How do you know if your company is achieving its goals? Key Performance Indicators, or ecommerce KPIs, are a valuable tool for measuring success. Don't let other people's metrics of success become yours. Important eCommerce KPIs can be used to track the progress of specific projects and analyze which strategies are the most effective. There are many metrics that can help you measure your progress and this article will show you what they are and how to use them.
What is a Key Performance Indicator (KPI)?
A Key Performance Indicator, or KPI, is a number that measures the performance of a company. It can be used to measure anything from the amount of money spent to the number of customers served. The measurement of effectiveness is determined by the Objectives of Key Performance Indicators.
There are three types of KPIs:
1) Financial KPIs
2) Operational KPIs
3) Marketing KPIs
What are eCommerce KPIs?
Important eCommerce KPIs are indicators of business success. It is advisable to define a KPI based on your business objective.
The Importance of eCommerce metrics
To measure a business’ performance metrics, eCommerce is essential for measuring its success. These data can be used for analysis by businesses to gain more information through their eCommerce website and about their operations. eCommerce KPI helps organizations understand their actions and determine how it is best to adjust their strategy to increase growth rate. The information will enable operational staff to better understand and improve performance based on the to indication of the number of sales.
eCommerce KPI to track
A performance indicator is a quantitative measurement that measures performance concerning measurable goals.
"Your online store has set a target of increasing site visitors by 50% by 2023."
A performance indicator could indicate whether a site receives fewer unique visitors a week than any other ecommerce store and if the site is targeted at the highest number of unique visitors. In some cases, customer satisfaction though validating customer support or cost of customer acquisition are the key to business growth when measuring an eCommerce KPI to track.
Why eCommerce KPIs are important?
A KPI must be the same for strategy and setting goals. Without eCommerce KPIs, there is no metric for progress. It is likely to affect your decision based solely on gut instincts. This gives you a complete view of what your business needs and your customers, enabling you to make savvy business decisions. But eCommerce KPIs are hardly a matter for themselves though. It comes down to analyzing the data that provides actionable insights. This way you know how to increase the number of sales online and tells you how much potential issues are on the way.
eCommerce KPIs
In the next section of the guide, you will discover ecommerce metrics, what bounce rate is, and how customer support uses important eCommerce KPIs to track, which are useful for tracking sales performance, as well as examples.
Find some useful metrics to help you achieve a business goal. An eCommerce KPI is a measure which affects the profitability or performance of an online retailer. This eCommerce KPIs can measure the success of your organization as well as your customer service goals.
How are eCommerce KPIs helpful when making a decision?
The best KPI is one that can measure business performance in a variety of ways. The results should inform the management decision-making process while the KPI should guide actions. Key performance indicators (KPIs) represent milestones to online store success. Monitoring this data is helpful for e-commerce companies in evaluating sales strategies. The best way to monitor KPI is to set up your business goals and then the top of funnel metrics. A few eCommerce KPIs are supportive and are irrelevant to the rest.
The management decision-making process:
Identify the problem or opportunity.
Generate possible solutions or alternatives.
Evaluate the alternatives and select the best one.
Implement the decision and monitor its effects (or lack of).
Revise or abandon it as necessary.
Key performance indicators examples for eCommerce
Note: These Performance Indicator lists are not exhaustive. The KPI of eCommerce businesses will vary depending on what you need for your online business.
Which eCommerce KPIs should you track?
Ecommerce KPIs are incredibly large, and simply looking at them can seem overwhelming. But not all stores can track key performance indicators. In eCommerce stores, such as eBay and Amazon, it is not possible to track costs per conversion. Ecommerce KPIs are determined by business needs. This is a key factor that should be considered when determining what eCommerce KPIs you can target.
Types of key performance indicators
Key performance indicators vary across different categories. These are qualitative and quantitative, predictive of future events, and reveal past events. KPI relates to various business operations.
Key eCommerce Metrics and KPIs
When your business grows and the time for delegation is upon you then you might lose a sense of the different aspects of your online store. It will be helpful in understanding eCommerce key performance indicators to measure. The following are some examples of these eCommerce KPIs that we break down into categories (select the one that applies to your company best). Management of eCommerce businesses involves several steps.
What are eCommerce KPIs for marketing?
eCommerce KPIs indicate the efficiency of your advertising strategy. They affect your sales key performance indicators. If you own an eCommerce business, you may use a marketing KPI to know what products sell and what customers buy. This will enable you to develop products more effectively by preparing better product descriptions and product marketing. The most popular eCommerce KPIs used by marketers are: You can track your sales analytics via Google Analytics and online store built into the analytics platform.
