Unlock B2B Marketplace Success: 14 Essential eCommerce Metrics & KPIs for 2023

To build a successful B2B marketplace, you have to identify correlation-causation relationships and track marketplace health.

In this article, we cover certain metrics that business owners can follow. We go over important B2B ecommerce KPIs and metrics, show the difference between them, and tell how to use them timely. You will also find the list of the most important metrics to use right away. 

1. WHAT ARE B2B ECOMMERCE KPIS?
2. TYPES OF KPIS
3. WHAT ARE ECOMMERCE METRICS
4. WHAT IS THE DIFFERENCE BETWEEN KPIS AND METRICS IN ECOMMERCE
5. WHAT KPIS TO TRACK FOR B2B ECOMMERCE MARKETPLACE
6. B2B MARKETPLACE METRICS & KPIS FOR B2B ECOMMERCE MARKETPLACE
7. A SHORT GUIDE ON HOW TO UNDERSTAND YOUR ECOMMERCE METRICS
8. FIND OUT HOW TO REGULARLY TRACK YOUR ECCOMMERCE METRICS
9. KPI REPORTING: USEFUL RESOURCES

eCommerce KPIs are metrics that allow businesses to understand their performance over time. Depending on business objectives, KPIs can be used to track and monitor business growth, sales efficiency, conversion rates, and so on. KPIs vary by department, business and industry and are subject to business-specific targets and industry standards.

With that said, marketplace KPIs will measure and track the company’s progress toward achieving specific marketplace goals. These could be anything from monthly recurring revenue, customer lifetime value or brand awareness. 

Below are three helpful questions that are often used to determine relevant data points that will gauge B2B software marketplace performance:

• What are your business goals?
• What short- and long-term objectives are you trying to reach?
• What are the biggest management priorities?
   

Once you identified the main business goals and priorities and looked at the industry benchmarks, you can further set your targets.

A few other issues to address at this point will include designating relevant time frames for tracking, identifying responsible individuals, and articulating a well-defined agenda for following those metrics to help motivate your team members.

Although there are different KPI taxonomies, KPIs are typically divided into the following types:

• Quantitative KPIs rely on numbers to measure business objectives (ex. the number of leads to achieve);
• Qualitative KPIs measure opinion-based data, such as brand awareness;
• Leading KPIs aim to predict future performance like estimated conversions;
• Lagging KPIs describe past performance, such as a sales turnover;
• Input KPIs measure resources required to complete a specific project, such as budget;
• Process KPIs evaluate efficiency within the organization, such as the average customer service response time.

eCommerce metrics are measurements of the performance and effectiveness of an online store or ecommerce website. These are used to analyse all parts of ecommerce business, including sales, customer behavior, and website traffic. The main idea of using them is to identify areas for improvement and make data-driven decisions to optimize their website, marketing strategies, and overall performance. In the following paragraphs, we will provide the metrics mostly used by ecommerce companies. 

KPIs (Key Performance Indicators) and metrics are related but distinct concepts in ecommerce. Both KPIs and metrics are used to measure the performance of an ecommerce business, but there are some differences between them: 

KPIs and metrics are both important for measuring the performance of an ecommerce business, but KPIs tend to be higher-level and more strategic, while metrics tend to be more operational and granular. 

B2B ecommerce marketplaces require some specific KPIs to measure their performance: 

• Gross Merchandise Value (GMV) — to learn the total value of goods and services sold on the marketplace. 
• Average Order Value (AOV) — to understand average value of each order placed on the marketplace. 
• Customer Acquisition Cost (CAC) — to measure the cost of acquiring each new customer on the marketplace. 
• Repeat Customer Rate — to realize the percentage of customers who make multiple purchases on the marketplace. 
• Time to Value — to understand the amount of time it takes for a new seller to generate their first sale on the marketplace. 
• Seller Retention Rate — to find out the percentage of sellers who continue to use the marketplace over time. 
• Conversion Rate — to release the percentage of visitors to the marketplace who make a purchase. 
• Net Promoter Score (NPS) — to learn the likelihood that customers would recommend the marketplace to others. 

