Understanding How to Improve E-commerce Efficiency with 4 Key KPIs (Part 2)
When discussing the key factors for the success of an eShop, the Shopping Cart Abandonment Rate and Average Order Value (AOV) are indispensable and crucial indicators. These two KPIs directly impact your business performance and profitability. The Shopping Cart Abandonment Rate measures the proportion of customers who abandon their purchase, while AOV represents the average amount per order. By understanding and optimizing these two metrics, you can precisely enhance revenue and improve the overall customer experience.
After the stability of the eShop, which KPI indicators can be referenced?
Shopping Cart Abandonment Rate (SCAR)
Shopping Cart Abandonment Rate refers to the percentage of visitors who add items to their shopping carts but ultimately do not complete the transaction. This is a crucial KPI as it can reveal potential sales opportunities that you might be losing. By analyzing the shopping cart abandonment rate, you can identify and address issues causing visitors to abandon their carts, thereby increasing the conversion rate.
Average Order Value (AOV)
AOV represents the average value of each order, and it is a vital KPI as it directly impacts your revenue. By increasing AOV, you can enhance the value of each customer. This can be achieved through cross-selling, encouraging the purchase of related products, or offering bundle discounts, contributing to an overall increase in total sales.
How to calculate KPI?
Shopping Cart Abandonment Rate (SCAR)
The calculation of the shopping cart abandonment rate is relatively straightforward, requiring only the number of visitors who added items to the cart and the actual number of visitors who completed transactions. The formula is as follows:
Shopping Cart Abandonment Rate = (Number of Completed Transactions ÷ Number of Cart Additions) x 100%
eg. (Number of Completed Transactions 50 ÷ Number of Cart Additions 800) x 100%
Shopping Cart Abandonment Rate = 6.25%
Average Order Value (AOV)
Calculating AOV is simple; you just need to divide your total sales by the number of completed orders. The formula is as follows:
Average Order Value = Total Sales ÷ Number of Orders Placed
eg. Total Sales $10,800 ÷ Number of Orders 125
Average Order Value = $86.4
Adjusting KPIs based on business stages
When an eShop is in a stable phase, it is crucial to consider the Shopping Cart Abandonment Rate (SCAR) and Average Order Value (AOV). These two key performance indicators (KPIs) significantly impact the operation and profitability of the eShop during this stage. The Shopping Cart Abandonment Rate reflects the instances where potential customers choose to abandon their carts, while AOV is related to the average value of each order. By optimizing these KPIs, you can enhance the efficiency of your business and achieve more robust operations.
Shopping Cart Abandonment Rate (SCAR):
This metric is essential for understanding why visitors decide to abandon their carts at the last moment. By reducing the Shopping Cart Abandonment Rate, you can recover potential sales opportunities, improve the shopping experience, and ultimately increase customer loyalty.
Average Order Value (AOV):
AOV is linked to the value of each transaction. By encouraging additional purchases or offering bundles and add-on products, you can increase the average order value for each customer, thereby boosting total sales.
In summary, these four major KPIs are interconnected, working together and influencing the overall performance of your eShop. Therefore, it is recommended for operators to pay comprehensive attention to these metrics in order to formulate more informed strategies, increase revenue, and achieve long-term success.
The Big Reveal of KPI Optimization Strategies
Shopping Cart Abandonment Rate (SCAR) Optimization Strategies
To optimize the Key Performance Indicator (KPI) of Shopping Cart Abandonment Rate (SCAR) and reduce instances of abandoned carts, strategies need to be implemented to improve conversion rates:
Analyze and Identify Abandonment Points:
Understand why users abandon their shopping carts. Utilize data analytics to examine user behavior, such as the checkout process, shipping costs, or unexpected fees. Identifying problem points allows for targeted improvements in the checkout process, reducing obstacles and simplifying procedures.
Implement Re-marketing and Recovery Campaigns:
Utilize re-marketing strategies to re-engage users who have abandoned their carts. Send personalized emails or notifications reminding users of their unfinished purchases, and consider offering incentives such as discounts to encourage completing the transaction. Simultaneously, implement automated recovery processes to prompt users about their abandoned carts when they return to the website.
Optimize User Experience and Checkout Process:
Simplify the checkout process to make it as user-friendly and straightforward as possible. Optimize the mobile experience by reducing form fields and providing guest checkout options to minimize purchase barriers. Use progress indicators and clear calls to action to guide users smoothly through the checkout process.
Average Order Value (AOV) Optimization Strategies
o boost the Average Order Value (AOV), it is essential to encourage customers to increase their spending during the shopping process:
Implement Sales Upgrade and Cross-Selling Techniques:
Utilize product recommendations, sales upgrades, and cross-selling strategies. Recommend related or higher-priced items, offer bundled sales, or provide volume purchase discounts to incentivize customers to increase their cart value.
Set Minimum Purchase Thresholds for Rewards:
Provide rewards such as free shipping, discounts, or gifts for orders surpassing a certain value. Display progress bars or notifications indicating how close customers are to reaching the threshold for the reward, encouraging them to add more items to their shopping cart.
Personalize and Optimize Product Displays:
Utilize customer data and preferences to personalize product displays and recommendations. Implement targeted promotions based on past purchasing behavior or browsing history, encouraging customers to add related items to their shopping cart.
Optimizing SCAR and AOV KPIs requires strategic approaches involving user analysis, targeted interventions, and continuous optimization of the shopping experience. By implementing these strategies, businesses can reduce shopping cart abandonment rates, encourage higher purchase amounts, ultimately promoting revenue growth and enhancing customer satisfaction.
We've Launched a New Feature!
The Sales Lifecycle is committed to helping merchants achieve a profitable equation when using the eShop system. By integrating multiple intricate pathways into a unified, efficient process, we significantly enhance operational efficiency and user convenience, making it easier for merchants to realize revenue growth.
