Ecommerce has become one of the few growing industries in recent years. Ecommerce still thrived while many businesses suffered due to the pandemic.
When new technology is developing, consumers are getting more familiar with products, and it can be difficult for businesses to keep up, let alone stay ahead. Many eCommerce KPIs may help you quickly assess your company’s performance and operations. It’s critical to keep track of these eCommerce indicators if you want to expand your business.
It can be challenging to pick the right set of ecommerce business KPIs to track your business performance. Your decision will be based on your unique strategy and objectives. Although there is no one-size-fits-all solution, a few key indicators and eCommerce KPI standards are relevant for most online firms. Everything you need to know is right here.
What is a key performance indicator (KPI)?
A key performance indicator (KPI) is a technique for evaluating a company’s performance and can assist a corporation in making strategic decisions. They help compare other organisations operating in similar market conditions.
Businesses can employ a wide range of key performance indicators. Customer KPIs assist organisations in gaining a better understanding of their customer’s behaviour and the interaction between them and their brands.
Client satisfaction and retention KPIs can assist an eCommerce company in understanding customer relationships and making changes to strengthen them. Other KPIs, such as customer acquisition cost, help businesses determine how much they’ll need to spend to grow their market share.
A plethora of KPIs can provide eCommerce insights into everything from the number of purchase returns to how long things are kept in a cart. Keep reading to know more in detail!
KPIs eCommerce businesses need to monitor
The most critical KPIs for your eCommerce business are listed here.
1. Customer life time value (LTV)
It is a crucial metric to have in your eCommerce dashboard. It will give you an idea of how much money you should spend on keeping current clients and gaining new ones.
Here’s the thing, every client matters, and some are more valuable than others. By tracking the customer lifetime value KPI, you’ll notice higher-value clients who spend more on your business and customers who spend less than you paid to get them.
You’d need to cut down on those clients who spend less and keep those who spend more. In other words, CLTV can tell eCommerce retailers how much money a single consumer will likely create throughout a business relationship.
2. Social media engagement
Social media metrics can be pretty beneficial to your eCommerce business. The following are essential social media engagement KPIs to monitor regularly:
Likes per post
We use the term “Likes” to refer to those who have upvoted your social media posts. Likes, thumbs-ups, and favourites are examples of this. To calculate it, add up the number of likes on each social media site and divide it by the total number of posts on each platform.
Shares per post
It refers to “shares,” “retweets,” and “repins”, as well as other metrics. This metric represents the average number of times a post is shared.
Comments per post
The term “comments” refers to any mentions and comments on your social media posts. This metric defines how much of a community your brand is gathering on social media.
The clicks per post indicator track how many people clicked on links from social media posts. To compute this metric, add up the number of clicks from your social media postings over a given period (usually a month) and divide it by the number of social media posts made during that period.
3. Cart abandonment rate
It is the percentage of eCommerce clients adding things to their shopping cart but leaving without making a purchase.
This KPI can assist eCommerce companies in better understanding their customers’ behaviour. Strategies that focus on lowering the abandonment rate will have an immediate positive effect on income.
Customers who departed without completing a transaction can receive an email reminder, or you can offer them other items. The KPI itself is beneficial in that it indicates something is wrong; it is then up to business executives to create ways to help customers overcome these hurdles.
4. Conversion rate
For all eCommerce stores, the conversion rate is a highly significant KPI. This figure represents the percentage of website visitors who become customers. A high conversion rate means you’re persuading many people to buy your products or services, whereas a low rate implies that not as many people are ready to purchase or that your traffic isn’t targeted enough.
Knowing how many customers came to your site can help you improve your eCommerce success by revealing patterns that can help you better target site visitors in the sales funnel.
What constitutes a good conversion rate is highly dependent on the specific business, the market in which it operates, and the performance of opponents.
5. Churn rate
The annual rate clients stop subscribing to your services is your churn rate, so many businesses keep track of it. Depending on your subscription options, you can measure the number of starting subscribers in the month, year, or quarter.
If you provide a three-month subscription, you’ll track the number of new subscribers who sign up at the beginning of the time and the number who cancelled at the end. It’s generally unsustainable to operate with a high churn rate. Remember that keeping an existing customer is more cost-effective than gaining a new one.
But what constitutes a high churn rate, and how can you reduce it? It is dependent on the size of your business. Aim for a 5-7% churn rate if you’re an established eCommerce business. Expect a monthly churn rate of 5% for a small-to-midsize organisation.
Talk to your customers if you want to lower your churn rate. Understand why they’re cancelling their services by conducting cancellation surveys. Then develop a strategy for addressing those issues.
6. Website traffic
This metric is simple to comprehend, but it is also one of the most accurate brand reputation and performance markers. Ecommerce digital marketing is in the company’s DNA. It’s also a challenging commercial environment, with companies of all sizes competing for the same audience across many channels and platforms.
This eCommerce KPI assists organisations in determining the effectiveness of their digital marketing efforts. For a variety of reasons, website traffic is critical. The more individuals who visit a website, the greater the chances of making a sale.
Every visitor to a website has the potential to make an impression, stimulate interest, and spread brand values. Monitoring website traffic is beneficial since it provides insight into the health and relevance of your brand.
If traffic increases, you can assume something is working, such as a new product creating interest or a new marketing effort succeeding. If traffic is declining, it could mean that the existing offer is no longer relevant and that something in the business plan needs to change.
7. Time to purchase
The following crucial KPI to track for eCommerce websites is the time to purchase. This metric indicates how long it took visitors to your site to convert into paying clients. A long time to buy may not be a problem for you, depending on the type of eCommerce company you run.
If you sell costly computer or server equipment, given how much study goes into purchases of that size, you’re unlikely to see any impulse buys. On the other hand, if you sell relatively affordable clothing, jewellery, or shoes, you’re likely to see a lot of purchases made in one to two visits. Knowing your typical time to purchase can assist you in making extremely informed marketing decisions.
For example, a computer equipment retailer might wish to set up a customised email marketing campaign that delivers information about the products the shoppers are interested in. On the other hand, the general sale or new product emails will work effectively for stores with many impulse purchases.
This article discusses KPIs that an eCommerce firm can use to assess its health and performance. They can also help you figure out how to boost your average order size, income, and growth. You’ll be able to make informed, unbiased judgments if you understand the relationships between the essential components of your organisation.
And these choices might have a significant impact on your company’s bottom line. So spend time learning about your company’s data and capturing the actionable insights that will move you forward. As these measures are implemented, the methods for calculating and interpreting them can be enhanced and improved, making them more effective.