What is the return on experience in ecommerce?

Even the smallest businesses in the U.S. have a digital presence, usually a website. But that’s not enough. The COVID-19 health crisis proved that you need a digital experience that stands out – across channels for the highest returns on experience (ROX). 

ROX drives gains in many of the metrics you follow. The impact of your experience shows up everywhere, from cart abandonment and sales conversion rates to average order value (AOV) and customer acquisition costs. 

By prioritizing ROX, you’re prepared for changes in shopping behaviors and whatever might come next in ecommerce.


The experience advantage

ROX captures the outcomes of your investment in creating better digital experiences. Your company will win, keep, and grow relationships with a connected digital experience. From ecommerce to in-store, the metrics behind ROX indicate if your experience delivers or needs improvement. Check out how to calculate ROX here

Say that your next customer is exploring your ecommerce site right now from home. She checks your offer and gets fast answers to product questions. She browses and buys within minutes. It’s so fast and easy that she becomes a return customer. 

Well-designed digital experiences make buying easier, remove friction, and bring personalization to commerce. The wins add up fast in commerce. After sports equipment maker POC reworked its digital shopping experience, AOV increased by 18% and orders per session rose by 20%. Shoemaker Wolverine Worldwide focused on converting mobile visitors to its commerce experience. The result? A 19% increase in total mobile conversions accompanied by a drop in cart abandonment rate. And optimizing checkout flow can also deliver meaningful results.


Shopping experience metrics

There’s a first for everything: first purchase, first page view, first conversion. To measure ROX, look for these key shopping metrics to improve:

  • Sales conversion rate: This core commerce metric measures the percentage of visitors to your experience who purchase something. Improvements that can enhance your conversion rate include personalized promotions and product suggestions, engaging imagery, and targeted how-to content. 

To calculate conversion rate, divide the number of sales by the number of shoppers and multiply by 100. It’s a formula you can apply to any timeframe. If you have 100 sales and 1000 visitors in a day, your conversion rate for that day is 10%.

  • Bounce Rate: When a person leaves your site after viewing a single page, that’s a bounce. The lower that number the better. An engaging digital experience draws people to stay on your site longer. People who don’t bounce consume content, browse, and often convert. 

Your bounce rate is the percentage of visitors who bounce. 

  • Abandoned cart rate: A potential customer liked your products enough to put something in their cart. Then she left. Why? Maybe it was something unrelated to the digital experience, like fulfillment time. But often the digital experience contributes to making the transaction smooth and providing an easy way to uncover issues in the ordering process. 

To find your abandoned cart rate, divide the number of sales by the number of carts created. Multiply the result by 100. 

  • Customer acquisition costs (CAC): A great digital experience wins customers thanks to lower bounce, fewer abandoned carts, and more conversions. That adds up to a lower CAC per customer. 

To calculate CAC, divide your marketing spend by the number of customers for a given period.


Customer lifecycle metrics

Effective commerce experiences are built on two foundations: a smoother transaction flow and personalization. People find the products they want and need faster. They can buy – again and again – without hassle. It’s a winning combo for metrics that improve with longer, stronger relationships, including: 

  • Repeat purchase rate: A climbing repeat rate says customers like your digital experience enough to come back. When you invest in digital experiences, look for this rate to rise. Customer retention should rise too, but that number is usually calculated using much larger time scales, such as a year or a quarter. Repeat purchase rates, on the other hand, can measure an experience difference much more quickly than retention. 

To find the rate of repeat purchases, simply divide the number of customers who’ve bought more than once by the total number of customers for a given period.

  • Average order value (AOV): This is the average value of all orders over a defined time period, such as a day, week, or month. More personalized experiences connect people with products they’re more likely to want, increasing AOV thanks to effective cross-selling, upselling, and bundling. AI-powered experiences match customers with can’t-miss options based on past shopping and/or on what’s in their cart. 

To calculate AOV, divide your commerce revenue by the number of orders. Higher is better, and many things can impact AOV, such as changes to your product mix, promotions, and the digital experience. 

  • Return Rate: Great experiences deliver the right content, the right products, and the right answers to customers – at the right time. That should result in fewer returns. Look at return rates as you create and refine experiences. If return rates don’t decline (or increase), look for the reason. 

To find the rate of returns, divide the number of customers who’ve made returns by the total number of customers who’ve made purchases for a given period.

  • Customer lifetime value (CLTV): Many commerce leaders consider CLTV a guiding light. It’s easy to understand why: It’s the average value of a customer over time. Look at all the metrics listed above. A shift in any one affects CLTV. The more metrics your commerce experience improves, the more likely you’ll see a dramatic rise in CLTV. 

To discover CLTV, multiply the average purchase value by the average purchase rate (that’s the number of purchases for a time period). Multiply the result by the average lifespan of customer relationships, and then subtract customer acquisition costs. 

Take the first step today to get ready for what’s next in commerce. Explore ways to transform checkout. Go big by rethinking how content, products, and check outcomes together for each customer. 


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