On the road to online retail success, Key Performance Indicators are the checkpoints. KPIs are used to assess how successfully a company's objectives are met. There are various reasons why KPIs are vital in aiding your organization's success, from analyzing staff performance to measuring corporate advancement.
It's not easy to figure out which eCommerce KPIs to track. Your decision will be based on your personal objectives and strategy. There is no one-size-fits-all approach, but there are a few key measures and eCommerce KPI standards that may help most online firms. Everything you need to know is in this article.
Understanding Your Business KPIs
There are several KPIs that may be used to assess your company's performance or advancement. Some of them include:
1. eCommerce Sales
The most crucial markers of a company's health are its sales. So this is where we'll be looking at the most KPIs. As tempting as it may be to track and report on everything you can think of right now, trying to accomplish too much at once might cause your team to become overburdened. It will eventually cause more difficulties than it solves; also, tracking a large amount of dead-end data will waste a lot of time and effort. The above KPIs will assist you and your team in identifying frequent bottlenecks in your sales process, allowing you and your team to concentrate on growth.
2. Conversion Rate
All other revenue-driving eCommerce indicators are closely related to conversion rate. It indicates the amount of people that purchase after visiting your website. Businesses can derive useful conclusions by comparing conversion rates to page visits, average order values, and traffic sources. Google Analytics provides information on conversion rates by channel, device, and operating system.
Your conversion rate is affected by elements such as website structure, speed, and third-party trust factors like logos, customer reviews, and so on. With your current ad expenditure, increasing your site's conversion rate would increase revenues and lower customer acquisition expenses.
3. Cost Per Acquisition
Your total spend rate divided by the number of new consumers is your cost per acquisition. It's the amount of money you spend to convert a lead into a client. Assume you're running a Google AdWords campaign and need 10 clicks to attract one consumer. The total cost of all 10 advertisements is then used to calculate your CPA.
The measure is useful since it emphasizes the many inputs required to obtain a paying client. You may gain further insights by combining CPA with data from average order value, traffic volumes, customer lifetime values, and other sources. With CPA, you can assess every other KPI objectively and determine if you're on the correct route.
4. Average Order Value
How much money does your website make for every order? The AOV (average order value) informs you how much each consumer spends on each transaction in your shop.
This is one of the more basic eCommerce KPIs, but it's critical to monitor since it may help you determine how much you spend on client acquisition and analyze consumer purchase trends. Increasing AOV is one of the simplest (and most cost-effective) strategies to boost sales and profit. Ideally, you should spend far less on client acquisition than they do on their order.
5. Customer Value Over Time (CLTV)
This is one of the most important eCommerce KPIs to monitor, especially if you want to boost client retention. It's particularly beneficial if your company specializes in selling high-end goods. Client Lifetime Value estimates how much money a customer will spend with your company on average over the course of their relationship. This KPI reflects eCommerce indicators including average order value, conversion rate, and customer retention, giving you a clear picture of your store's entire success. The lower your recurring business is, the closer your CLTV is to your AOV. In this instance, it's best to make some modifications to improve the customer experience and encourage them to return to buy something else
6. Customer Acquisition Cost (CAC)
Customer Acquisition Costs tell you how much you need to spend to acquire one new customer. You should factor in your overheads and marketing and sales costs associated with customer acquisition. As a brand builds visibility and awareness, Customer Acquisition Costs should reduce so it is a great KPI to set targets for. However, the cost of acquiring new customers on its own doesn’t provide enough information to make decisions. So, look at your CAC in relation to other metrics like your AVO to get a better understanding of your performance.
6. Net Profit
Net profit is an often neglected eCommerce performance statistic, yet it is a clear critical indicator of your eCommerce store's overall health. Making a profit is a significant milestone for a business, and understanding how much money you're bringing in can determine how much you can spend on marketing, customer service, and other growth initiatives.
Maintaining a high net profit margin is also an eCommerce KPI worth monitoring for large businesses. It may not have the same stakes in terms of the company's long-term health, but employees of the marketing and sales departments can be sure it's on their minds.
7. Product Performance
Breaking down your eCommerce KPIs to a product level can help you analyse the performance of each product. For an eCommerce marketing manager, it's a highly useful exercise. You could also wish to think about KPIs for certain categories. If you sell your brand through a third-party retailer (such as Amazon or Tesco), you must take into account the performance of your products on their sites. You should think about which of your items sells better on third-party store sites. What can you do to boost sales numbers? Determine what things are purchased and where they are acquired.
Relevant Reading: WHY IS OPTIMIZING YOUR PRODUCT PAGE IMPORTANT?
8. Site Speed
In today's firms, milliseconds may equal millions in lost revenue. Customers are both irritated and turned off by sluggish websites. Bounce rates and conversions are both affected by slow websites.
Use Google Analytics to extract useful information from your website and the user experience it gives. Because the performance, efficiency, and speed of your ecommerce platform are at the heart of the user experience, you must concentrate on these parameters. As an ecommerce site, any issues with page speeds during checkout or in the shopping cart must be addressed right away. Through insights obtained from datasets, you may learn how each page and process performs and, as a result, reduce site performance.
Identify the Key KPIs to Streamline Success
eCommerce KPIs enable you to make informed decisions regarding revenue, marketing strategies, customer experience, and other critical areas. They assist in determining which techniques are effective and which are not. The sheer amount of e-commerce KPIs, on the other hand, might be daunting. That is why it is critical to determine which KPIs are most significant and to concentrate solely on them. If you utilize the wrong measures, you'll be shooting in the dark. However, having the relevant data at your fingertips makes optimizing your company much easier.
To know more about eCommerce tips & strategies, get in touch with eComIntegrate. Our experts will help you identify a pathway to success.