Selecting the right key performance indicators (KPI) is the best way for businesses to track their success, and with retailers, it is no different! KPI’s provide a way for eCommerce businesses to track and understand how the business is performing at each stage of the growth cycle. Knowing this allows shareholders to make more informed decisions on the marketing strategy and future revenue.
Without working with quantifiable results, businesses have no indication of how far they are from achieving their goals and objectives. Working with KPIs also allows eCommerce businesses to answer common questions related to their growth.
If you are an eCommerce brand you might have asked yourself: “Am I investing money into the right marketing channels? Am I spending too much money to acquire new customers? How much money is each customer worth? What products are most profitable to my business?…. “
If that is you, broadening the KPI’s you are currently using to track your success might help you answer all these questions! In this blog, we will go over the most important eCommerce KPIs to help you measure and understand how you can optimize your business results!
What Are eCommerce KPIs?
In short, eCommerce KPIs are quantifiable results that help businesses track and evaluate the overall success of their online store. eCommerce KPI’s should directly reflect how far a business is from achieving its goals and objectives.
Selecting the right KPI for your business is crucial for your success and growth, but, with so many KPI’s available, how do you know if you are choosing the right ones?
The truth is that not every metric will be the right fit for your business. When choosing the right KPI for your brand, here are a few factors to keep in mind:
Goals: As mentioned above, your KPI’s should be a direct reflection of how far your business is from achieving its goals. The right KPI for your business will highlight the impact of your sales and marketing efforts on your bottom line.
Easily Measurable: Choosing measurable KPIs is the best way to gain quick access to the overall progress of your business results.
Growth: Your eCommerce KPIs need to highlight the different stages of your business’s growth. Depending on the current stage your business is in, some metrics will be more important than others.
Reality: Make sure to always select KPI’s that are most relevant to your business reality. The truth is that goals and objectives will change from business to business, so it is important to track the KPIs that directly reflect your goals.
10 eCommerce KPIs To Include In Your Reports And Dashboards
Let’s take a look at some of the most important eCommerce metrics to track and report on the performance of your online store:
1. Total Revenue
Total revenue is the total revenue your business has generated from online sales. This may seem like an obvious metric to track, however, tracking your revenue is a great way to measure if you are on track with your day-to-day sales goals.
eCommerce businesses can also use past revenue data to help make projections into how much revenue the business can expect to generate in the coming month. Measuring your revenue is a great way to communicate with shareholders and decision-makers on the current strategies and pricing in place.
Revenue should also be measured against your total costs. If you see that your total costs are higher than your revenue in a given time period, it might be worth readjusting your strategy to try and reduce costs.
2. Total Transactions
Total transactions measure the number of transactions that were completed on your online store. Total transactions are the perfect metric to measure how successful your company has been with its sales. A high number of transactions can indicate your online store has been successful at either returning current clients or attracting new clients to the website.
3. Conversion Rate
Conversion rate is considered to be the most important eCommerce metric to track. The conversion rate is the number of visitors who take action on your website divided by the number of website visitors you have received, over a given time period.
Tracking and reporting on conversion rates provide insights into how successful your strategy has been at engaging users on your website. An increase or decrease in this metric will impact every other eCommerce-related metric of your business.
4. Top Products
As an eCommerce brand, it’s important to know what product is currently the most popular with your customers. By creating a table that looks into the top 10 products by revenue, you can get a better understanding of what products are most profitable for your business on a weekly, monthly, and yearly basis.
5. Cart Abandonment
Cart abandonment is the number of users that add items to their online cart and then leave the website without checking out. This metric is extremely important for eCommerce brands that may be experiencing low sales.
A high cart abandonment rate can indicate that the checkout process is proving to be extremely complicated for customers. If this is the case, make sure to go over your checkout process and analyze each friction point. Ask yourself, “Is my shipping costs too high? Do I have a complex checkout process? Does my checkout process feel trustworthy?”
Fixing your checkout process is the best and easiest way to boost sales!
6. Bounce Rate
Bounce rate reflects the number of users who view a single page on your website and then leave shortly after, without any further interactions. Monitoring your bounce rate is extremely important as it will indicate if website visitors are finding what they need.
A high bounce rate will help you identify the reasons users are leaving your website. When assessing the pages with a high bounce rate, think to yourself is the pricing visible? Is the product image clear? Have we included reviews of the product?…
The more time a visitor spends on your website, the more likely they are to purchase a product as they will become more familiar with your brand!
7. Average Order Value
Average Order Value (AOV) is the average amount of money customers will spend on each transaction. AOV is a great metric to highlight is your marketing efforts have been successful in upselling customers. Working on increasing your AOV is the best way to quickly increase revenue.
8. Customer Lifetime Value
Customer Lifetime Value (CLV) expresses the total amount of money a customer will spend on your products and services over their lifetime. CLV is the perfect measure to help you understand if your customer retention strategies have been effective.
Working on customer retention is the best way to increase your profit as repeat customers will see a lot more value in your business. Customers who trust your brand tend to spend more money on each purchase.
9. Customer Acquisition Cost
Customer Acquisition Cost (CAC) highlights how much money your business spends on acquiring a new customer. CAC is the ideal metric to help you understand how much money you can invest in your marketing strategies to help increase your sales.
10. Product Returns
Product returns highlight the number of products that were returned after purchase. Measuring how often a product is returned is a great way to gain customer feedback. Make sure to prompt users with a feedback section when they process a return to help you understand the reasons behind it.
Once you receive the client feedback, make sure to put a process in place to discuss new strategies to help avoid more returns in the future.
Start Your eCommerce Reporting…
With a digital marketing reporting tool like Oviond, you can get all the information you need to report on the performance of your eCommerce business. Connecting to integrations like Google Analytics, Google Search Console, Shopify, and more, you can ensure you always stay on top of your most important KPIs to ensure you are running a profitable business!