9 Ecommerce KPIs to Keep Track of
How to evaluate if your ecommerce performance is going towards the expected results? How can you identify what needs to be changed? When you define the ecommerce KPIs (key performance indicators), they function as guides and help you measure the results.
It's important, though, to know what needs to be measured and define the indicators that are related to the success of your entrepreneurship. Beyond that, you will have to define the methods to measure each KPI.
It may seem complicated at the beginning, but soon you will see how web analytics tools and counting on an effective CRM (Customer Relationship Management platform) help to automate many tasks and already give you the necessary data to measure the KPIs.
What Are Ecommerce KPIs?
KPIs stand for key performance indicators, as the name already implies, ecommerce KPIs are used to evaluate different aspects that indicate the performance of an online store, and they should be set according to your objectives.
They can be, for example, the number of visitors to a page, the number of people who buy on the website, and so on. They show how ecommerce is progressing towards its goals.
Why Use Ecommerce KPIs?
If the KPIs are satisfactory, this is a good sign that the strategies and actions implemented have been successful. On the other hand, if the KPIs are low, it's an alert to assess what needs to be improved to get the expected results.
When you keep track of ecommerce KPIs, you become able to make data-driven decisions, based on the results they point to you. Without them, it becomes difficult to measure with accuracy your ecommerce performance.
For instance, when you make a social media campaign to promote a specific product. if you don't establish the KPIs to evaluate it, you can't know for sure if the investment was worth it. Two of the KPIs, in this case, could be the number of clicks on the ad, and the number of sales made through the ad
It's important to know how to use the ecommerce KPIs strategically. Analyze the information they provide you to get new insights and see new ways to get to know your customers' behavior and improve your ecommerce. By measuring KPIs, you can draw plans for your ecommerce not by guessing but based on data.
Types of Ecommerce KPIs
There are several types of key performance indicators, usually, they are related to one of those categories:
- Customer service
- Project management
Most Important Ecommerce KPIs
1. Website Traffic
The number of people who access your pages is the Website Traffic. This is an important KPI to give you an idea of how much visibility your website is getting.
Inside website traffic, you can analyze the sources of the traffic, for example, if people enter your pages through organic search, paid ads, following links from other websites, or through social media.
By understanding where your website traffic is coming from, you have the opportunity to define more precise strategies to invest in ads on the social media and websites that your target audience is.
Besides, if you aren't getting much organic traffic from searches made on Google, for instance, it's time to think about how to improve SEO, analyze what keywords to focus on and the type of content to create to rank better.
2. Time on Site
How much time do visitors spend on your website? Which pages are the most visited? On what page do they exit the website? All of that information is fundamental to understanding your visitors' behaviors.
Time on site is an ecommerce KPI that shows you if your pages have good content capable of grabbing visitors' attention and making them want to keep navigating through your website. If they spent more time on your website, the chances of closing sales are bigger.
When most of the visitors enter your website and leave quickly this might be a signal that you aren't providing a good user experience to them, that the information is disorganized, or the load time is too slow. It's important to analyze these details, which could make you lose profit.
More time spent on your site means they are engaging with your brand and that's a good sign. Be aware, though, that if they are spending too much time on the check-out process, this is the part that should be simple and quick to facilitate the purchase.
3. Bounce Rate
Bounce rate measures the number of people who access a single page on your website and leave it without navigating to other pages.
If the bounce rate on certain pages is too high this may indicate that you need to analyze why visitors are leaving so fast, and aren't compelled to click on the menu and navigate to get to know more about your company's website.
When visitors spend more time on your website, you have more chances to show your brand, products, and sell.
Check the pages with high bounce rates. Do they have an appealing design? Is the content interesting to your target audience? Do their features work properly? Try to make changes to see how it affects the bounce rate.
4. Conversion Rate
Conversion rate is a fundamental ecommerce KPI because this refers to the number of visitors to your website that turns into customers. After all, it isn't enough to have high website traffic, it's necessary to think of strategies that convince them to buy your products.
If you have a high number of people becoming customers that's a great indicator that your sales strategies are effective.
On the other hand, if the conversion rate is low, it's important to analyze how to target potential customers, study their behavior, and try to understand better what actions could attract them to your website and convince them to buy.
