Tracking key performance indicators (KPIs) is essential for any business, but it is especially important for e-commerce businesses. E-commerce KPIs can help you track your business’s performance across a variety of areas, including sales, marketing, customer service, and operations. By understanding your KPIs, you can make informed decisions about how to improve your business and achieve your goals.
This article will discuss some of the most crucial e-commerce KPIs to track. We will also provide tips on how to track these KPIs effectively and use the data to improve your business.
What are the KPIs for eCommerce?
Key performance indicators (KPIs) for eCommerce are important measurements that show you where your business’s successes and failures are coming from. Businesses can compare their performance to that of their rivals and other industries using e-commerce KPI benchmarks.
Why are KPIs Crucial for e-commerce?
Making educated decisions about customer experience, revenue marketing strategies, and other crucial areas is possible with e-commerce KPIs. They aid in identifying which tactics are effective and which are not.
E-commerce key performance indicators also show you where to concentrate your efforts and can offer suggestions for solving issues. They will ultimately assist you in deciding what adjustments you need to make to expand your clientele and increase sales.
Without this kind of e-commerce success measurement, decision-making must be based on feelings or individual views. A better prescription for corporate success is to base your decisions on data. Senior stakeholders, stockholders, and lenders are more likely to be pleased.
What is An Indicator of Performance
A quantifiable measurement or data point used to assess performance in relation to a goal is known as a performance indicator. As an illustration, some online businesses could want to see a 50% growth in website traffic in the upcoming year.
A performance indicator for this objective could be the daily unique visitor count or the types of traffic the site obtains (paid advertising, search engine optimization, brand or display advertising, YouTube videos, etc.). Customer lifetime value is the most crucial KPI to monitor for some firms.
Top eCommerce KPIs to Track
Most leading online retailers will actively monitor a select group of high-level e-commerce KPI examples we have gathered. Regardless of the level of online maturity, these measures offer insights into the performance of most eCommerce enterprises.
You’ll undoubtedly find several KPIs worth tracking if you read through them with your company’s objectives in mind.
#1. KPIs for Product Performance
Understanding each product’s performance will be easier when you build your e-commerce KPIs. Dashboard down to the product level. It’s a very useful exercise for a manager in eCommerce marketing. Additional KPIs to think about include category-specific KPIs.
You must consider your product performance on the third-party retailer website if you sell your brand through a third-party retailer (such as Amazon, Tesco, etc.).
You should consider which of your products sells the best on websites run by independent retailers. What can you do to boost sales numbers? Determine the products being purchased and the locations where they are being made. You can control your brand on retailer websites if you have the ability to gauge the effectiveness of each product sold through independent retailers. Look closely and get details on product-specific conversions for each brand the merchant sells.
#2. Churn Rate
As an online firm, you can use the churn rate to determine how quickly customers abandon your brand or stop their subscriptions.
Formula: Start by dividing by the total number of customers at the beginning of the month, then subtracting the number of customers present at the end of the month from the number present at the beginning. To calculate the percentage and the annual churn rate, multiply the result by 100 and then by 12.
#3. Conversion Rates
Conversion rates reveal the percentage of your target market that takes the required action. The click-through rates on social media, click-throughs on Google search engine results pages, or conversion rates on your website could all be related to this.
On your website, you may track a variety of conversion rate KPIs, such as how many visitors sign up for your newsletter, establish an account, or join your loyalty program.
#4. The Cost of Acquiring a Customer (CAC)
The customer acquisition costs provide information about the cost of acquiring a new client.
You should consider your operating expenses and the costs of promoting and selling new customers. For instance, if your CAC is $20, but your average order value is only $10, you are rapidly losing money. However, if your AOV is $100, you are profitable. This KPI is crucial for stores that sell low-margin goods because it may also be used to determine price points.
Customer Acquisition Costs should decrease as a company grows in visibility and awareness, making it a useful KPI to set goals for. To make judgments, you need more information than just the cost of recruiting new clients. To better evaluate your performance, compare your CAC to other metrics, like your AVO.
#5. Client Lifetime Value
The Metrilo survey found that the average client lifetime value for the industries they looked at was $168.
Client lifetime value, often known as CLV, CLTV, or LTV, measures how much the typical client will spend with you throughout their relationship. In essence, it serves as a gauge for the average value of a customer.
Calculating this e-commerce KPI can be a little challenging. Even though we’ll use the simplest calculation, you’ll still need preliminary research. You must first calculate your average order value, the typical number of times clients purchase from you each year, and your average customer retention. The averages must then be multiplied.
#6. Cost Per Conversion (CPC)
It is the money you invest to convert a visitor into a client. This includes all outlays for positioning and advertising. In essence, the amount you spend overall on an advertisement leads to a successful conversion.
