A KPI — key performance indicator — is just a measure of some procedure, event, or activity. A good example is checkout abandonment, when shoppers depart before completing an order. This KPI should be monitored closely by all ecommerce companies. If it’s typically 10 percent and goes to 15 percent, which might be an indicator that something is broken on your own site, such as your SSL, your shipping estimator, or your credit card authorization. By tracking that KPI daily, you’ll mitigate the risk of losing business if something breaks.
KPIs differ among companies. By way of instance, large corporations track the time between orders and final payment, trying to reduce this cycle. For an ecommerce company, checkout abandonment is an important KPI and decreasing that percent generally contributes to higher revenue.
For tactical and operational planning, KPIs can also be used for SMART goals — Specific, Measurable, Achievable, Realistic, Time-bound. For instance, you might choose to set a goal to enhance your checkout abandonment from 10 to 7 per cent in six months. Or, you might choose to set customer service aims to decrease the average number of available cases from 10 to 5 in 3 months.
All companies should regularly monitor their earnings, cash position, receivables, payables, and basic accounting reports. In case you have an inventory and higher-end accounting system, you may even track your cost-of-goods offered and gross-profit margins every day. Beyond this, you should track pay-per-click advertising functionality, social networking metrics, email advertising results, and market sales (like Amazon, eBay) to identify areas of improvement. Just about any measurement can become a KPI provided that you have a method of capturing the information in a quick and consistent method.
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21 KPIs for Ecommerce
Baseline KPIs should always be tracked, and acted on if they deviate from their normal variety. KPIs used for goal setting may change, as can the target assortment of those KPIs.
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In my experience, the essential KPIs that ecommerce merchants should track are as follows.
- Unique visitors
- Total visits
- Page views
- New traffic
- New clients
- Total orders per day, week, month
- Time on site per trip
- Page views per trip
- Checkout abandonment
- Cart abandonment
- spin speed
- Gross margin
- Customer support open instances
- Pay-per-click cost per purchase
- Pay-per-click total conversions
- Average order value
- Facebook”talking about this” and new Likes
- Twitter retweets and new followers
- Amazon evaluations, response and order turnaround time, and open cases
- Email available, click, and conversion rates
- Referral sources: percentage from search, direct, email, pay-per-click, additional
Your company might have more than that if you outsource fulfillment, have a higher proportion of call-in orders, etc.
What is a Normal KPI?
You might be wondering what the normal range is for these kinds of KPIs. Generally speaking, there’s absolutely no answer, as every company is different. Develop your baseline over time and be conscious of your normal operating ranges.
As soon as you’ve established your regular ranges, you can start to use KPIs to establish objectives and measure improvement. Most likely you already do this with PPC advertising — with goals for click throughs, cost per acquisition, and cost per click. Maybe you set goals regularly to enhance those metrics. You can do the exact same thing with all the KPIs listed above.
Make Tracking Easy
If you do not have a dashboard that’s capable of displaying most of your KPIs — this generally takes a higher-end, highly integrated system — pull KPIs from all of your different monitoring tools and dashboards to a spreadsheet on a weekly or monthly basis. This will offer you a snapshot of your historic performance that identifies seasonal tendencies and necessary troubleshooting if KPIs deviate from their normal ranges.
Monitoring Peaks and Valleys
KPIs are also useful to look at your typical cycles. In a simplified example, if you suddenly get a bulge of new clients and do not really understand why, you might want to check at your social networking activity or referral KPIs to identify new traffic sources. Maybe your”speaking about you” KPI at Facebook is high due to a new product somebody is speaking up. Likewise, if your gross profits are suddenly much reduced, it might be because your cost of goods sold has increased or because more clients are taking advantage of free shipping. In short, use your dashboards or some other tools you can to track your KPIs on a daily basis if possible.
Seasoned ecommerce supervisors can often predict revenue depending on the amount of visitors, checkout abandonment, cart abandonment, and other elements. What’s more, they can flag problems instantly.
Use your KPIs for setting SMART goals for your company improvement. KPIs can be identified for nearly every operational area — from sending to visitors to conversions. Work with your staff to identify areas for improvement, select your baseline KPI, and set a goal for improvement in a certain timeframe. Then you’ve got a measurable aim.