Website traffic
Your online store is used to measure how many visitors are at your eCommerce shop. It may not be relevant to an online shop but can be useful for any website where implementing specific Marketing Campaigns and tracking the type of conversion rate can be very helpful.
eCommerce Website Growth Rate
eCommerce KPIs have a great potential value as an investment for business and need to be monitored regularly and closely. With competition in this sector, even a minor decrease from the year's best performance could mean the loss of tens of thousands of subscribers. Analyzing and understanding the signs before it happens, reduces churn rate, and avoids the cost of an emergency shutdown.
Store's performance indicator
The indicators can help you to understand the performance of your online store and make adjustments accordingly. For instance, if you notice that conversion rates are low, then you might want to look into your product descriptions or how you are presenting your products on the site. If it appears that your bounce rates are high, a possible solution might be to provide a better user experience or slowing down your website’s loading time.
Device type
Customer access in-store is essential to the best possible shopping experience. Segment your online shopping by device type tells you how much products and services are used. How is this a good tool for evaluating industry standards and developing mobile experience across all platforms? Try to maintain consistent processing across devices but test performance across mobiles, the web and tablets to get an idea of the number of customers purchase products and the best way to use them.
Average session on the website
Another valuable piece of information is how long visitors spend on your site. If your average session lasts about one minute or so (or a high bounce rate), you may find it hard to load or your site is experiencing other usability problems.
Bounce rate
As we mentioned before the bounce rate shows an excellent view of possible website problems. By measuring your bounce rate, you can see how much you are putting off the sale of your site. Bounce Rate - Bounces.
Site speed
It is important to maintain eCommerce site speed to attract visitors to the site. Performance on an eCommerce site is a crucial component of your customer experience. How do you monitor the page speed? Identify the actions of each step. Solution for a serious problem in reducing page load time.
Page views per session
Another pertinent eCommerce KPI is page views per visit. The metric is intended to assess the usefulness of your webpage and the efficiency of the sales process. If the customer has to be repeated on the product page to see their products in their shopping cart, it can help reduce friction. Online shops that get more page views or sessions tend primarily to make more sales.
Revenue per visitor
It's a critical eCommerce KPI for online stores where you are rapidly expanding or where you are changing audiences due to new marketing strategies or new product launches. By knowing the revenue per visitor, you can see how valuable it is to a visitor, and not a single customer. Revenues per user: Net profits/number of visitors, depending on the website or how much time you want to monitor, these metrics may be measured every day for a month, a year, or some specific activity. You can calculate revenue per visitor for product launches and campaigns.
Repeat visits
Repetition visits discussed above regarding purchasing time. When your buying time is high, then you'll get a large percentage of repeat visitors that represent those same consumers who come back to your stores to get their choice done. Repeat visitors refer to repeat customers that buy from you. In some e-commerce websites, repeat visitors may signify strong brand loyalty. The more visits you have, the stronger your chances of developing lasting relationships with your customers.
Cart abandonment rate (CAR)
Cart abandonment rate is viewed as an important KPI for eCommerce. The shopping cart abandonment rate indicates how many users have added items to the cart and then abandon the purchase during the checkout process. Also, how long the customer has been buying the product and how much money it endures. Unlike bounce rate and conversion rate, cart abandon rate depend on factors much later at shopping time and are sometimes can be related to site performance. The shoppers are often left the checkout process without a basket because they are unsure of why.
This statistic can help you determine what percentage of customers want to buy. If you compare the above data to others, it is possible to determine a strategy for a lower percentage of abandonment rates and more customers through to sale. The problem may be because of friction at checkouts or other factors hindering sales. Shopping cart abandonment rate = [1 - (the number of completed purchases/the number of shopping carts created)] × 100%.
Cost per acquisition (CPA)
Customer acquisition cost (CAC) is a metric for measuring the cost of acquiring a paying user (customer). On the other hand, cost per acquisition (CPA) measures the cost of acquiring a non-paying user (prospect, quality lead or potential customer). The cost of your marketing campaign is one of the most important factors in determining success.
Cost per lead (CPL)
Cost per lead, cost per registration, cost per signup or cost per activation will determine how successful your campaign is. Making sure you have the right CPL will help maintain a healthy budget and optimize your conversion rate (CR).
Social media engagement
A metric for measuring how effectively social media is being used by a company for engagement is usually the total number of followers. This metric, then, hinges upon the rate that follows are gained and lost during a specific time frame. Or the activity of how the company is responsive to fans. It can measure likes, comments, shares, followers and other social media engagement metrics.
Total Likes - Total Number of likes a post received within a specific time frame.
