Ecommerce KPIs are essential to measuring your eCommerce business’s success and tracking its growth. Without a clear understanding of how your business is doing and where you can improve, it’s nearly impossible to know how to operate your eCommerce store effectively.
But with so many different metrics to consider and track, it can be challenging to understand which ones are most important for your business and how you should monitor them.
Fortunately, by learning about the various KPIs you can use for your eCommerce store and following these tips on how to use them most effectively, you can have a clearer understanding of how to optimize your eCommerce strategy moving forward.
This blog post will walk you through the ins and outs of effective eCommerce KPIs. Read on to discover more about what they are, why they’re essential, and how to use eCommerce KPIs to benefit your business.
What Are eCommerce KPIs?
KPI stands for “key performance indicator.” If you track and monitor KPIs, you will see how your eCommerce store is performing, identify areas for improvement and make adjustments as necessary.
eCommerce KPIs track everything from sales to revenue to customer satisfaction and more. Any metric important to your eCommerce business can be turned into a KPI.
That said, eCommerce KPIs will vary from business to business. This is because each vendor is unique and sells a different product type in another industry with a different target audience. As such, there is no one-size-fits-all solution for eCommerce KPIs. The ones that you track will depend on your business objectives and the goals that you’re trying to achieve
Why Are eCommerce KPIs Important?
As we’ve already discussed, KPIs can help you understand how your eCommerce store is performing, identify areas for improvement and track your progress over time. However, they do more than just inform you of your current performance.
KPIs allow you to set goals and track your progress toward reaching them. They help you set clear expectations for your eCommerce business and monitor your success in delivering on those expectations.
eCommerce KPIs are essential in helping you understand your customers. You can use these statistics to determine where your customers are coming from, what they’re searching for, and what they’re buying. This information can help you create better marketing campaigns and effectively target your audience.
You can also use eCommerce KPIs to demonstrate the success of your business to investors and potential stakeholders. This can help you to secure funding and prove that your business is worth investing in.
Which eCommerce KPIs Should You Track?
As we discussed, there are many eCommerce KPIs you can track. The trick is to select the KPIs that matter most to your business.
If you’re new to eCommerce, you may not know what KPIs to track. In this case, you should start by evaluating your goals. What do you want to achieve with your eCommerce store? Once you know what you want to achieve, you can look at the metrics that will help you achieve those goals.
Here are some of the most common eCommerce KPIs:
This is one of the most important eCommerce KPIs and can indicate how your customers respond to your marketing efforts. So, what exactly is a conversion rate?
The conversion rate refers to the percentage of visitors who complete a desired action on your eCommerce store. In other words, it is the percentage of people who add a product to their cart and go on to make a purchase.
If your conversion rate is low, then it means that a large percentage of your website visitors are exiting without making a purchase. This means that something about your store isn’t appealing to those visitors, and you may miss out on sales.
Average Order Value
This is an indicator of how much customers are spending on your eCommerce store. It can be a great metric to track if you want to improve your customer lifetime value (CLV). However, it is important to note that AOV can be easily manipulated by offering discounts or running sales.
It is, therefore, important to track AOV over a long period of time to get an accurate indicator of how much customers are spending on your store.
Shopping Behaviour Analysis
This can indicate how your customers respond to your marketing efforts and their loyalty to your brand.
To track shopping behavior, you need to track customer data, such as what products are sold, how much, and when. You can then use this data to understand your customers’ shopping habits, such as what products they purchase, when, and how often.
It can also help you understand your customer base better, including their demographics and preferences. This can help you to focus your marketing efforts on the right audience, making them more effective and improving your overall eCommerce performance.
This is an important eCommerce KPI to track if you’re interested in the financial performance of your store.
The best way to track eCommerce profitability is to calculate your total profit on an ongoing basis. You can do this by subtracting your total costs from your total sales.
Tracking profitability can help you understand how your eCommerce store is performing. It can also help you identify areas of improvement, such as which products are most profitable and least profitable and what you can do to improve the profitability of your less profitable products.
How To Choose the Right eCommerce KPIs for Your Business
There are many eCommerce KPIs to choose from. The most important thing to remember when selecting your KPIs is that you should be tracking those metrics that are most relevant to your business.
So, for example, if your business is heavily focused on growth, you should track metrics like customer acquisition and retention. On the other end of the scale, if you are a retailer focusing on sales and revenue growth, metrics like customer lifetime value (CLV) and average order value (AOV) will be more relevant.
Another important factor to consider is the availability of metrics across different eCommerce platforms. It is important to note that not all metrics are available across all eCommerce platforms. For example, while metrics like CLV and AOV are available across multiple platforms, metrics like average order value and conversion rate are only available on Shopify.
How To Track eCommerce KPIs?
There are a few different ways that you can track eCommerce KPIs. You can track some KPIs manually and others using an eCommerce reporting tool.
eCommerce KPIs that can be tracked manually include the number of orders, average order value, and sales volume. For these, you can log the information in a spreadsheet and track it over time to better understand your business.
eCommerce KPIs tracking with tools includes conversion rates and customer satisfaction. Using a tool like Google Analytics, you can track these KPIs automatically and gain more insight than if you’re tracking them manually.
Tips to Help You Use eCommerce KPIs Effectively
Now that you’ve learned about eCommerce KPIs, you may wonder how to achieve them. Here are a few tips to help you meet your KPIs:
- Set goals – Before you dive into the KPIs, you must set goals. What do you want to achieve with your eCommerce store? What is your overall eCommerce strategy?
- Stay consistent – Track your KPIs regularly and note the numbers. If you see that your statistics are in decline, make changes to your strategy. If you find positive results, you can stick with the working strategy.
- Stay up to date with the latest industry trends. This will help you stay informed about your customers and stay abreast of emerging opportunities for your eCommerce business.
- Improve your customer satisfaction – If you’re getting positive feedback, you’re likely to see an increase in repeat customers.
- Prioritize correct product listings – Product listings are one of the most important aspects of your eCommerce store. If your product listings are incorrect, you’ll have difficulty getting sales. Make sure that you double-check all of your product listings to ensure that they’re correct.
- Invest in the right marketing channels – eCommerce marketing channels are key to growing your business. If you don’t know which channels are most effective, you won’t be able to reach your goals. Make sure that you’re investing in the right channels for your business.
The Bottom Line
eCommerce KPIs are important because they give insight into how your eCommerce business is performing. They are also essential for tracking your progress and ensuring you’re on track to achieve your goals. After all, the more insight you have into your eCommerce performance, the easier it will be to grow your store.
Now that you know how to use eCommerce KPIs, what they are, and what they can do for you, it’s time to start tracking your eCommerce store’s KPIs. Do this by setting up analytics and tracking your KPIs consistently.
When you know how your store is performing and what you need to do to improve, you can take action and make necessary changes to improve your eCommerce strategy.