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Everything You Need to Know About Key Performance Indicators for E-commerce


Increasing sales and revenue is a priority for e-commerce stores. However, merely focusing on the numbers would not be sufficient to determine whether your website is garnering the attention of your customers and showing substantial growth. You will also need to track the e-commerce metrics and key performance indicators to boost your revenue. For instance, determining data related to the top customers, the referring site through which they reached your store and their history would help in providing them with better customer experience.

Key Performance Indicators (KPIs) can be thought of as data points that provide accurate data insights related to a specific business operation. These can be qualitative, quantitative, or predictive in nature depending on the business requirement.

KPIs are needed to measure the progress of the e-commerce store as they provide detailed information about your business and customers. You can use KPIs to make strategic decisions to drive more sales as well as get an insight into the problems that you might be facing in your business. Another advantage of using the KPIs is that the data related to the same can be distributed to the respective team members so as to educate them on solving critical business problems.

There are a few things that you need to keep in mind while deciding the key performance indicators for your business:

Baseline: The metrics that you have chosen to track from the initial stages.

Objective: Objectives such as traffic generation, sales, brand awareness need to be considered to achieve specific targets.

Strategy: Digital marketing activities such as remarketing, PPC, newsletter that would work best for achieving your business goals.

Channels: Channels such as social media, Google ads, etc., that you wish to use for implementing your strategy.

Duration: Time required to achieve your set business goals.

Growth forecast: Growth that you are expecting for your company over time.

The KPIs related to e-commerce are divided into categories such as sales, manufacturing, marketing, customer service, and project management. Here are some of the key performance indicators belonging to these categories that are crucial for any e-commerce business:

Conversion rate: The conversion rate is the rate at which users are converting on your e-commerce website. This is determined by dividing the total number of visitors on the website by the total number of conversions.

Cart abandonment rate: The shopping cart abandonment rate determines the number of users who are adding products in their cart but not buying them. High cart abandonment rate would mean that there is a glitch in the checkout process. It would be best that this rate stays low over time.

Customer lifetime value (CLV): The CLV tells you the worth of a specific customer for your business. This would help in strengthening the brand’s association with a customer.

Churn rate: This KPI tells you the rate at which the customers are leaving your brand or canceling the subscription to your brand.

Bounce Rate: The bounce rate determines the number of users who exited from your website right after viewing one page. If this number is high, you’ll want to investigate why visitors are leaving your site instead of exploring.

Average Order Value: It tells you the average value of an e-commerce transaction on your store. Higher AOV would mean that more income would be generated on each order.

The choice of KPIs entirely depends on the end goals of your website and what you aim to achieve over time. However, there are times when companies commit errors while implementing KPIs. Here are some of the most common mistakes that businesses make when it comes to KPIs:

Not aligning the KPIs with the business strategy

KPIs are useful when they are aligned with your business strategy and help in ensuring that the strategic decisions that are taken show exponential growth over time. In case, the KPIs are not linked with your business strategy, you might be wasting a substantial amount of time and money which might negatively affect your business.

Measuring everything even when it is irrelevant

It is not necessary that everything related to your e-commerce business should be measured. However, most of the companies tend to use KPIs to measure everything that holds no relevance to the business which is probably one of the biggest mistakes they are committing.  Make sure that you choose only those indicators that meet your site’s objective accurately.

Compiling the strategic KPIs

Businesses that deal in real-time analytics receive huge amounts of data related to sales, customers, finance, and so forth. However, it is often seen that all the KPIs are compiled together in one big report or a dashboard which becomes hard to understand. As a result, the KPIs that could help in providing an informed decision get mixed up with irrelevant information.

Not updating your KPIs

After the right set of KPIs is identified, they are left untouched even when they might not be relevant in the present strategy. It is necessary that you collect the right data and use it as well to improve the business performance which is why it is necessary to review and update the KPIs and make sure that they remain relevant with the current business strategy.

After realizing the importance of using KPIs in real-time analytics,  we can conclude that a set of KPIs that is designed according to the business requirements should be able to help teams in making informed decisions and improving the business performance.



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