Total Shares - Total Number of shares that a post received within a specific time frame.
Social Media Marketing Metrics - It can measure likes, comments, shares, followers and other social media metrics.
Cost per conversion rate (CPC)
One of our recommended eCommerce KPIs is the cost per conversion – or CPC. CPCs are often used to describe Google Adwords, as they're the price of conversion from visitors into buyers for an advertisement. CPC looks relatively simple if you look for Google Ads reports.
Click-through rate (CTR)
The Click-through rate (CTR) captures the number of clicks, percentage of customers who click on ads, as opposed to matching just looking at them. It is a crucial metric for eCommerce business and SEO.
Pay-per-click (PPC)
This is one of the key eCommerce KPIs for marketing when you use PPC advertising like google advertising or ad campaigns on a similar platform. When you can see measure the total number of clicks and how much money you're paying per visitor, you can determine how much you spend during that first step. Paid per click cost = Cost per advertisement/total number of clicked advertisements.
Revenue per click (RPC)
This is a typical income for a given click across a paid-per-click campaign. Each paid click has its own cost. CPC = total revenue/total clicks.
Conversion rate (CR)
It is an indicator that determines how quickly people take a specific action that they perceive to be a conversion. In a general sense, conversion rate mean sales. By tracking your conversion rate you can know how many people who visit your site make purchases, what percentages you send emails to them and also how much effort it requires for you to acquire a new customer. The ratio of chance at reaching a goal to the time that a particular goal is achieved. Several Visits / Number of Conversions x 100.
The successful conversion rate is achieved by understanding customer reactions and developing personalized messaging. Customers' goals should also be known.
Email Conversion Rate
The email conversion rate is the percentage of people who open an email and take the action you want them to. The math is easy, just divide the total number of people who did what you wanted them to do by the total number of people who received your email. Then, multiply the result by a hundred (x 100) to define the outcome as a percentage.
For example, The number of recipients who took a specific action / the number of emails delivered to recipients x 100
Return On Ad Spend (ROAS)
Return on ad spend (ROAS) is the performance metric for digital marketing and advertising campaigns measured as a ratio of profit or sales generated from an online advertising effort relative to the money invested in those efforts.
Quality ads will lead to people being more inclined to click on them furthering ROI while wasting fewer clicks by rewarding consumers that are more likely to click on them.
What are eCommerce KPIs for sales?
Sales KPIs measure a business’ performance on a number of conversions and revenue basis. Sales key performance indicators provide absolute metrics on how much was sold and potential sales forecasts as well as goals, inventory levels, and other factors.You may see sales eCommerce KPI for specific channels, times, teams and employees. Some good examples of key E-commerce statistics and KPIs to track include:
Inventory Turnover
Inventory volume is the key financial ratio and KPI for eCommerce businesses for optimizing warehouse resources and productivity levels. Inventory turnover helps you see what stock levels and sales results are. Inspect your stock to determine if there is a turnover in stock. It must be able to be sold to customers at a retail price. If that metric is not implemented it may obscure other eCommerce benchmark metrics like ROAS (ROA) or any other marketing metric benchmarking measure.
Cost of goods sold (COGS)
This is what we spend on selling our services. Typically, these include manufacturing costs, wages and other costs directly incurred during sales or production activities. COGS = Inventory cost (year-long) + Additional inventory cost (purchased during the year). End inventory (by the end of the year).
Time between purchases
If you're looking at measuring the frequency of a purchase, another KPI that you should look at is the duration between the purchases. It tells you how much time is spent between buying items and completing an order. Once your have KPIs to track then you can see if the purchase habits are being used in promoting a more effective marketing campaign. The time between purchases = Buy frequency and time.
Cost per conversion (CPC)
A conversion cost measure measures how much resources you spend to gain a customer's attention. Cost of converting = Cost for customers / No for new clients while the cost per conversion may be important, you may need to invest a greater amount of resources to build the audience of your online stores.
Customer acquisition cost (CAC)
Customer acquisition cost is one metric that can help determine how many dollars a company can be spent on gaining customers. This will include all marketing expenses, emails, discounts offered to customers and any other necessary steps to sell to them. It should be tested against several other metrics to understand the cost of earning customers. Customer acquisition cost = Cost spent to acquire a customer.
Repeat Purchase Rate (RPR)
Repetition purchases / re-purchase rates are essential metrics for a product that is commonly sold. Repurchase rates are used in addition to being used to represent customer loyalty and helping you improve sales decisions. Repeat purchases rate = Purchases for new customers / total sales.
