“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.
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:
You create ecommerce KPIs by first creating ecommerce business goals.
Here’s an example of clear ecommerce goals paired with specific KPIs from Shopify:
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.
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.
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:
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:
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:
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:
If you implement these 5 tips, you’ll see a measurable reduction in your shopping cart abandonment KPI.
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:
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:
So, how can you increase customer retention? By following these tips:
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?
From integration with your ecommerce stores and apps to seamless inventory tracking through your POS, DEAR Inventory will track, measure, and generate reports that make it possible for you to grow your business using sound, accurate data.
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