Setting key performance indicators (KPIs) for your ecommerce store is not a haphazard practice. It requires forethought and a solid understanding of your business plan. It also necessitates making some thoughtful choices. As Search Engine Journal advises, each company should really primarily track between four and 10 KPIs, otherwise the process gets too convoluted.
The trick is making sure that KPIs tie in closely with your specific organizational goals. Your priorities may lay anywhere from boosting conversion rate to driving more traffic, improving customer service, increasing customer loyalty and many more.
In addition to clearly defined KPIs, you’ll need a way to measure them over time. This is the realm of data analytics for ecommerce analytics platforms. With the right business intelligence tools, employees and partners will be able to query data to assess performance, identify trends and discover inefficiencies. Armed with this knowledge, business users can make data-driven decisions to further refine operations and KPIs.
Here are four KPIs ecommerce retailers should at least consider tracking.
Of course, conversion rate is a huge indicator of your website’s effectiveness and your store’s overall success. The 2017 E-Commerce Benchmark KPI Study found that ecommerce websites average a 1.6 percent conversion rate. Multichannel retailers had a slightly lower percentage; online-only stores had a slightly higher rate.
While conversion rate isn’t everything, this KPI can help you determine where you stack up against the competition. If your rate is consistently lower, you may need to tweak your website or product lineup. If it’s significantly higher, figure out what customers love about your store—or figure out if your pricing is actually too lenient.
Conversion Rate by Segment
Conversion rate is a broad KPI; it’s important to break it down further so you can tell who’s buying and who isn’t. For example, iPhone users might be converting at much higher rates than Android users. If this is the case, you may need to re-examine your mobile browser or app for Android mobile devices. It’s also worthwhile to investigate the source of your conversions, as you may need to tweak your marketing budget accordingly. The same principle applies for various social media platforms.
The more granular you can get your segmented conversion KPIs, the better understanding you’ll have of where to allocate your resources.
Shopping Cart Abandonment Rate
Having items in a shopper’s cart doesn’t mean you have the sale in the bag. Over half of people will abandon a shopping cart because they’re just looking around, comparing prices and doing research. But high shopping cart abandonment rates can also help you identify problem spots in your sales funnel. When Baymard Institute averaged 37 studies on cart abandonment rates, they found the average rate to be around 69.23 percent.
This rate serves as a solid benchmark against which your ecommerce store can compare. But it’s also important to track your own shopping cart abandonment over time separately from industry averages—a practice that is especially important after you make any changes to your website. Be sure to consider desktop, mobile browser and mobile app rates for this KPI.
Customer Lifetime Value
The only way for ecommerce companies to assess the return on investment of marketing campaigns is to understand customer acquisition cost (CAC) vs. customer lifetime value (CLV). After all, it’s impossible to determine the worthwhileness of paying X amount to acquire a customer without having context for how much value the relationship could produce over time.
This metric is also helpful in evaluating customer loyalty over time. A low CLV indicates that buyers are dropping out of the funnel after their initial purchase. A high CLV is the culmination of effective branding and loyalty perks.
These four ecommerce KPIs will help you get started on your data-driven journey.