B2B marketplace business metrics are primarily measured to estimate the company’s revenue, profitability and customer acquisition. The three most important metrics you’d want to track for your marketplace are:

• GMV (gross merchandise volume) 
• CAC (customer acquisition cost) 
• CLV (customer lifetime value).

In the table below, we show how to find the most important metrics to track: 

We have explained each of these metrics in details below. 

Take rate is the average commission you take from each transaction. If you’re like Upwork or Airbnb, you might further split it between vendors and buyers; otherwise, you might prefer either party to carry the fee burden. Whatever the logic behind your take rate, it’s important to track it. Adjusting a take rate by just one per cent may yield a significant increase in your overall revenue, so keeping an eye on the industry benchmarks and testing different scenarios can bring unexpected benefits.

If there’s a single metric that you’d want to track for your marketplace, then this is it. GMV is the total sales value of products (or services) sold through your marketplace within a designated timeframe. Since GMV contains all important levers to work with and offers a more authentic picture of the marketplace, investors often prefer to look at this indicator rather than actual revenue. With that said, GMV is not sufficient to determine the real health of the marketplace, so you’ll need to look at other numbers to see if the marketplace is truly realizing its potential. For starters, to arrive at your total revenue, you’ll need to take GMV and multiply it by the take rate.

Customer acquisition cost (CAC) is the price you pay to acquire a new customer: It measures the total cost incurred on acquiring a customer over a specific period of time. CAC combines all the marketing costs and any other expenses involved in converting a lead into a buyer. Ideally, the closer it is to zero, the better. Customers can refer their friends and partners to join the marketplace without your business spending a single dollar on acquisition. However, that’s rarely the case. Especially in the early stages of growth, you’re bound to spend substantial sums on advertising campaigns to lure buyers to the marketplace. To arrive at CAC, you need to divide the total costs incurred on acquiring a customer by the total number of converted customers.

For example, if you spend $1,000 on marketing and advertising to acquire new buyers, 10 of whom end up buying products on the marketplace, then your CAC is $100.

Customer lifetime value (CLV) is the total revenue you expect from an individual customer over a span of time. CLV is always expected to be higher than CAC. Otherwise, the growth is deemed unsustainable. Arriving at CLV is a bit tricky because it includes a few other variables, such as the size of an average transaction, the expected “lifespan” of a customer and the estimated number of repeat purchases. Thus, to calculate CLV, you need to estimate the following constituents first:

Average order value (AOV) = Total revenue/Number of orders

Average order frequency rate (AOFR) = Number of orders/Number of customers

Customer value (CV) = AOV*AOFR

Average customer lifespan (ACL) = (Sum of customer lifespans)/(Number of customers)

To calculate CLV, you need to take customer value and multiply it by the average customer lifespan like so:

For example, if the marketplace’s total revenue is $1,000 and the number of orders placed in June equals 50, then AOV is $20. If the marketplace serves five customers, then the average order frequency rate is 10. Having arrived at those two numbers, we can now calculate customer value: $20*10 = $200. To arrive at an average customer lifespan, we have to look at the number of years each customer buys on the marketplace. For example, for Starbucks, the ACL is 20 years. However, if you don’t have so much data and can’t wait 20 years to arrive at such a number, then you may use the shortcut formula: 1/Churn Rate percentage (we’ll discuss Churn Rate in more detail below). For simplicity’s sake, let’s assume that your ACL equals three years, then CLV will be $200*(12 months)*3 = $7,200.

The customer lifetime value (CLV) to customer acquisition cost (CAC) ratio is used to identify the efficiency of the overall business operations. For example, if your CLV to CAC ratio is 5:1, then it means that for every single dollar spent on the marketplace, you earn an additional $5. Here’s how to arrive at the number:

For example, if your CLV is $1,000 and CAC is $100, then CLV is 10:1.

Lead to customer conversion rate (lead to CCR) is also known as lead conversion or sales conversion rate. This is a crucial metric used to evaluate the efficiency of the sales funnel.

The customer conversion funnel essentially tracks the path that a customer goes through to complete a purchase. Identifying areas where customers have difficulties can have a remarkably positive effect on improving conversions.

For example, if prospective buyers look through catalogs but don’t proceed further in their shopping journeys, you might need to address several bottleneck issues, such as an ineffective search engine that’s unable to return relevant results, lack of assortment, weak catalog representation and so on.

