These Ecommerce KPIs are crucial to understanding and managing your business.
“If you can’t measure it, you can’t manage it.”
We don’t know who said it first, but we do know this quote rings true in the world of ecommerce.
If you don’t have specific objectives or clear goals, how do you know if you’ve reached a desirable outcome or milestone?
A lack of clear targets is especially harmful in your ecommerce business where tactics and strategies change fast, and if you’re not keeping up with trends or data, you’ll quickly lose to your competition.
That’s where ecommerce KPIs come in.
They help you make sense of the data you’re (hopefully) collecting, and give you insights into changes you need to make, strategies you need to implement, or tools you need to use.
But ecommerce KPIs are not created equally.
There are a few essential KPIs you absolutely should measure, and there’s a whole lot of KPIs that would be a waste of your time to measure.
We’ll give you a thorough list of the ecommerce KPIs every business should consider measuring, what to do before you start measuring KPIs, and how to make the most out of the data.
But first, let’s define ecommerce KPIs and metrics.
What are Ecommerce KPIs and Metrics?
A metric is any data you want to measure.
A key performance indicator (KPI) is a metric that measures data relative to a goal.
You can measure whatever you want, but if it isn’t tied to a goal, and if it doesn’t move you closer to that goal, it’s not a KPI.
Which means ecommerce KPIs are metrics that visibly influence your conversions, sales, and growth online.
With that in mind, there’s one question you’re probably asking yourself:
How Should You Construct and Measure Your Ecommerce KPIs?
You create ecommerce KPIs by first creating ecommerce business goals.
Here’s an example of clear ecommerce goals paired with specific KPIs from Shopify:
- GOAL 1 — Boost sales 10% in the next quarter. KPIs include daily sales, conversion rate, and site traffic.
- GOAL 2 — Increase conversion rate 2% in the next year. KPIs include conversion rate, shopping cart abandonment rate, associated shipping rate trends, and competitive price trends.
- GOAL 3 — Grow site traffic 20 percent in the next year. KPIs include site traffic, traffic sources, promotional click-through rates, social shares, and bounce rates.
- GOAL 4 — Reduce customer service calls by half in the next 6 months. KPIs include service call classification, identify which pages were visited immediately before the call, and identify what event lead to the call.
Once you have clear goals in mind, you can begin measuring the appropriate KPIs.
Since the KPIs you’ll measure will be specific to your business goals, we’ll give you a few ecommerce KPIs that every business should measure to get you started on the right foot.
Essential Ecommerce KPIs to Measure
If you’re just starting out, consider measuring only 4-10 KPIs to avoid overwhelm and to be as efficient as possible.
Here’s a list of 7 high-value ecommerce KPIs that will give you plenty of meaningful data you can use to reach your desired outcomes.
Brand Name Search
If your goal is to increase your brand awareness, your audience engagement, or your site traffic, then tracking how often people search for your brand name is essential.
If people are increasingly aware of your brand name, they’re more likely to seek out and discover the products and services you offer and are more likely to buy from you.
When your prospect considers buying a solution to their problem, they’ll immediately search their own minds in an attempt to recall a seller that they know of who can provide the solution they’re looking for.
If you’ve successfully implanted your brand name into their mind, they’re likely to go to your website and revisit your offer before looking at your competition.
If you want to increase your conversion rate, then you should focus on decreasing your bounce rate – the percentage of people who visit and immediately leave your site.
According to the Wolfgang 2017 E-commerce KPI Benchmarks Study, by increasing time spent on a site by 16%, conversion rates went up by a full 10%.
In the world of online conversions, 10% is a huge increase.
So, how do you decrease bounce rate and keep people on your website?
Here are a few suggestions:
- Create well-written, scannable, and good-looking web pages
- Target one keyword or keyphrase per landing page
- Design a clean, easy-to-use, easy-to-navigate website and menu
- Make your site mobile responsive to reap the benefits of mobile marketing
- Speed up page load time
- Write an FAQ page that answers commonly asked questions
- Write regular blog content that’s useful to your prospects
- Improve your B2B SEO
Applying these tips will help you quickly achieve your ecommerce KPI of a low bounce rate.
