark for what is typical for your website, it will serve as a valuable tool for observing any fluctuations. 

‘Returning users’ refer to individuals who have previously visited your website and are coming back for another visit.

Utilising this measure 
This metric can be found in various reports within Google Analytics, such as your Audience reports and Acquisition reports.

Using the number of users as a foundation for evaluating performance and engagement metrics can provide insights into how your current traffic interacts with your site, particularly regarding your conversion rate.
Analysing the total number of users over time provides a clear perspective on the growth of your audience.
The distinction between new and returning users provides valuable insights into your retention strategies, which can be integrated with other retention analyses.
Analysing the volume of users based on traffic sources (marketing channels) – especially in relation to conversions – can provide insights into which marketing campaigns are effectively generating traffic and sales.
When embarking on a journey to acquire new customers, monitoring the number of new users can provide valuable insights into the effectiveness of your efforts.

2. Online sales conversion rate 
This is a crucial metric to help you gauge how many of your customers make a purchase from your store.

Understanding the conversion rate 
The ecommerce conversion rate represents the proportion of sales relative to the number of users, indicating the percentage of visitors to your site who successfully made a purchase. This is among the simplest and most beneficial metrics to utilise in your account. This tool allows you to assess the overall performance of your shop and enables you to compare the effectiveness of various campaigns, audience segments, devices, emails, ads, and more against one another.

In straightforward language, a high conversion rate indicates that many visitors to your site successfully made a purchase – which is fantastic! A low conversion rate may indicate that customers are not purchasing as frequently as desired, which could highlight potential issues such as challenges with your traffic generation efforts, website design or functionality, or even the appeal of your product. However, this is not always the scenario, and the ecommerce conversion rate should consistently be analysed alongside the other metrics outlined below.

Utilising the conversion rate 
In your Universal Google Analytics accounts, you can find your ecommerce conversion rate under Conversions > Ecommerce reports. Alternatively, you can calculate it as a percentage by dividing your total sales by the total number of users.

The conversion rate allows you to assess the overall performance of various traffic sources in comparison to one another. For instance, do Instagram ads yield a higher conversion rate than Facebook ads? If that's the case, you can explore further to uncover the reasons behind it.
The conversion rate is a valuable tool for evaluating the performance of emails or ads within a particular campaign. However, it's essential to consider other important metrics outlined here to support your findings.
It is essential to focus on enhancing your conversion rate, but keep in mind that various factors can negatively impact your site's overall conversion performance. It might appear surprising, but not all of these are negative. For instance, a conversion rate might appear exceptionally high when you initially launch your website, especially if you've only conducted a soft launch among a limited circle of friends and family. This results in low traffic, but the visitors are from a group that is very likely to make a purchase. As you promote your website and attract more visitors, you may notice a decrease in your conversion rate. However, the goal is to increase your overall sales volume, leading to more sales in total!

Conversion rate is indeed a crucial metric, but it shouldn't be the sole focus of your attention.

3. Typical order value 

The average order value (AOV) provides insights into the typical revenue generated from each customer.

AOV stands for Average Order Value.
The average order value indicates the typical amount of money customers spend with each purchase in your store. This is a highly significant metric that can be utilised alongside the ecommerce conversion rate to enhance your understanding of your shop's performance. Utilising both ecommerce conversion rates and average order values will enable you to effectively compare various traffic groups or assess performance trends over time.

Grasping your average order value and its progression can assist you in formulating strategies to enhance your revenue from each customer.

By utilising this measure 
In your Conversions > ecommerce reports in Universal Google Analytics accounts, you can view your average order value. Alternatively, you can calculate it by dividing your total revenue by the number of transactions.

Analyse the average order value across different customer groups (including factors like location, device, demographics, traffic sources, and whether they are new or returning customers) to gain insights into who is spending more and the reasons behind it.
Analyse the average order value and ecommerce conversion rates from various traffic sources to identify which marketing strategies are attracting high-value customers.