Similarly, if you discover that many buyers click on the “buy” button but do not follow through with the transaction, there might be a transaction flow problem, such as a lack of convenient payment or fulfilment options.

To calculate lead to CCR, use the following formula:

For example, if your advertising campaign brought 150 qualified leads but only 25 of them purchased products on the marketplace, then your lead-to-customer conversion rate is 17%

Activation rate measures the number of users who have taken an action over a specified period of time. Whatever action you decide to track, it needs to deliver the initial customer value (it can be a purchase, subscription activation, and so on). Here’s the formula:

Monthly recurring revenue (MRR) is a predictable revenue that you expect to earn each month. This metric allows you to predict future revenue and estimate the performance of the employed resources. Suppose you have 1,000 customers who have recurring orders for $100 on average; then your monthly recurring revenue would be $100,000.

Repeat order ratio (ROR) measures the percentage of transactions that are repeat purchases. The higher the percentage, the more money you can afford on acquiring new customers. If ROR is steadily growing, then you’re moving in the right direction.

For example, the total number of transactions that happened via your marketplace in June equals 100; If 25 of those orders are repeat purchases, then your repeat order ratio for June is 25%

The average revenue per account (ARPA) determines the revenue-generating capacity of the marketplace at an account level over a specific period of time. It’s calculated by dividing the total revenue by the average number of accounts in the same period. Although sometimes referred to as a “vanity” metric, tracking it is important on many levels: It can serve as a basis for accelerating your MRR growth and helps you understand if you’re aligning your offering to the right customer. The average revenue per account should be improving over time as sales increase, the value proposition improves and becomes more targeted.

One method to measure user satisfaction is to use the net promoter score (NPS), which was popularized by Frederick F. Reichheld in the 2003 issue of Harvard Business Review. The score is obtained by asking your customers one single question: “How likely is it that you would recommend [product] to a friend or colleague?” The answer can be anything from zero to 10, where zero is highly unlikely and 10 is highly likely.

The recommendation question is believed to be a more accurate representation of user satisfaction than simply asking whether they like your product or not.

Based on answers, respondents are segmented into the following groups:

• 9-10: Promoters. Promoters are loyal customers who will keep buying and will refer your product to others.
• 7-8: Passives. Passives, although not enthusiastic, are satisfied with your product.
• 0-6: Detractors. Detractors are unhappy customers who will most likely share their disappointment with others, thus affecting your business.

The positive NPS is considered good, and the NPS +50 is considered excellent. The rating should be followed over time to see if customer satisfaction has increased or suffered. Although NPS is considered one of the best indicators of customer loyalty and satisfaction, it has received a fair bit of criticism for being culturally insensitive and not a very good predictor in the long term.

Now you know which metrics you need to track to understand your ecommerce business health. But how often should you track each of these metrics? Is once a quarter enough? Most of them do not require you to track them weekly. Let’s find out which ones should be tracked more often. 

* Metrics that can be measured with different timing depending on the nature of your business and business goals. 

KPI reporting is a visual dashboard that can be incorporated into your B2B ecommerce platform to track your pre-determined metrics and analyze how your B2B marketplace performs against the targets. KPI reporting generally comprises charts, graphics, tables, diagrams, and all sorts of data visualization tools that make it easier for your team members to track important indicators over time. Having a KPI reporting widget is beneficial on many levels since it allows you to:

• Track the most impactful data and filter out irrelevant information
• Have a snapshot of your teams’ performance across the board
• Make the data easily and visually accessible to stakeholders and partners
• Set goals and motivate your team members

Below are a couple of spreadsheets that could be helpful when choosing the metrics to track:

• eCommerce KPI Spreadsheet for Marteplace-1 (from the authors of the Version One Marketplace Guide)

The spreadsheet contains essential metrics for overall marketplace performance (GMV, CAC), Seller, Supplier and Buyer metrics. Download the file to see all the metrics and start using it for your processes right now. 

• eCommerce KPI Spreadsheet for Marteplace-2 (by venture capital firm dahni)

This document contains a convenient monthly-split metrics table and cohort analysis scheme. Download it and use for your efficiency accounting.