staple of stones

An ecommerce store owner needs a solid foundation of data to better understand and manage his or her business. However, while data is important, most vital is getting the right data. With so much information available via analytics systems, it is easy to get buried under an avalanche of reports without gleaning much insight. But there is an easier way to pick the insights that are most useful to you – also known as KPIs.

Key Performance Indicators (KPIs) are measurements that reflect the performance and progress of a business. A benefit to running an online store is the ability to effectively measure KPIs and use them to optimize your business. Only a few key insights are needed to truly measure your business performance. So how does one pick the KPIs that fit your store needs?

Define Your Business Objectives First

Before you can improve your business, you have to define what success looks like for your business, and then pick KPIs based on those initiatives. In other words, you do not want too many KPIs at first; less will be more useful in the long run, usually around four to ten. Here are some examples of goals businesses might set, and the associated KPIs:

GOAL 1: Boost sales in the next quarter.
KPIs include daily sales, conversion rate, and site traffic.

GOAL 2: Increase conversion rate 3% in the next year.
KPIs include conversion rate, competitive price trends, shopping cart abandonment rate, and associated shipping rate trends.

GOAL 3: Grow site traffic 20% in the next year.
KPIs include bounce rates, site traffic, promotional click-through rates, social shares, and traffic sources.

GOAL 4: Reduce customer service calls by half in the next 6 months.
KPIs include service call satisfaction, event that led to the call, and identify the page visited immediately before the call.

As discussed above, all the KPIs involved circle back to the original business goal: the goal came first, and what you needed to meet that goal (KPIs) came second.

A few additional points:

KPIs Differ Between Industries and Business Models

Your KPIs will be seriously influenced by the industry you are in, as well as the business model. For example, the metrics needed for a B2B software company to work on customer acquisition are different than an ecommerce clothing store working on conversion rates.

Always Be Segmenting

The best thing you can do is segment your data as much as possible; for example, you can segment conversion rates by PPC, email, blog content, etc. Never focus on averages; the results will be skewed.

Focus on a Few

The beauty of inbound marketing means you can potentially measure just about everything on your site; stop! When it comes to KPIs, less is more. In general, your business will probably be served best working with 4 to 10 metrics.

The Bad KPIs for Ecommerce

Some readily available metrics are bad key performance indicators. A few examples: number of visits, page views, emails sent, Twitter followers, Facebook fans, time on site, bounce rate, and revenue.

You should monitor these data points, but do not use them to measure your success. For one, there is very little that can be learned from these that impact the bottom line; second, more does not always mean success; and third, anyone that takes these actions comes from the top of the funnel, and they are not your end goal. Always choose your KPIs with the end goal in mind.

Good KPIs for an Ecommerce Site

This is not a catch all list, but some helpful ideas to get you started.

1.Site Traffic:
Measure your traffic for daily, weekly, and monthly visits, so you can analyze when there is a dip or spike. Set a goal for average weekly visitors, and frame marketing efforts accordingly.

2. Product Page Views:
Understanding which product pages get the most and least attention from your customers is instrumental in figuring out their preferences and how they interact with your site.

3. Exit Pages:
When are your customers leaving your site? Optimize those pages to keep customers shopping – whether that means adjusting shipping costs or not requiring an account to purchase.

4. Referral Sources:
How did your customers get on your site? Invest more in the sources of traffic working for you; remember to include bounce rates when deciding on those metrics.

5. Average Page Views and Time on Site:
This tells you if your site is engaging and if traffic is targeted. If low, you might reconsider campaigns and keywords. Also, check your loading speed.

6. Return Rate:
Analyze new versus returning visitors. Are you keeping customers coming back? Evaluate customer service efforts and maintaining relationships with customers.

And a few additional “good” KPIs include:

  • Conversion Rate
  • Cart Abandonment
  • Average Order Value
  • Net Profit