Most Important Ecommerce KPIs To Measure Performance Of Your Ecommerce Business

Every move in this world has been subjected to one or the other form of metrics. This is the only way to know the efficiency or effectiveness of the product or service that has been put under the microscope. 

Without a metric system to measure the performance, there would be no viable product that has withstood the test of time and has evolved what it is today. 

Key performance indicator is one such quantifiable measurement that you use to track growth. Most of us would have heard about KPIs being used in MNCs and other companies to track their and their employees’ graph of progress. 

This not only gives you an insight into the growth curve, but will also help you to understand and predict the future course of the subject’s performance. 

Why just limit the performance indicators to companies and their employees, implementing it online will give a great impact on the productivity and enhancement of the online business world as well. 

In fact when compared to other forms of business and their marketing strategies, online business tends to be far more transparent in terms of behaviour and actions. KPI is what will get to the desired results in the future. 

Just like how you would treat feedback and constructive criticism, make use of the KPIs and shape the future of your eCommerce business the way you envisioned it.

There are multiple types of key performance indicators and can be either qualitative, quantitative, predicting future, or revealing the past. In ecommerce, KPIs generally fall into the below five baskets:

From these how would you choose what’s the best fit for your business?

Not every KIP is important for the growth of your business. 

Then, how and on what basis should you choose the perfect KPIs in order to get your business on the right track to success?

Here they are-

1. Business goals: the answer is in the title. Go with your business plan and goals. See which one suits it the best in the long run. These KPIs should be impacting crucial pointers like income, profit etc. 
2. Realistic KPIs: What works for others need not be the solution for you too. Choose your KPIs based on your business need not on the trend it is stating in the market.
3. Measurable KPI: Your KPIs should be simple to calculate so that everyone will be privy to the progress the business is making.
4. Keep it short and sweet: You don’t need to have a hoard of KPIs tracking your progress. Choose what’s needed and keep it simple. 
5. Stage your business is in: There need not be one KPI for the whole of your business cycle. You need to keep updating your KPIs to be in sync with what stage your business is in. Eg: start-up, maturity, renewal or declining phase.

Now that you have some knowledge on what KPIs are and how to choose them let’s get to the heart of this article. 

Most Important Ecommerce KPIs

Here is a list of the top ecommerce KPIs that are used to measure the performance of your eCommerce business. 

These have been classified under their respective area of jurisdiction.

A. Customer service:

1.Customer satisfaction (CSAT) score: 

The baseline of every successful business is customer satisfaction. Hence this score is what will either make you or break you. 

This is typically a feedback style metrics. Given your’s is an eCommerce business this factor matters more than ever. 

It is usually the question that is put across to the customer with a rating system to numerically depict their satisfaction. 

This factor not only affects your customer rating, but will also help improve the conversion rate and even reduce the cart abandonment rate.

2. Customer services count: 

There are many ways in which you can provide valuable services to your customers. Phone calls, electronic mails, and chat windows are the few basic ways to provide timely services. 

And hence, the number or frequency of calls or the mails or messages your website receives forms another main KPI inorder to measure your progress. 

3. Response time: 

More than you receiving mails and calls from the customers, your response time makes a lot of difference for customer satisfaction. 

Response time is inversely proportional to customer satisfaction. Along with this lower the response time, higher the conversion rate too. 

B. Project management:

1.Return on investment: 

This is one of the most chosen KPI by any ecommerce owner. A positive ROI means that you are profiting from your business. 

And then you can always put it back into your business and grow it in folds. There are different types of returns as well. 

You can measure your returns on the investments you made on advertising, marketing, influencers etc. 

2. Budget:

This KPI basically indicates how much you have invested in a particular project. This is a very tricky decision to make. 

There are all the chances of allocating either excessively or insufficiently. However, you can always adjust your budget on the go to fit into your goal.

3. Cost performance index:

Dividing the value you have earned versus the actual costs lands you your CPI. This basically calculates the amount of work completed for every unit of spend. 

By keeping a keen eye on this index you can still make amends to your processes and get right back on track if you ever miss your spot.

C. Manufacturing: 

1.Yield: 

This index means exactly what the name tag refers to. This indicates the count of products you manufacture. 

This can be studied based on multiple factors like time, money invested etc. This is one of the most important indices as these numbers are what will tell you if you are on track to your goal number or you are going off track. 