#7. Customer Contentment
High sales and low cart abandonment rates might imply that everything is well, but you can’t be sure until you determine your customer’s happiness level.
The optimal time to survey to gauge customer satisfaction is when the customer is most likely to reply after a sale or delivery. It is sufficient to ask a straightforward question like “How satisfied were you with your experience?” before providing a scale from one to five.
#8. AOV, or Average Order Value
The average order value (AOV) reveals the average amount each consumer pays on each transaction. This is one of the more straightforward eCommerce KPIs, but it’s crucial to monitor because it can reveal how much you spend on customer acquisition and can aid in understanding customer buying habits. One of the best (and least expensive) strategies to boost sales and profit is to enhance AOV.
In an ideal world, your acquisition costs would be far lower than what customers would pay. Encourage your consumers to add more things to their orders so you may continually attempt to raise your average order value. You can achieve this through upselling, selling product bundles, or providing discounts for spending a certain amount.
#9. Net Profit Margin
This is one of the most significant e-commerce KPIs for determining how profitable your store is. It is the profit margin you achieve after deducting everything, such as taxes, administrative costs, and other costs. After all deductions, your net profit margin shows how much money you make.
#10. CPA, or Cost Per Acquisition
This resembles the CAC KPI mentioned above. However, rather than only measuring the cost of obtaining paying customers, Cost per Acquisition also considers the cost of getting new leads and non-paying users. Therefore, this is a perfect KPI to track your progress if your eCommerce strategy attempts to increase awareness through free samples, newsletter campaigns, or gated content. It’s perfect for eCommerce startups and shops that sell expensive goods. They might even wish to investigate further and track this KPI on particular platforms like Facebook or Instagram.
#11. Net Income
For internet shopping, the typical net profit margin is 7.26%.
The net profit of your business is a gauge of its general profitability. It is your remaining income after deducting all of your expenses. Though the math is straightforward, calculating net profit alone might be challenging. Fortunately, your bookkeeping platform automatically shows a net profit on your business’s profit and loss statement and balance sheet.
An accurate indicator of the health of your store is net profit. If your business is profitable, you have a strong platform for expansion and the resources to engage in marketing campaigns that will help you expand even further.
#12. Return on Advertising Spend (ROAS)
Digital marketers must pay close attention to the critical eCommerce indicator, return on ad spend (ROAS). Although it is a KPI comparable to the one for cost per acquisition (discussed above), they have a significant difference. Cost per acquisition relates to the overall cost incurred to acquire a consumer, whereas ROAS is specifically tied to ads’ revenue. This implies that ROAS directly influences CPA, linking two eCommerce KPIs.
Despite this, they differ in a way that necessitates independent consideration. For instance, the CAC does not account for order value. It could appear like a red flag if acquiring a customer is expensive.
#13. Recurring Purchase Rate
It lets you know how many buyers return to your website to make more purchases. It can aid in both the planning of your sales strategies and the measurement of customer loyalty. In general, a higher rate of repeat business is preferable.
#14. Length of Stay
The average time visitors spend on your website before departing is known as time on site. For this KPI, no calculations are required either. You can easily find it under “Avg” in Google Analytics, where it is automatically calculated. Session length.
#15. Visitor Spending
You may use this significant e-commerce metric to calculate the average revenue you make per visitor. For instance, your revenue per visitor will be $0.25 if your revenue for the most recent quarter was $50,000 and you had 200,000 visits to your online business.
#16. PPC (Pay-Per-Click)
Every time someone clicks on one of your ads, it displays your cost per click. This e-commerce KPI can be used for marketing on social media and search engines. It can also be referred to as Cost-Per-Click (CPC). It’s one of the most often monitored e-commerce KPIs.
#17. Rate of Cart Abandonment
Visitors who add things to their cart and then depart your website without purchasing them are said to have abandoned their cart. The percentage of customers who abandon their carts is tracked by the KPI.
Because the average cart abandonment rate varies depending on the device, region, and sector, tracking it is crucial.
From 2006 to 2018, OptinMonster monitored typical cart abandonment rates. The percentage never fell below 60%, and it has been increasing. A recent average of 75.6 percent was used.
#18. Purchasing Patterns
It calculates the typical volume of orders your clients place during a given time frame, a good KPI for identifying underperforming products or categories and gauging customer loyalty.
#19. Cost of Goods Sold
For online merchants, the cost of goods sold (COGS) is crucial. It evaluates the direct costs of manufacturing your products and is occasionally called the “cost of sales.”
Online retailers can better understand their manufacturing and production costs using the COGS retail performance statistic. It doesn’t factor in marketing expenses or overhead costs. It’s important to remember that COGS will change based on the accounting principles applied to the computation.