Average Order Value (AOV)
Average order value (AOV) is information about the number of orders the customer spends each. AOV is also known as the average market basket. Average Order Value can help you understand your revenue in terms of total number of customers. Calculating the value of orders becomes complicated when product return rates are used instead of order prices. If a product is brought back to the vendor or returned to marketplace sellers, this will distort chances on estimating AOV. The size of an individual order may change depending on the percentage of returns that find their way back to them and this will affect overall AOV calculations for those periods. Average order value = Total Revenue / Total Number of orders
Cart conversion rate (CCR)
This e-commerce measurement measures the number of visitors who have completed a shopping process when they purchase a product. CCR - total conversion rate/ total number of visitors x 100.
Customer Lifetime Value (CLV)
The lifetime value of the customer is a critical eCommerce KPI for any website that is about customer retention and customer loyalty. Understand your clients' lifelong value. The goal of tracking Customer Lifetime Value (CLV) or customer retention is knowing exactly why your customers are valued - in dollars. Customer lifetime value = (Properties from customers over a period X Average period a client is a client acquisition costs)
Gross margin
A gross margin is a total amount that you earn from the sales price. This is your revenue from a product after the sale and includes your inventory. Why is tracking sales vital? Using a benchmarking tool is a good way to see how sustainable your growth is.
Average profit margin
This percentage represents your profits for specific periods. Ideally the maximum earnings will rise with production or sales growth. Average number of earnings margin = profitable / revenue.
Gross profit
It's one of the key indicator that helps entrepreneurs plan. This shows the profit after subtracting the cost of production and distribution. Total number of profits / gross profit.
Conversion rate (CR)
CR are very important measurement for any eCommerce store. These rates represent the percentage of websites that convert into customers. The higher the CR, the less you get to attract the more customers who will buy your product/service. Identifying what customers visited your site helps improve the performance of eCommerce. The conversion rate for online shops depends on several variables.
Time for purchase
The next key KPI is that eCommerce sites are required to keep track of our time to sell. It shows you the average period of time it takes your website traffic to convert from visitor to real customer. While some people can visit your website immediately to get their money's worth, other people might visit twice or more before buying from you. Depending upon your eCommerce store, high time for buying might not cause problems for you. Generally speaking, you don't see impulse buying when buying expensive computer hardware and software.
eCommerce Churn rate
The churn rate has a significant impact on eCommerce stores if they are offering recurrent purchases. Understanding churn rate is key to understanding the concept of retention. If tracking is a requirement, the customer should be able to withdraw if their subscription is cancelled. Churn rate = (Loss customers during the period - Customers during a period).
Purchase frequency
This measure measures the number of orders a user can place in a certain period. While repurchase rates are percentages, tracking purchase frequency provides an average quantity of orders for a given period of time. Availability = orders/ number of customers at one time.
Referral traffic
What are the important people? Referral traffic helps identify the sources that bring the most website traffic. This data will help you find where and how much time to concentrate your efforts on PPC ads. Depending upon context, referral traffic can provide valuable KPIs for eCommerce performance for many reasons.
eCommerce sales
It is important to track and improve the operation of an eCommerce store by automating online sales and payments as well as increasing revenue.
What is eCommerce KPIs manufacturing?
KPIs in manufacturing depend on supply chains and manufacturing processes. This can show you how to reduce costs as well as allow you to measure efficiency.
Average order time
Number of orders per week
Number of orders per month
Sales conversion rate
Average number of revenue per order
Average number of revenue per customer
What are eCommerce KPIs in customer service?
Customer Service indicates your service effectiveness. How many eCommerce KPIs are needed in your call centre? Monitoring these measures help ensure you provide good service. Customer Service KPIs are a key indicator of customer satisfaction that can be used by companies to improve the value of the customer lifecycle.
User experience
This measure measures the customer’s experience with our services by analysing the user interaction, performance of your services and speed of use.
Chats
A feature more eCommerce sites adopt is chat-bots. These bots offer an automated chat feature, which is critical for your website. Assessing its success, such as the number of chats initiated and revenue earned, can help you determine how useful its business is to your organization. Your chatbot can help improve processes and increase customer satisfaction. If we increased chatbot product recommendations, this could help us improve our sales.
Customer support & satisfaction
These measures focus on customer support and requirements and how users should connect with support to collect valuable feedback.
Customer Experience
Whether you are providing customer service or providing an offer to customers based on the response, share or subscription. The more active the customer, the greater their chances for purchasing and sharing your content. How can we track our customers' experiences? How can we measure their experience?
Customer survey results and feedback
Make frequent customer surveys for accurate feedback. Make surveys for feedback during website upgrades or major updates or whenever a new feature comes along. Why are people leaving feedback? Often comments are given as a way to improve the services. Listening to the users is important in your eCommerce business.
