Numbers don’t lie, right? So when it comes to the health of your business, you’ve just got to know your numbers. After all, you can’t approve more orders and get more sales if you don’t know where you’re starting from or what’s getting in your way.
That’s where your key performance indicators (KPIs) come in.
If you’re not already measuring your e-commerce fraud KPIs, you’re going to have a hard time accomplishing your sales goals, no matter what growth tactics you employ. Here’s how to get started with establishing, tracking, and improving the measurements that are most important to your business and objectives.
What Sales KPIs Should I Track For My Online Store?
There are countless KPIs your business could be measuring, and knowing which ones to monitor is important. Putting too much focus on the wrong numbers can result in missed revenue and lost customers.
Some KPIs are vanity metrics — numbers that make your business look great but don’t do much to propel your business forward. Others are actionable metrics that can serve to improve your business’s bottom line.
Here are a few of the KPIs you want to measure in order to build your business and protect your online store against e-commerce fraud.
Sales Conversion Rate
A merchant’s sales conversion rate is the number of orders invoiced during a given period divided by the number of visits in that same period, with the result multiplied by 100. The average overall conversion in online stores is between 1.5% and 2% — a target for e-commerce merchants to aim for. Rates can be improved by such simple measures as offering alternative payment methods, launching a mobile version of your store and simplifying the buying experience.
But too-strict fraud prevention strategies may end up having a negative impact on these conversion rates and creating enough customer friction to damage reputation and relationships.
Average Order Value
This metric calculates the average dollar amount a customer is spending on your site for each order. Merchants who want to improve this number could show “related items” during the checkout process. But as average transaction values increase, merchants must be mindful if some of these purchases are actually fraudsters maximizing the spend on stolen credit cards before the rightful owner notices the transactions.
Shopping Cart Abandonment Rates
Shopping cart abandonment happens when customers add merchandise to their carts but leave your e-commerce store without completing their purchases. Some surveys suggest that the average cart abandonment rate tops 83% and is due to factors like high shipping costs, challenging account registration processes and long delivery times.
With nearly 60% of U.S. online shoppers abandoning a cart in the last three months, valuable revenue is being lost. Merchants can improve on this number by adding contact options, interacting with customers, reducing checkout friction and clearly communicating shipping costs and return/exchange policies.
Depending on which e-commerce platform you’re using, you might not even know if you have chargebacks or what your business’s chargeback rate looks like. And if you’re lucky enough to know your number, do you know if it’s good or bad? Once merchants set their baseline, it’s important to track this number for the long term, as the chargeback lag means it could be months to see the impact of any changes in your e-commerce store on the chargeback rate.
Order Approval Rates
Unfortunately, your order approval rate — or the number of successful transactions divided by your order volume — isn’t what you think it is, even if you’re tracking this important metric. Chances are, you’re incorrectly declining good orders from good customers, which results in frustrated customers and lost revenue.
And if you’re not tracking this number (and calculating it correctly), you don’t know exactly what’s happening with your orders and you’re underestimating the revenue you’re losing.
E-Commerce Data To Monitor
Knowing your numbers is key to fraud prevention, and it’s not just KPIs you need to keep a watchful eye on. To grow your business, you’ll want to monitor other data, including:
The Number of Negative Transactions
Keep track of fraud attempts, chargeback records and problem customers. Include the customer name, shipping/billing addresses, phone numbers, credit card numbers, IP addresses and email addresses. As new orders come in, check them against this database.
Share Information With Other Merchants
Sharing your data with fraud prevention networks that include multiple merchants is an easy way to identify patterns and spot negative transactions. By expanding the data you use to detect fraud, you can cut off fraudsters before they get a foothold.
Adopt Fraud Scores
Managing a large number of fraud filters in your payment platform can be difficult, especially with high sales volumes. A system that evaluates multiple criteria to establish an overall fraud score may improve efficiency and let you reduce your false decline rate.
Outsource Your Fraud Prevention
Fraud is serious business, and there’s a lot at stake. If your business can’t dedicate the internal resources to battling fraud, a third-party fraud protection solution may be a smart choice to help you calculate your approval and chargeback rates, avoid chargebacks, and even mitigate their impact on your business.
At ClearSale, we can do all this and more — including helping you create and track the KPIs that will help you grow your business. Our unique approach to fraud prevention means we don’t just prevent fraud from happening in the first place — we also approve more legitimate orders, which helps increase your sales.
How the ClearSale Calculator Can Help
Most merchants don’t know if they’re leaving money on the table, but ClearSale’s Order Approval Rate Calculator can help. Simply enter the dollar amount of your monthly orders, the dollar amount of autodeclined transactions and the dollar amount of approved orders.
Our calculator can help you see if you’re approving as many orders as you think you are. Most merchants are declining too many orders, and even the slightest miscalculation to your authorization rate can result in not realizing the good revenue you’re turning down. But by knowing your KPIs and using those to correctly calculate your approval rate, you can improve your revenue, reputation and customer relationships.
Not satisfied with your approval rate? Adjust your numbers in the calculator and see what would happen if you had fewer declines each month and more approved orders. And when you’re ready to stop imagining extra revenue and start capturing it, contact us. We’ll be happy to explore the options you have for improving your numbers and making sure your fraud prevention program is helping, not impeding, the process.