Top KPIs for DTC Brands to Track

E-commerce is growing, and it’s becoming crowded. At the height of the COVID-19 pandemic, 10 years of e-commerce growth happened in just 90 days. The DTC sector is growing as well, by 2022 the number of DTC e-commerce customers will hit an all-time high of 103 million. While the increase in customers proves an opportunity, many DTC brands will find it harder and hard to stand apart from the pack.

When looking to differentiate from the competition, DTC brands need to consider KPIs. Key performance indicators are measurable values that demonstrate how effectively a brand is meeting key business objectives. In short, companies use KPIs to evaluate their success at reaching targets.  By developing and tracking KPIs, brands can understand how their customers are engaging with their store and brand, and then make the necessary adjustments to optimize sales and customer loyalty. Here are top KPIs for DTC brands to track: cart conversion, average order value (AOV), the time between purchase, customer LTV, and carbon footprint.

Cart conversion

Shopping cart conversion rate is one of these key KPIs that can help brands better understand how shoppers are interacting with their store, and what adjustments could boost conversion, thus boosting sales. Cart conversion measures the number of complete orders compared to the total number of shopping carts initiated by potential customers. When customers don’t complete their order, this is known as cart abandonment. 

Cart conversion rates can be improved by eliminating friction at checkout, offering a buy now and pay later option, and by offering carbon neutral shipping. Eliminate friction by simplifying the checkout process, be upfront with additional costs like shipping and tax, and don’t force customers to make accounts in order to checkout. The fewer steps to checkout, the better. A buy now and pay later option will help capture an entire group of customers who are price-sensitive – especially if you’re selling big-ticket items. When customers see their large cart total it can scare them off, but with a buy now and pay later option they are more likely to complete the purchase, knowing that they don’t have to pay the entirety at once. Carbon neutral shipping is a sure way to increase cart conversion rates, brands like Nuzest and Tribe Kelley saw increases of 22% and 19%, respectively, after adding EcoCart’s carbon neutral option to their checkout. 

Average order value (AOV) 

Average order value (AOV) tracks the average dollar amount spent each time a customer places an order on your website. Knowing your AOV helps inform you on marketing and pricing strategies, and whether or not they are working. By increasing AOV, brands can directly impact their revenue growth. After the sustainable furniture brand Simbly started offsetting the carbon footprint of their orders on behalf of their customers, they saw AOV skyrocket 38%.  The response from customers has been extremely positive, this increase in AOV is seen comparing sales from the six months prior to implementing EcoCart to the six months after. 

Time between purchases

Evaluating the time between purchases helps determine how long it takes people to use up your product. You want a short period between purchases made by each customer. Longer periods make it easier for customers to forget about you and move on to a competitor. On the other hand, when your customers buy from you regularly, they are probably loyal fans of your company. 

Customer LTV

Customer lifetime value (LTV) equals the total revenue of a customer over your relationship, minus the costs of that customer. So if a customer purchases $1,000 worth of products or services from your business over the lifetime of your relationship, and the total cost of sales and service to the customer is $300, then the LTV is $700. LTV is an important metric to be aware of because the higher the number, the greater the profits. It will always cost money to acquire new customers and retain existing ones, but the former costs five times as much. Once your LTV is established, you can work to improve it.  

Carbon footprint

E-commerce gets a bad reputation for the hefty carbon footprint that accompanies it. After all, the packaging and shipping associated with e-commerce can produce massive amounts of carbon emissions that contribute to climate change. However, that doesn’t mean a brick-and-mortar storefront is the answer either. In-person shopping has its own carbon footprint to deal with, and oftentimes it’s bigger than that of e-retailers. Instead, work to measure your carbon footprint and then offset it. Since each aspect of the e-commerce supply chain produces carbon, you have to consider each part when you look to offset. EcoCart easily, and precisely, measures the carbon footprint of manufacturing and shipping your products, and helps you offset it by donating to rigorously vetted, third-party verified carbon offsetting projects that actively reduce the amount of carbon in the atmosphere. 

How to track these important metrics

Wow – that was a lot of metrics. But now that you have your list of important KPIs to track, how are you going to measure them? Automation is the best way to successfully measure and track these. Look at a tool like Peel. Peel delivers business intelligence to help you convert, engage and retain more customers. Put the spreadsheets away and save time with Peel’s automated analysis – they automate your business analytics by using pre-defined algorithms from its AI engine to your business’ data. Peel provides data in digestible reports with visuals for added understanding; utilize these reports to make informed business decisions that directly impact all these important metrics.

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