Make tests to see what practices help to improve the conversion rate, for example, offer free shipping when a purchase reaches a certain value, create special sales, and offer discount coupons.
Also, try to organize your pages in different ways, test more than one CTA, change the products you are highlighting, and do benchmarks to see your competitors' strategies.
5. Customer Lifetime Value
Customer lifetime value refers to how much each customer is worth to your business. Having loyal customers who develop long-lasting relationships with your brand is very important, it helps to give stability and to conquer more credibility on the market.
Besides, investing in keeping loyal customers, creating actions to encourage them to buy again, and straightening the bonds with your brand, has a smaller cost than the initial customer acquisition.
6. Customer Retention Rate
Customer lifetime value and customer retention rate are two ecommerce KPIs that walk together and are closely related to customer loyalty. If a person buys on your website and doesn't return this may not be a good signal, right? For example, they didn't like the product or the service, and that can damage your brand's reputation.
It's important to invest in actions that encourage customers to come back, create communication strategies to foster a relationship with them, and improve customer retention, therefore increasing customer lifetime value.
If the retention rate is low, think about practices that could make the customer want to return. For instance, offering a coupon discount for the next purchase, or making a rewards program.
7. Cart Abandonment Rate
Do you know when people access an online store, navigate through the various sections, and product pages and add several items to the cart, but leave the website before finalizing the purchase? Many customers do that, probably you have done that already as well.
But, cart abandonment is something that you need to watch closely to keep this rate as low as possible. How to convince your customers to complete the purchase? What can convince them to buy the items added to the cart?
It's necessary to know your customers' behavior to develop effective actions to sell more. For instance, you could sell an email asking about the reason why the person left the cart and offering a discount or free shipping for them. Sometimes, all it gets to finalize the sale is an incentive on your part.
Another problem could be the checkout process, if it has too many steps and the pages take too long to load, the information isn't clear, the customer may give up. Test how to simplify the steps. Ask your clients for feedback, they may help you to improve too.
8. Customer Acquisition Cost
Customer acquisition cost refers to the amount spent to acquire each customer. You will add up all the costs related to bringing new clients, for example, how much you spend on advertising, keeping the website and your social media pages, for instance, and then divide the total value by the number of customers acquired.
It's important to keep track of this number in order not to have a customer acquisition cost higher than your profit. If the cost is too high that's a sign you may need to rethink your strategies. Always keep the return on investment (ROI) in mind.
9. Customer Satisfaction
If you want to build a customer-centric business, no doubt customer satisfaction must be one of the top priorities when it comes to ecommerce KPIs. Measuring customer satisfaction rate may not be as simple as measuring website traffic or bounce rate, for instance.
Actually, the analysis of several KPIs helps to understand if clients are happy with the products and services provided by your company. For example, if the conversion and retention rates are high these are good indicators.
To understand customer satisfaction, you will need to access multiple ecommerce KPIs, but it's also interesting to get more personal. For example, sending surveys to your customers. Ask their opinion about what they think should be improved.
Allow them to leave comments on the products pages, this helps you to know their view better and also enables other customers to make assertive purchases.
Make your clients feel heard and seen, and take their opinion into consideration when analyzing what you need to improve on your website. This makes a huge difference in customer satisfaction rate.
How to Define Which Ecommerce KPIs to Evaluate?
As you can see, there are several ecommerce KPIs to be analyzed, even beyond the ones listed here. Looking at this amount of key performance indicators may feel overwhelming and confusing, but you don't need to worry.
The first step to creating an effective process of evaluating KPIs is to define the ones that are important to your business.
Set them according to your goals, what metrics are essential to analyze to know if your strategies are being successful towards the objectives you have set? They are the KPIs to watch for.
KPIs Need To be Analyzed in a Context
The ecommerce KPIs can't be analyzed isolated from one another, it's easily perceivable how one is connected to the other. It's important to develop the capability to assess them considering the multiple factors that affect performance and think strategically.
Organize your and your team's routine to make periodical reports assessing the ecommerce KPIs you have selected as priorities.
They must be watched out regularly, so you can be ready to make changes as any KPI points out a problem. You will see that they can be very useful in fostering your company to have continuous growth.
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