In order to know how well your online store is performing, you should be monitoring several ecommerce KPIs. These Key Performance Indicators (KPIs) will not only give you an overview of what is happening with your website and business, but also inform you of possible changes that can positively (or negatively!) affect those numbers.
To help you understand KPIs and how to read them, we’ve put together a list of the top ecommerce KPIs and key metrics that you should be reviewing on a regular basis.
First, let’s start with general key performance indicators. You’ve probably heard this term thrown around a lot – it’s said and used everywhere, not just in business. Retail stores, hospitals, restaurants, and grocery stores all use them.
A KPI is the measurement of an activity. It tells you how effectively you’re tracking towards a business objective or goal.
Good KPIs Will:
Help you make data-informed decisions about your business;
Provide evidence of progress (whether it’s good or bad) over time;
Measure one thing, and only one thing.
What is an Ecommerce Key Performance Indicator?
Now, because you have an online store, you probably want to know about ecommerce key performance indicators.
Ecommerce KPIs measure activities on and throughout your online store’s website. They can cover a wide range of measurements, from sales to marketing to customer service.
Important KPIs for Ecommerce Websites
Ultimately, the main goal of your ecommerce website is to drive and retain sales. I mean, without sales you wouldn’t be able to stay in business.
That’s why the most important KPIs for ecommerce businesses surround sales. Monitoring sales-related KPIs will help you stay ahead of any potential downturns and give you time to try new discounts and promo codes before things get worse. And if you are utilizing any ecommerce SEO services and digital marketing strategies for your website, then you need to make sure you are monitoring your KPIs on a regular basis.
So, just what sales KPIs should you be reviewing and monitoring?
Below is Our Top Ecommerce KPIs List:
This may seem like a simple metric to monitor and review, but knowing your sales (actual dollar amount of sales) is super important. You can even break it down by week, month, quarter, or certain promotional time periods and compare to get a better idea of your sales are the highest.
Breaking it down by time period will also help you forecast better in the coming months and years.
Conversion rate will tell you how well customers are converting on your website. To calculate your conversion rate, you’ll divide total total number of visitors by total number of conversions.
Knowing the conversion rate of your best-performing product pages will give you a good baseline of your website’s performance. You can see what these pages have and update your other pages to help them convert more visitors into customers.
You can get even nerdier with conversion rate and calculate it for your entire site, certain product pages, specific categories of products, and more.
If you are a small business, conversion rate optimization should be a top priority. Just a small increase in your conversion rate can have a big improvement on your sales.
Average # of Products per Order
Are customers buying 1 product per order or 12? Ideally you want customers buying multiple products per order. Multiple products means higher average transaction amount.
To increase the amount of products shoppers are buying each visit, show related products to their specific order before they checkout. Keep the products simple and relatively inexpensive too.
TIP: Think about the items you see (and possibly add to your cart) when you’re standing in the checkout line at Target. This can spur ideas for products that customers can easily add to their carts right before checkout.
Cost of Goods Sold
Cost of Goods Sold (COGS) will tell you how much you’re spending to sell a product. This takes into account marketing, overhead costs, production costs, etc.
Gross profit is the actual profit you’re making after paying for your products (COGS). To get your gross profit, you’ll subtract your cost of goods sold from total sales.
In addition to knowing your total gross profit, you can also monitor gross profit for specific departments and product categories.
Customer Lifetime Value
Customer Lifetime Value, or CLV, will tell you how much money a customer will spend throughout their lifetime with your business. It’s essentially a number to tell you how much a customer is worth.
To get this number, you’ll add up all gross profit purchases from one customer. You can compare the various customer lifetime values and average them together to get a better idea of this number.
Customer Acquisition Cost
Customer Acquisition Cost, sometimes referred to as CAC, is the total amount you spend to get a new customer to purchase from your store. This will usually take into account your marketing costs, including ads, commercials, radio spots, etc.
New Customers vs Returning Customers
In order to grow your business, you need both new and returning customers buying from your store. Knowing the comparison of new customers versus returning customers will help you form marketing campaigns to target both groups of people.
Other Key KPIs for Ecommerce Businesses
Sales metrics aren’t the only KPIs, however. In addition to knowing your sales and revenue numbers, you also have to pay attention to marketing, customer service, and manufacturing metrics.
Here are a few other key KPIs for ecommerce businesses:
Return on Ad Spend (ROAS) The amount of revenue from every ad dollar spent. You can calculate ROAS by dividing revenue dollars from marketing by advertising dollars spent.
Ad Cost of Sales (ACoS) ACoS is an Amazon PPC term. It is used to measure the performance of an Amazon Sponsored Products campaign.
Cost per Acquisition (CPA)
CPA measures the cost it takes to get one paying customer on a campaign or channel. It’s calculated by dividing total campaign cost (or channel cost) by conversions.
Return rate is the the rate in which products are returned back to your company. Ideally this number should be low.
Brand Search Lift
Brand Search Lift is how well your brand name appears in the search results over time. The more often your brand name appears, the higher your brand search lift will be.
Yield is the total number of products you’ve produced.
Website Sessions and Pageviews
The number of visitors that arrive to your website is considered a user session. Pageviews is how many actual web pages each user session views. Here are some tips for increasing site traffic to your ecommerce website.
Shopping Cart Abandonment Rate
Shopping cart abandonment rate is how often visitors put your products in their cart but leave your website before going through with their purchase. You want this number to be low, however if you notice it going up then you can run several marketing tactics to entice visitors to come back and complete their purchase.
Use an Ecommerce KPI Dashboard to View & Analyze
We’ve talked about A LOT of KPIs here. And looking at them one by one can be time-consuming … and can also be misconstrued without any context.
That’s why we recommend creating an ecommerce KPI dashboard to view and analyze your data.
In a dashboard, you’ll see a snapshot of your key performance indicators over a certain timeframe and how they relate to each other.
You could even create several dashboards, with one for sales, one for marketing, and one for customer service (or however you want to group them) to allow you to see the data more clearly.
Use Your Ecommerce KPI Metrics to Improve Website Performance & Sales
Your ecommerce KPI metrics are important to improving not only your website performance but your sales too. By keeping an eye on how the numbers are trending, whether good or bad, you can make informed, data-driven decisions to improve overall performance.
Need Help Improving Your Ecommerce KPIs?
If you have questions about ecommerce KPIs, ecommerce SEO or want help improving the performance of and traffic to your website, fill out the form below to request a free analysis, or send us a message. We can analyze your website and help you find success online.
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