4. Customer Acquisition Cost Determining your Customer Acquisition Cost (CAC) is essential for establishing effective KPIs and objectives for your ecommerce marketing efforts. CAC enables you to evaluate the expenses involved in acquiring a new customer and assists in figuring out your advertising budget. 

Definition of CAC 
The cost of acquiring each customer is a calculation that reflects the total expenditure involved in bringing customers to your business. This includes all advertising expenses and any other costs related to attracting customers who ultimately make a purchase at your establishment. Instead of pulling this data from Google Analytics, you should manually calculate it by dividing the total cost incurred to acquire your customers by the total number of paying customers.

Utilising this measure 
Like any form of selling, achieving success in ecommerce hinges on profitability – ensuring that your revenue exceeds your expenses. When planning your marketing activities, it's crucial to determine your budget and understand how much you can allocate for spending. When evaluating the performance of each channel, it's important to assess the cost of acquiring each customer and determine if that investment is yielding a profit.

Evaluate your overall cost for acquiring each customer in relation to your average order value to determine the profitability of your website.
Establish clear CAC goals for every marketing channel to ensure you stay focused (remember that each channel may have a distinct CAC based on its function in acquisition, retention, and so on).
Evaluate the Customer Acquisition Cost (CAC) of different marketing campaigns to assess profitability and identify potential areas for enhancement.

5. Return on advertising investment 
Return on Advertising Spend (ROAS) is a valuable metric that enables you to identify the marketing channels that yield the highest revenue.

Definition of ROAS 
ROAS indicates the revenue generated by each advertisement, calculated as the total revenue from that ad divided by the advertising expenditure. If you are managing a pay-per-click campaign, you will observe the budget allocated for each ad or campaign compared to the revenue generated from that activity in your store.

Utilising this measure 
This metric can be found in Google Analytics, but it is not included in your eCommerce reports; instead, you will discover it in the acquisition reports. Navigate to Acquisitions > Campaigns > Cost Analysis to view your ROAS for your important paid channels.

Evaluate your ROAS against your CAC goals to better understand the performance of your advertisements.
Analyse the ROAS from various ads within a campaign to identify which promotions or messaging yield higher profitability than others.
Analyse the ROAS from your paid advertising efforts to identify areas for enhancement.

6. Abandonment Rate The abandonment rate provides insights into obstacles that may hinder conversions on your website or within your shopping cart. 

Understanding abandonment rate 
The abandonment rate refers to the proportion of users who initiate a purchase but fail to finalise it. In an e-commerce shop, it's normal to encounter abandonment rates. There will always be customers who initiate a purchase but, for various reasons, may not be prepared to or may choose not to finalise it.

Nonetheless, shopping carts typically involve multiple steps in the journey from ‘adding to basket’ to ‘order completion’. While some drop-off in this funnel is normal, examining the abandonment rate at each stage can be crucial for identifying any steps that may deter your customers. Streamlining these processes could enhance the likelihood of completing purchases.

Utilising this measure 
If you have enhanced ecommerce settings activated in Universal Google Analytics, you can view abandonment rates in the Conversions > Ecommerce > Shopping Behaviour report. Additionally, you can configure the stages of your cart as a ‘funnel’ in an Analytics goal, allowing you to monitor drop-offs in Google Analytics under the Conversions > Goals > Funnel Visualisation report. For further details on how to set this up, refer to our article on configuring Google Analytics.

Examine the abandonment rate at each stage of the process. If one stage shows a significantly higher rate than the others, delve into the reasons behind this discrepancy. Is the information unclear? Are there any hidden charges?
Evaluate the abandonment rate following any major modifications to your website to determine if there is any effect.
After you have a good grasp of these metrics, it is beneficial to dedicate time to explore all the reports available in Google Analytics. For additional details on any metrics, please refer to Google’s help section and the Google Analytics guides available in DigitalBoost’s online resources.