Knowledge is power, immense power when you work in an industry with cut-throat competition and dynamic outlook. However, there are a plethora of eCommerce businesses who aren’t utilizing the knowledge from their data that they could be. One needs to make sure that their organization is not just data rich and information poor. One needs data to be well-informed.
There is total ease of access to digital analytics today. And somewhere there is a lack of awareness in the eCommerce market about this. If used correctly, this is a gold mine for digital marketers.
If one really wants to know how their eCommerce site is doing, they need to keep track of key performance indicators (KPIs).This is where the KPIs come in. What are they? How do you measure them and which ones should you measure?
What are KPIs for eCommerce?
A Key Performance Indicator (KPI) is one of performance measurements. They are used to evaluate factors which are highly crucial to the success of an organization or an online store.
For an eCommerce store, tracking the right KPIs at the right time can tell how well the company is performing and what improvements are needed and where.
KPIs act as measurable values which can confirm how effectively your business milestones are advancing. It depicts the organization’s performance showcasing how well an individual or a team is performing for accomplishing the business goals.
Rightly determining your business KPIs
Before hopping on to the KPIs, you need to define a few crucial elements that will help you choose the right metrics for your business.
- Baseline:- this is where you are compared to the metrics you’ve chosen to track.
- Important objectives:- Some of the more important objectives can include but are not limited to brand awareness, traffic generation, more leads in the pipeline, more sales, and even a combination of specific targets.
- Strategy:- One should define which digital marketing activity can help them to best achieve the strategic goals? Some of the major aspects include launching a newsletter, running social media contests or celebrity takeovers, remarketing, PPC etc.
- Channels:- You should clearly define which channels you will be using to implement the strategy. Some of the examples are email marketing, social media, Google and Bing ads etc.
- Time period:- You should also set the goal with a specific time in mind. Ask yourself, how long will it take you to achieve the objectives that you jotted down?
- Forecast:- This forecast is based on how much improvement do you expect to see?
Popular eCommerce KPIs
- Conversion rate:- In order to work out the conversion rate for your online store, divide the number of sales by the number of website visitors, and then multiply it by 100 to get the percentage.Conversion rate= (Total Number of Visitors on the Website / Total Number of Conversions) x 100
- Shopping Cart Conversion Rate (CCR):- This will help you measure the exact number of visitors who complete the checkout process by purchasing the products from your website.CCR = (Total Conversions / Total Number of Visitors) x 100
- Customer Acquisition Cost (CAC):- In order to know how much money you are spending in order to acquire a new customer, use this KPI.CAC = Costs Spent on Acquiring Customers / Number of Customers Acquired
- Revenue Per Click (RPC):- This gives you an average revenue for each click on all of your pay-per-click campaigns. This KPI allocates a value to every paid click your website gets.RPC = Revenue / Total Number of Clicks
- Bounce Rate:- With bounce rate, you can calculate how many visitors leave your website after viewing only one page. Your target should be to keep this number as low as possible.Bounce Rate = Total Number of One-page Visits / Total Number of Entries to a Website
- Email List Growth Rate:- In order to calculate the growth rate of your email list, this KPI is crucial.Email List Growth Rate = [(Total Number of New Subscribers – Total Number of Unsubscribes) / Total Subscribers ] x 100
- Average CTR:- CTR stands for Click Through Rate, which is the total click count divided by the total impression amount. This will tell you how well your title tags or meta descriptions drive traffic to your website.Average CTR = Total Number of Clicks That an Ad Receives / Total Number of Impressions
- Net Promoter Score (NPS):- This KPI is used to give insights into your customer relationships with the information that how likely are customers to recommend your brand to someone in their circle. NPS can be used to distinguish three categories of people:Promoters = respondents giving a 9 or 10 score
Passives = respondents giving a 7 or 8 score
Detractors = respondents giving a 0 to 6 scoreNPS= percentage of promoters – percentage of detractors
- Average Order Value (AOV):- You can also call this as the Average Market Basket, AOV gives you an insight on how much your customers typically spend on one single order.AOV = Total Revenue / Number of orders.
- Shopping Cart Abandonment Rate (CAR):-The abandonment KPI tells you how many visitors are adding products to the shopping cart but are not actually proceeding with the checkout process or purchasing them. The single most important aspect to curb down shopping CAR is to reduce friction in the checkout process.Cart Abandonment Rate = (Total Number of Completed Transactions / Total Number of Shopping Carts) x 100
Once you have been through right eCommerce development services and set your business goals with KPIs, it becomes imperative for you to monitor and update those KPIs on a regular basis. Your eCommerce business should be efficiently data-driven, hence gathering data from all the relevant eCommerce KPIs on a single spreadsheet is important.