Do you know what makes your eCommerce store successful? Which strategies work best to increase your revenue? Understanding what’s driving your business is the key to ensuring future growth.
Measuring performance can help you grow your revenue, but only when you track the right Key Performance Indicators or KPIs.
You can measure dozens of different metrics, and your specific needs will determine which are the most important for your store.
However, there are some metrics which are vital to the success of any store, such as your conversion rate or cart abandonment rate.
In this article, we’ll review what KPIs are and how measuring them can help you grow your business. Plus, we’ll reveal the 32 most critical eCommerce KPIs you need to measure in 2018 to understand what’s driving your business.
What is a KPI and why is it so important?
A Key Performance Indicator (KPI) is a type of performance measurement. KPIs are used to evaluate factors that are crucial to the success of an organization.
For eCommerce stores, tracking your KPIs can tell you how well your company is performing and where to make improvements.
Identifying the KPIs for your store, gathering the data and reviewing the results can take some time, but believe me, it’s worth the effort. KPIs reveal the most important metrics driving the success of your business and allow you to track their progress as you grow.
KPIs also help ensure that nothing slips through the cracks. For example, when you have KPIs per department, they can show you which individuals contribute the most to your store’s success. KPIs are also helpful for products which have a high return rate or a sudden drop in sales. With the right metrics in place, you can quickly identify the source of many challenges you face on a day to day basis.
Furthermore, the process of establishing and tracking your KPIs forces you to take a look at the specific impact your changes will have, before you decide which improvements to make.
How to track your KPIs
Google Analytics is a great tool monitoring the different KPIs of your website to see where you should make improvements to your store. Some KPIs are based on sales data which you will have available through the eCommerce platform that you use. For email open rates, and other important KPIs for eCommerce, use the analytics and reports sections provided by those platforms to monitor your success. In addition to these platforms and built-in tools, many digital marketing platforms include tools designed to help you track your KPIs.
Now that you’ve got a sense of what KPIs are and how to track them, let’s take a look at 32 of the most critical eCommerce KPIs. It’s likely you’re already tracking some of these metrics, but I’m sure you will find some new inspiration here too!
1. Conversion Rate:
Conversion rate is an important KPI for all websites, including eCommerce stores. This can measure action that you want someone to take, such as clicking on a button or signing up for a list. For eCommerce stores, your conversion rate is the percentage of visitors to your site who make a purchase and convert into actual customers. To determine your conversion rate, you take the total number of sales divided by the total number of visits to your site.
2. Average Order Value:
Average order value (AOV) is also a vital metric for online stores. Your average order value can give you a better understanding of your clients’ spending habits, including which products fit their price range. Tracking your AOV can help you identify opportunities to upsell, cross-sell or promote special offers. To get this number, divide the sum of generated revenue by the total number of orders.
3. Cart Abandonment Rate:
Cart abandonment rate refers to the percentage of shoppers who add items to their cart, and then leave your site completing their purchase. Studies have show the average eCommerce cart abandonment can be as high as 70%. Customers can leave items in their cart due to a complicated checkout process, missing information, the cost of a product or the cost of shipping. To find out your cart abandonment rate, take the number of people who abandoned the checkout process in your store, and divide it by the total number of people who entered the checkout process, including those who did and did not complete their purchase.
4. Site Traffic:
The amount of traffic to your site is another important KPI for all websites. For eCommerce stores, you’ve got to drive consistent traffic to make consistent sales. This metric shows you how many people are visiting your site on a daily, weekly and monthly basis. You can also track new and returning visitors as an important KPI of the traffic to your site.
5. Average Time on Site:
This indicator allows you to track how much time your customers spend on your website. This helps you see whether your customers are engaged by the content on your site. When the average time on your site is low, it can indicate issues with your navigation or landing pages.
6. Page Views per Visit:
Just as the average time on site, this KPI will show you if your content is engaging. In Google Analytics, it’s called “Pages/Session”. This metric is as simple as the name implies – it’s the average number of pages viewed for each visit to your site.
7. Exit Pages:
Another measure of engagement, this shows you where your customers lose interest so you can make improvements to the content on those pages. Exit pages can also indicate where you need to change your business strategy. For example, if you see that people abandon your site after reviewing your return policy or shipping costs, you may need to reevaluate your approach to shipping and returns.
8. Referral Sources:
It’s important to track how customers arrive at your site. This KPI can help you determine which sources are sending the most visitors to your store. Is it organic search, PPC ads or social media? Monitoring your referral sources helps you see which marketing campaigns are working well and which campaigns need more work.
9. Bounce Rate:
Your bounce rate is the percentage of visitors who leave your website immediately after arriving. When your bounce is very high, it can indicate that you’re using the wrong keywords in your SEO or PPC, your website is not clear or it’s too complicated to use. Any website that is not mobile-friendly is may also have a high bounce rate. You can calculate this KPI easily: divide the number of visitors who leave your site immediately by the total number of visitors. Bounce rate is also an important KPI for search because Google takes this metric into consideration when deciding how to rank your site.
10. Email List Growth Rate:
This KPI shows how fast you are adding subscribers to your email list. This is the number of new subscribers minus unsubscribes, divided by the total number of subscribers in your list. When you have email lists for different segments, you can setup KPIs for each group and see which group is growing the fastest.
11. Email Bounce Rate:
You email bounce rate is the percentage of undelivered emails from your total emails sent. These messages are returned by the recipient’s mail server. There are two categories of email bounces: hard bounces and soft bounces. This KPI indicates the health of an email list, and can tell you whether it’s “aging” quickly, with too many email addresses that are no longer valid.
12. Email Open Rate:
You can calculate this KPI by taking the number of people who open a particular email campaign and dividing it by the number of sent emails that didn’t bounce. Your subject line and the name you use in the “From:” field are important factors that influence your email open rate.