Conversion rate is one of the most important ecommerce KPIs to measure across every part of your site.
A conversion rate is simply the rate at which visitors to your site perform the action you want them to (opt-in to your email list, share your post, buy your product, etc.).
Here’s the basic calculation:
(Number of conversions) / (number of site visitors) = conversion rate
If 1,000 people visit your ecommerce store, but only 50 people buy, your conversion rate is 50 divided by 1,000 which equals a 5% conversion rate.
You can increase your conversion rate by:
- Using many of the same strategies for decreasing bounce rate
- Testing different pricing strategies
- Using high-quality photos
- Writing persuasive copy
- Writing better product descriptions
- Using omnichannel ecommerce
- Increasing social media sales
By testing the methods above, you’ll be able to measure incremental improvements in this particular ecommerce KPI, and over time, you’ll reach a higher and higher conversion rate.
Shopping cart abandonment is unfortunately widespread.
Baymard Institute studied buyer behavior on ecommerce sites and found that 69% of all ecommerce visitors abandon their carts.
There could be several reasons why online shoppers abandon their carts:
- Shipping fees were too high
- The site asked them to create an account in order to checkout
- Too many form fields to fill out to complete the checkout process
- Website errors
- Not enough payment methods
It’s frustrating knowing there are so many factors that contribute to such a high rate of shopping cart abandonment.
Where should you begin if you want to influence your customers to complete their checkout?
You can start with these 5 proven tips to stop shopping cart abandonment:
- Include images of the shopping cart items throughout the checkout process
- Use trust badges on your checkout page
- Reduce checkout form elements
- Ask users to register for an account AFTER the sale, not before
- Reduce or eliminate shipping costs
If you implement these 5 tips, you’ll see a measurable reduction in your shopping cart abandonment KPI.
Average Order Value
Your average order value (AOV) is a fundamental ecommerce KPI metric to track if you’re struggling to make a profit.
AOV is simply the average amount that people buy in your store.
The higher, the better.
To increase your AOV, try these tactics:
- Product bundling
- Free shipping for customers who spend a lot of money (over $100, for example)
- Limited time offers and coupons
- Upsells to higher-priced items than the ones in their cart
- Cross-sells to items related to the ones they already have in their cart (like a laptop bag to accompany their new laptop)
- Points for purchases that customers can use to buy other items from you in the future
Repeat customers are the holy grail of good business, online or offline.
It’s also an essential ecommerce KPI if you value long-term business growth.
A 5% increase in customer retention rate will result in a 25% to 95% increase in profits according to Bain & Company.
Here are 3 metrics you should focus on:
- Rate of repeat purchases
- Frequency of purchases
- Order gap analysis
So, how can you increase customer retention? By following these tips:
- Deliver products in customer packages that make your customers say “wow”
- Offer fast delivery options
- Under-promise and over-deliver (e.g., your policy says you ship within 5 business days, but you usually ship overnight)
- Make it easy to repeat purchases
- Make it fast and easy to create an account
- Offer free and easy returns
How to Make the Most out of Ecommerce KPIs
We have to stress the importance of the old idiom “less is more.”
The first thing you’ll be doing when first measuring ecommerce KPIs is establishing a baseline for all of your KPIs and then testing strategies to improve those KPIs.
This is a long process, so be patient and never stop testing new strategies and tactics.
In that same vein, you should always be testing new technologies that make it easier for you to track, measure, and understand specific ecommerce KPIs.
One such technology is a cloud-based inventory management system that allows you to track all of your sales, offline and online, in one central hub.
This system would give you the advantage of knowing exactly how much inventory you have in stock in real-time, without needing to take a physical inventory.
You can also update all of your ecommerce stores when you start carrying new seasonal items or when you stop selling unprofitable items.
You’ll even be able to automate reorders and backorders so you’ll never have to run out of stock.
This system will help you reach many of your ecommerce KPIs such as your average order rate, shopping cart abandonment rate, and customer retention rate, among many others.
Where can you get this system?