Net promoter score (NPS)
The net promoter score is a measurement that indicates the satisfaction of a customer towards the services that their company provides. A frequent utilization of this metric is to analyze multiple marketing campaigns and see which one generated more interest or a higher level of satisfaction for clients for any given service. This level can be in correlation with the amount spent on marketing over time.
The net promoter score (NPS) relies on customers giving feedback about the quality of service being delivered from the company to them, often by replying "overall how likely are you to recommend this company to a friend?" with responses given on a scale from zero (not at all likely) to 10 (extremely likely). Real value can be obtained through conversion rates: [(consideration phase leads) / [(prospective customers)] * 100].
Other eCommerce key performance indicators:
Several important eCommerce metrics can help increase sales, revenues and satisfaction.
Return On Investment (ROI)
ROI stands for return on investment. The goal of the section is to illustrate how and what we can measure to help decide in favour of one option or another.
There are many different ways of measuring and analysing ROI these days. From team KPIs to financial cost per quality, conversion rate and quantifiable results that they deliver, it's enough information available to make a decision based on numbers or skill-set availability or promotion capacity.
The following are general ways in which companies like to quantify their ROI:
Profit Margin vs Return on Investment (ROI)
Net Profit or Internal Rate of Return (IRR) vs ROI
The gross profit margin is the difference between revenue and cost of goods sold. The ROI is how much money a company makes for every dollar invested in it.
B2B eCommerce KPIs to track
B2B eCommerce KPIs are in a way different from b2c eCommerce kpis. There is a higher emphasis on specific business attributes and there's a lot of consideration for the ways goods are bought, the touchpoints between companies, and what sorts of segments these audiences belong to.
One of the most integral steps for national retailers or operators entering the b2b domain is opening a shop in their chosen marketplace. Doing this effectively will undoubtedly require adhering to their core values as an operation and deeply understanding how an online platform can uniquely support them as an operator of goods, both physical and digital while making sure your customer support and number of sales are maximized.
What are KPIs for project management?
Key Performance Indicators for project management provide insight into the quality of work of a business team. All of the projects and initiatives you have within an eCommerce company have different goals and different processes and workflows. KPIs for project management may include the number of project documentation completed, and how well the status of the projects can be assessed. Project managers can tell you how well a group has worked towards a particular objective.
The following are some typical project management KPIs that you might use:
Project duration
Time is taken to complete a project from initial idea to completion
Projects started and completed, start to finish
Project costs
Projects completed on time or within budget
The number of projects completed per month
How do I create eCommerce KPIs?
The best KPI to select is defined as clear objectives. eCommerce KPIs may vary depending on your objectives and the breakdown structure.
Define target segments
Just like a business plan, any good marketing or business strategy starts with a list of target prospects, including their demographics and psychographics (Are they spending time in social media? What is the number of hours per day?). Analyzing your company's current performance and calculating what the best possible growth rate would be in each segment will help you set goals for the coming years.
What is a work breakdown structure?
A work breakdown structure is a list showing what each part or step in a project entails. It breaks down all communication tasks and how much time must be allotted to them, such as “preparing marketing materials” or “handling invoices.” The work breakdown structure is the foundation of a project, and it clearly defines each component and its allotted time.
Key performance indicators template
Here is a list of KPI-type templates. Many performance indicators directly affect the goals measured through these indicators.
KPI examples:
Goal: Increase revenues by ten per cent.
Goal: Improve conversion rate to 2% for next year.
Goal: Increase website traffic by 20 per cent over the next year.
Goal: Reduce call volume by 20% for the upcoming 6-month period.
Why do I need KPIs to track the store's performance?
KPIs should be important to websites to improve performance. Instead of deciding on changes based on intuition, KPIs could lead to changes immediately that improve statistics. It makes sense to monitor eCommerce site KPIs using Google Analytics and other tools.
How is eCommerce performance measured?
Performance measures of electronic commerce are determined through the use of key performance indicators (KPIs). KPIs vary according to individual business goals and objectives.
Use UTM parameters to track your campaigns
UTM refers to the Urchin Tracking Module. UTM tracking links provide insights in reports so that companies can make a decision on sales sources or optimize their marketing campaigns. UTM tracking links are short bits of code embedded in promotional images, blog posts, email newsletters, and social media messages. It lets you create URLs for the locations or objects you would like to track data about for gaining new customers, repeat purchase and important eCommerce Campaigns.
This article was written by 7needs, check out the collection of our business strategy blog posts.
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