Tracking key performance indicators for eCommerce is a daily job. The best way to track them efficiently is to use specific eCommerce metrics to help you get an instant and accurate picture. This article will cover the top five eCommerce KPIs, why they're important, and how to use them to enhance your eCommerce site.
No matter which eCommerce platform you're using, they all have reporting tools built into them. However, not all metrics can be found there. You will need multiple channels connected to get an accurate picture. That is what the KPI dashboard is for.
Dashboard example: here, you can see all eCommerce KPIs that determine performance. It's a single-view board: you don't need to log in anywhere else or consolidate data manually. It's a quick look at the situation from all data points that translate into immediate action.
If you want to build an eCommerce dashboard yourself, here are some design tips to follow.
We will cover the best eCommerce KPIs to use for evaluating your eCommerce store. Before that, you need to keep in mind that every one of these metrics can be set as a goal.
Now, what does that mean? It means that you need to set benchmarks for each numerical KPI. If that KPI meets the benchmark, you can continue as is. If that KPI drops below the benchmark - you need to take action.
For example, your average order value benchmark is $500. Your dashboard shows that over time, this metric fluctuated between $520 to $595. That is good. It meets your benchmark, and you can consider raising it for the next period. However, after a week, you see that the trend is downwards, and now your AOV is between $505 and $475. This means something has changed in your online store or marketing channels and needs to be addressed.
Let's go through the top eCommerce metrics that give you an accurate picture of the health of your eCommerce business.
This is the typical amount of money a customer spends on your eCommerce website. It can be applied to the whole store, or you can look at AOV for each category or product group if they have different characteristics.
The average value of the order can help forecast your total revenue. If it's stable, you will get a pretty good picture of your earnings. It also indicates how your eCommerce store performs in terms of offers and if your customers see the value of your products.
The best way to raise average order value is to offer customers rewards for spending more. Here are a couple of ways to do this:
This metric shows the percentage of customers who added items to the cart but did not checkout.
Around 88% of shopping carts are abandoned on average throughout the eCommerce industry. This means that only about 12% of your customer product picks translate into actual sales.
This metric shows that there may be problems with your eCommerce store. The most common issue is the checkout process: it can be too complicated or lengthy. Another common issue is related to the before-mentioned AOV. If customers see that they don't get free shipping or it doesn't satisfy other values, it can lead to a high abandonment rate.
Your first order of business is to streamline the checkout process. Here are a few good practices to turn users into repeat customers:
Conversion rate is the number of visitor purchases vs the total number of visitors on your web store.
Conversion rate showcases how successfully your page can sell to customers that land on it. CR metric can be used on the entire website, or on category pages and even individual product pages. This is especially important if you're running separate marketing campaigns for different categories or types of products.
CR shows issues that customers encounter while having the opportunity to purchase but don't go through with it. It also indicates if you're attracting the right crowd: i.e. your marketing campaigns bring the right customers.
Otherwise also known as Cost per Acquisition (CPA). This metric includes all the expenses that bring you a paying customer. It includes advertising costs, shipping costs, site maintenance, salaries, warehousing, etc. Needless to say, CPA shouldn't exceed your AOV.
You get an immediate picture of the ROI of each purchase. It's the quickest way to determine if your eCommerce business will make the revenue targets and turn a profit.
A high CAC most often reveals inefficiencies in marketing channels. Broken down by campaign, it shows where your customers are most likely to come from and determines your strongest and weakest acquisition channels. Additionally, it can indicate inefficiencies in your sales process: product pricing vs cost, shipping, warehousing and other processes.
Customer lifetime value is defined as the total business value over the total period of the customer purchasing from you.
The fact is, getting an existing customer to spend again is cheaper than acquiring new ones to try your product for the first time. 65% of purchases in the eCommerce business come from existing customers.
Low customer lifetime value shows issues with customer retention rate (another eCommerce metric you should consider). This means there are reasons your customers don't stay with you: they can find better deals with your competition, they don't see the value for repeat purchases, they're unhappy with the customer service and so on. If your CLV is low and your CAC is high, it means you really need to work on customer loyalty.
We have a lot of complex eCommerce metrics here. They all intertwine and are related to one another. The most accessible platform to monitor them all in one place is Whatagraph. It's as simple as connecting all the sources:
Dashboard example: Here is an example of an eCommerce dashboard with Shopify and Google Analytics channel integrations. Here you can see more retrospective data: sales, revenue, trends over time, user information and others.
If you feel that's too big - start with the Google Suite. It will give you an excellent start to understand where your website traffic is coming from and monitor basic eCommerce sales metrics.
Published on Nov 25, 2021
WRITTEN BYIndrė Jankutė-Carmaciu
Indrė is a copywriter with an undulating passion for reading and finding gems of information. Indrė writes according to a simple motto: a picture is worth a thousand words, but somebody had to write that phrase down for us to read it.
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