#20. Pageviews per Session
It speaks of the typical number of web pages visitors view per visit. You need to update your design if it takes your visitors too many clicks to reach the desired product. For your store, a higher pageview per session is bad.
#21. The SCAR, or Shopping Cart Abandonment Rate
Given how many customers abandon their shopping carts before checking out, the shopping cart abandonment rate (SCAR) is an important eCommerce KPI to monitor. A high percentage of shopping cart abandonment will harm your organization regardless of whether sales, customer experience, or branding are your top priorities.
This eCommerce measure frequently serves as a gauge for how user-friendly and reliable your checkout procedure is. It might be time to redesign this section of your site if your cart abandonment rate is high. If many customers add items to their shopping carts without checking out, they might not like your shipping costs, payment alternatives, or checkout procedure. You might need to provide more payment options or use a reputable payment service provider like PayPal or Stripe to entice customers to convert.
#22. Ratio of Holding Inventory
The average cost of keeping inventory before selling it can be calculated using this ratio or e-commerce KPI. Storage, personnel, security, and the equipment you use to store the inventory make up most of your holding costs. Your holding expenses typically range from 25 to 30 percent of the value of your inventory.
#23. Organic Search Results
Creating traffic volume without paying for it is one of the best strategies to reduce client acquisition costs. Organic search accounts for 33% of the traffic to e-commerce websites. Because of SEO’s effectiveness, monitoring your site’s position in organic search results is crucial.
#24. Email Conversion Rate
It speaks of email subscribers who made purchases after clicking on the links in your email marketing. Your email conversion rate (which, incidentally, is not necessarily the goal for creating email lists) reveals the efficiency of your marketing activities regarding revenue.
#25. Orders Placed
28 percent of clients order more than one item with every purchase, according to recent Metrilo research. The total quantity (not value) of orders placed with your store within a specific period is the number of orders. Normally, you would monitor this monthly, quarterly, or annually.
Inventory management requires a clear understanding of how many orders customers place. You’ll be able to predict product orders and warehouse space with accuracy. Monitoring order volume over time will also demonstrate the effects of alterations in product pricing, quality, and other factors on sales.
#26. Basket-Level Results
The secret to comprehending the complete makeup of your consumers’ online shopping carts is to look at performance indicators at the basket level. You may learn which rival brands your clients prefer by identifying complementary brands and goods. What did the consumer buy if they didn’t purchase my product? Where and to whom did I lose the sale?
For instance, you may direct traffic to a specific retailer’s product page. When a customer purchases a rival’s product rather than yours, you immediately realize something is wrong.
Alternatively, if you notice that most customers are also adding a certain brand’s products to their baskets along with yours, it would be a good idea to approach that company and develop a complementary collaboration to assist both brands’ sales growth.
#27. Net Promoter
Most of the e-commerce KPIs we’ve looked at are related to the cost of making money. The crucial retail performance indicator, the net promoter score, measures the customer experience from a distinct angle.
Due to its somewhat ethereal nature, customer experience is one of the more challenging aspects of an e-commerce firm to quantify. You cannot simply evaluate your data to calculate this e-commerce key performance indicator. You must query your customers to determine your Net Promoter Score.
What is the KPI in e-commerce?
Your e-commerce key performance indicators (KPIs) are useful measuring tools that can help you assess whether your digital strategy and SEO work are helping you achieve the online targets you set for yourself. You can design an international sales strategy using research data and website analytics.
What is the Best Tool for Tracking e-commerce KPIs?
With Google Analytics.
It can be combined with your website or online store to measure various parameters. It can reveal a customer’s route to your website, their number of page views, their clicks, and more. Google Analytics is the most effective instrument for understanding your customers.
Why are e-commerce KPIs important?
Key performance indicators (KPIs) are checkpoints along the path to success in online retail. E-commerce business owners can track their success toward sales, marketing, and customer service objectives.
What is KPIS for B2B e-commerce?
E-commerce KPIs are measurements that allow companies to track their progress over time. KPIs can track and monitor business growth, sales effectiveness, conversion rates, and other factors based on business objectives.
Conclusion
KPIs help business leaders better comprehend how far they have achieved their objectives. Business owners lack comprehensive knowledge of their company’s success without tracking KPIs. When KPIs are clearly defined and strengths and weaknesses are identified, it is simpler to develop a strategy that will address prior problems.
- Executive Dashboards: Meaning, Types & Examples
- NETWORK ADMINISTRATOR: What Is It & What Do They Do?
- What Are Push Notifications? Everything You Need To Know
- PROCURIFY: Features, Review, Pricing & Competitors
- AMAZON COMPETITORS: Who Are the Top Amazon Competitors?
References