Hence you need to always keep a really close watch on this factor. Else you might be too late to recover from your derailed path to the set yield rate.

2. Overall effectiveness: 

As an eCommerce business you can calculate two kinds of effectiveness. They are-

• Overall equipment effectiveness: This KPI helps paint a picture of how well your manufacturing equipments are performing.

• Overall labor effectiveness: This KPI is all about marking your manpower. This helps you get a picture of how effective your staff is with the manufacturing equipments.

Through these KPIs, you will be able to judge your manufacturing efficiency and take the required decisions and keep everything under control.

3. Product cycle time: 

The time required to manufacture a single product from start to finish is what a cycle time calculates. If this time is off then this will have a domino effect on every other aspect of your production, sales and marketing. 

This KPI alone is enough for you to get an insight on the whole production efficiency. So, this is another indicator that you need to keep close to.

D. Sales:

1.Order size: 

This indicator indicates an average number of how much a customer spends per order. 

This is also known by the term average market basket too. You can get this by just dividing your business’s total earnings by the total number of orders. This KPI tells you your product’s value in the market. 

This will also give you an overall view on how your marketing and pricing strategies are working. 

If you want to see a drastic increase in your order value, first divide customers into categories based on their choice of products, spending capacity, average shopping frequency and others. 

You can also improve your order size by providing discounts, free shipping, upselling, cross-selling, adding coupons etc.

2. Conversion rate: 

This is what your whole depends on. It’s not just the number of people who are visiting your eCommerce website that matters, the number of visitors who get converted to customers is what you need for a successful business.  

The average conversion rate in the industry is about 2.35% but we can also see a rate of 5% and more from the top tier eCommerce giants. 

You can calculate the conversion rate by dividing the total number of visitors by the total number of conversions. 

3. Shopping cart abandonment rate:

 This is an indicator that you should look out for. Higher the cart abandonment rate, lower is your sales rate. 

In simple words, this KPI indicates how many people come up until the payment step and then exit your website without. Apparently, the average rate in the industry is about 74%. 

There might be multiple reasons for abandonment like – high shipping costs, complicated checkout processes, restricted payment methods, requisition of registration and subscription etc. 

Though this might seem like a small problem, but billions are being lost due to this very issue. 

So, monitor this indicator closely and fix your issue(if any) as soon as possible, else this tiny issue will cost you big.

E. Marketing:

1.Bounce rate: 

By definition, this is the rate at which your customers leave your website without even proceeding to other pages. For you to be a good eCommerce website your bounce rate should be under 40%. 

However, if you are able to achieve anything between 40% and 55% still fine. But, if it is 55-65% there needs to be some improvement. 

If your bounce rate is above 90% or below 20%, then this means you need to uproot your whole website or there is a bug in your tracking or coding process itself. 

Bounce rate is extremely crucial for a good conversion rate, as it is not simply said – first impression is the best impression!

2. New v/s revisiting customers: 

This KPI gives you a comparison between customer retention and new conversion numbers. 

An increase in the revisiting customer base means creating a loyal base and this could also help in a way of marketing through word of mouth or feedback, reviews and ratings. 

It is not only important to focus on investing in acquiring new customers but customer loyalty also plays a major role in increase in sales numbers and hence a successful business establishment.

3. Number of clicks:

One of the prominent indicators of pay per click marketing strategy. Called as the click through rate, this particular KPI need not be restricted only to your main website, the click on your social media page like facebook and twitter and even promotional emails also count. 

It is calculated by dividing the number of clicks in a given period of time by total impressions. High CTR means that your audience thinks that your advertisements and promotions are relevant and useful. 

This will definitely lead to new customers and gradually a conversion. Through this indicator you have a hold on the efficiency of your ads, keywords and other listings. Hence, this is one way to improve your marketing strategies.

Final Talk

The list is not restricted to only the above, there are multiple others that can be included to monitor the growth of your business. 

Always keep these indicators in mind before you take any business related moves. With your goal set and your KPIs chosen it should now form a part of your BAU to check your progress and account it in every decision you make henceforth. 

So, don’t rush into anything without having all your bases covered and you have a convincing amount of facts with you. 

KPIs, when used effectively, have the capacity to turn your whole business around if monitored regularly and take the right steps.

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