Ecommerce Dictionary

Ecommerce Terms

All the abbreviations you hear, what they mean, and why they're imporant

AOV (Average Order Value)

Average Order Value is a metric used to measure the average amount each customer spends while purchasing from your eCommerce store. It is calculated by dividing the total revenue of your store by the number of orders. AOV allows businesses to measure customer loyalty and determine pricing strategies accordingly.

CX (Customer Experience)

Customer experience is the perception your website’s visitors have of your company after engaging with it online. For DTC sellers, improving the CX of your website can greatly increase your store’s conversion rate.

CLV  (Customer Lifetime Value)

Customer Lifetime Value is an eCommerce metric representing the total net profit a company expects to generate from one customer over their entire relationship with the business. By calculating CLV, you can understand how much money a customer will spend on your brand and then use this information to optimize your customer acquisition strategies. To calculate CLV, follow these steps:

• 1. Determine the average purchase value (APV) of a customer.
  
• 2. Determine the average purchase frequency rate (APFR) in transactions per year.
• 3. Determine the average customer lifespan (CL) in years.
• 4. Calculate CLV using this formula: CLV = APV * APFR * CL
  

RPV (Revenue Per Visitor)

Revenue Per Visitor  is a metric used to measure the average revenue generated by each visitor that comes to your website or app. It is a useful metric to track as it allows you to measure the effectiveness of your website or app in generating revenue. It also can be used to measure the efficiency of your marketing campaigns and determine which channels are driving higher revenue. To calculate RPV, divide the total revenue generated by your website or app by the total number of visitors.

PDP (Product Detail Page)

In eCommerce, the Product Detail Page is the page that customers land on when they click a product link and is where they decide to either check out or end their shopping experience. Optimizing the design, copy, and overall user experience of a PDP is essential for the bottom line of your Shopify store. Each PDP should include the following six elements:

• 1. A clear product image
  
• 2. Detailed product descriptions
• 3. A list of the product features, benefits, and specifications
• 4. Related products, customer reviews, and ratings
  
• 5. A shareable link
  
• 6. An easy-to-find "add to cart" button
  

Loyalty Program

Customer loyalty programs reward customers who repeatedly interact with a brand. It’s a customer retention strategy that encourages customers to continue buying from your brand rather than competitors. The more a customer buys or engages with the brand, the more rewards they earn.

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How do customer loyalty programs work?
With a loyalty program, companies can offer points or benefits to customers. And in return, they redeem points for discounts, free products, rewards, or insider perks. The goal is to motivate repeat purchases and build trust between customer and business. Rivo is the only customizable loyalty program built for Shopify.

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Revenue Terms

Your guide to business operations terminology

ARPC (Average Revenue Per Customer)

Average Revenue Per Customer  is a metric that measures how much revenue your business is generating from each customer. This metric can be helpful in understanding the value of your customers, and can help inform decisions around customer acquisition and retention. By understanding how much revenue each customer is bringing in, you can make better decisions around which customers are worth investing in, and which ones should be left alone.

CR (Conversion Rate)

Conversion Rate is an important eCommerce metric that measures how many of the visitors to your website actually end up making a purchase. It's calculated by taking the number of completed purchases and dividing it by the total number of website visitors. A high conversion rate indicates a successful e-commerce business as it means more visitors are turning into customers.

CTR (Click-through Rate)

Click-through rate is the ratio of users who click on a specific link out of the total number of users who have viewed it. CTRs commonly measure Ads, PDP's, Landing Pages, Blogs, and even social posts to determine the success of campaigns.

CTA (Call to Action)

A Call-To-Action is a prompt on an advertisement, web page, or other digital platform that encourages a user to take further action. The goal of this prompt is to entice the user with a persuasive offer that can move them closer to making a purchase decision. CTAs can include buttons, images, links, and text that direct users to purchase.

CAC (Customer Acquisition Cost)

Customer Acquisition Cost is a metric that measures how much it costs to get a new customer. It's calculated by taking your total acquisition costs (such as marketing or advertising expenses) and dividing those by the number of new customers acquired. Knowing your CAC can help you understand how efficient your customer acquisition efforts are, and if you are spending too much or too little to acquire new customers.

LTV (Lifetime Value)

Lifetime Value is a key concept in customer relationship management (CRM), and it measures the total amount of revenue that a customer brings to your business over the course of their lifetime. It helps you understand which customers are more valuable and which marketing strategies have been most successful in attracting and retaining customers. To calculate LTV,  you need to measure the average revenue per customer and then multiply it by their expected lifetime.

CAC-LTV Ratio

CAC-LTV Ratio stands for Customer Acquisition Cost to Lifetime Value ratio, and it's a metric used to measure how much money you're investing in acquiring new customers compared to the amount of revenue they generate over their lifetime with your company. The CAC-LTV ratio is calculated by taking the total cost of customer acquisition (CAC) and dividing it by the customer lifetime value (LTV).

ROI (Return on Investment)

Return on Investment is a performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of a number of different investments. ROI tries to directly measure the amount of return on a particular investment, relative to the investment’s cost.

To calculate ROI, the benefit (or return) of an investment is divided by the cost of the investment. The result is expressed as a percentage or a ratio.

Vertical

Verticals, or product categories, are an essential element of any eCommerce marketing strategy. By segmenting your products into verticals, you can create more targeted campaigns tailored to the needs and interests of different types of customers. Having well-defined verticals also helps you track performance metrics more effectively and identify areas for improvement.

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