13. Email Click-Through Rate:
Your email click-through rate (CTR) shows how many people clicked on links in your emails. The average email CTR mostly depends on the industry, but according to Mailigen, B2C newsletters tend to have lower CTR than B2B, typically around 2-3%.
14. Social Media Engagement:
There are several social media engagement metrics you can track. For example, the likes per post, shares per post, comments per post and clicks per post. Don’t forget to keep track of all your social media accounts – Facebook, Twitter, Instagram, etc. This KPI tells you which social network brings the most customer engagement to your business.
Pay-per-click (PPC) shows you how much you spend each time someone clicks on one of your ads. This KPI is typically used for search engine or social media advertising campaigns, and is also known as cost-per-click (CPC).
16. Returning Customers:
This metric shows you how many of your customers return to your store to make another purchase. Customer retention is vital for long-term growth, and it’s much easier to encourage repeat business than to acquire new customers. You can use this KPI to measure customer loyalty and also help you plan sales based on when customers return to your store.
17. Net Profit:
Your net profit is your company’s net revenue less any costs. This KPI shows you how much profit your business generates after all expenses. It determines if your business is successful or not. A straightforward way to increase net profit is to increase your revenue and decrease your expenses. You can use this KPI to measure the performance of your entire store, or specific products and categories.
18. Customer Lifetime Value:
This is an estimate of the total amount of money each person will spend throughout their time as a customer of your store. Why is this important? Customer lifetime value indicates how much you can spend on acquiring new customers. This KPI carries an important rule: the average customer lifetime value should always be higher than the average customer acquisition cost.
19. Cost Per Acquisition:
Following from the previous KPI, cost per acquisition tells you how much you need to spend to gain a new customer. CPA is often used to measure how much to pay for affiliate marketing, or how high you should set your bid and budget for PPC advertisting.
20. Average Profit Margin
It’s important to know how much of the price of your products is profit and how much is the cost of goods sold. This basic KPI is your profit margin. Use the average of your profit margin across all of your products to gain a more representative picture of your store’s profit margin, or compare profit margins to identify the most profitable products and categories in your store.
21. Customer Retention Rate:
Your customer retention rate shows you how many active returning customers you have during a given time period. It is the percentage of customers you keep relative to the number you had at the start of that period of time. Like returning customers, this can indicate customer loyalty and where you have bottlenecks in your business. Use this KPI to monitor one-time purchase habits for specific products and categories, then look for ways to bring these customers back to your store with discounts, or upsell and cross-sell to increase the value of their purchase.
22. Orders Per Active Customers:
This KPI measures the average number of orders your active customers made during a specific time period. While your customer retention rate measures the percentage of active customers you have during that time, your orders per active customers tell you how active these customers really were based on the number of purchases they made. Another great KPI for customer loyalty and highlighting underperforming items and categories.
Customer Service KPIs
23. Customer Service Email Count:
This is the number of tickets your customer support email receives. While this KPI doesn’t need much explanation, it can tell you a lot about your store. You may need to add more information to your FAQ page, or include instructions with each shipment to prevent lost time and resources on routine customer support.
24. Customer Service Chat Count:
Similar to the previous KPI, this metric shows the number of live chat requests on your eCommerce website. The number of chat requests can also help you find areas for improvement such as your FAQ, and help you identify specific products or categories which require more “pre-sales” information for customers to make a purchase decision.
25. Average Ticket Resolution Time:
This measures the average time taken by your customer service agents to resolve a ticket. You can improve this KPI by providing more information to your customers, and making sure your customer service team has everything they need to complete routine customer requests.
26. Net Promoter Score:
Your Net Promoter Score (NPS) is another KPI for customer loyalty, and also helps measure the overall customer experience of your store. This metric is taken from surveying customers and asking them to rate how likely they would be to recommend your business to a friend.
27. Time to Purchase:
Time to purchase is the amount of time it takes for a customer to buy your product. While some people may make a purchase the first time they visit your site, others may visit two, three or even more times before they decide to buy from you. Keep in mind that it also depends on the industry. When you are selling more expensive and complex products, people will do more research before buying.
28. Number and Quality of Product Reviews:
Product reviews are an important customer satisfaction metric that you should track monthly because they help people make a purchase decision. Ask your satisfied customers for reviews. When you get a negative review, you should immediately follow up and see what you can do to improve customer experience in the future.
29. Top Products
Knowing which products perform the best in your store helps you decide which products to feature. You can use this KPI store-wide, or within individual categories. This can also tell you when it’s time to stop carrying a particular item that isn’t selling well.
30. Number of Orders
Like site traffic, the number of orders you receive is an important KPI of the overall health of your store. You’ll need this metric to determine your average order value, and you can also use this KPI for specific time periods to see when you should create a sale or email a discount offer to your subscribers.
Product Category Performance
31. Top Categories
In addition to your top products, you should also measure your top performing categories. This KPI can tell you which categories to feature on your main page, and the best way to group your products for your customers.
32. Active/Inactive Categories
Measuring KPIs is important step towards reaching your business goals. To really grow your business, you need to monitor the performance of your store. Once you’ve decided which KPIs you want to track, make it a part of your daily, weekly or monthly routine.
Gather your metrics from different platforms in a spreadsheet. This helps you see your entire store’s performance at a glance. With many KPIs related to each other, you can spot trends and identify exactly where to make improvements.
As you continue to monitor your KPIs, you’ll learn which are the most important metrics for your store. By paying close attention, you’ll be able to identify and correct bottlenecks in your customer acquisition, retention and engagement practices, finding areas for improvement and new ways to grow your revenue.
Which KPIs are the most important for your eCommerce store?