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If you work in ecommerce, you’ve probably heard of KPIs before. What are the most important ecommerce KPIs to know? Answering this question is important for anyone involved in ecommerce or a regular business owner.

However, picking the right KPIs to track your store’s performance can be difficult if you don’t know where to start. Once you have the right ecommerce KPIs selected, you’ll be able to make data-driven decisions that improve your ecommerce presence and improve your return on investment.

In this article, we’ll look at the 11 most important KPIs for ecommerce and how you can leverage them for your ecommerce business.

What Are Ecommerce KPIs?

KPIs (short for key performance indicators) are one of the major metrics used by businesses to measure how well their online operations are performing. Think of KPIs as a way to look under the hood of your company and see how different aspects are performing, which can give you insight into your goals and objectives.

The most common KPIs in ecommerce usually measure website traffic, conversion rate, customer satisfaction, average order value, and customer loyalty. Measuring these trends and monitoring them over time enables a business to adjust its business strategies and improve the overall health of the business.

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What Are Some Typical KPIs That An Online Retailer Might Use?

Businesses tend to use different types of KPIs depending on their industry, goals, and market. However, when it comes to ecommerce, there are some universally important KPIs.

For example, site traffic, conversion rate, and customer satisfaction top the list. Now that you know more about KPIs and their purpose, let's jump into the 11 ecommerce KPIs you need to track for a successful sales strategy.

Top Ecommerce KPIs

First, we’ll start with the best ecommerce KPIs. These KPIs are the most critical and are what every online business and retailer should include when trying to gain insights into their everyday operations.

  1. Average order value: This is the average amount a customer spends on goods you sell. Lower average order values may be an indicator that your goods are too expensive or that you are only selling low-value goods.
  2. Bounce rate: The average number of visitors who leave your website after looking at only one page. (Usually your landing page.) High bounce rates are usually correlated with clunky websites that aren’t user-friendly or that your website was not what site visitors were looking for.
  3. Cart abandonment rate: The shopping cart abandonment rate is a huge one for ecommerce. A number of customers come to websites and never end up buying things. Tracking when customers place items in their shopping carts and at what stage they fail to complete the checkout process will help you determine the best way to turn abandonments into sales and identify opportunities to upsell and cross-sell. 
  4. Conversion rate: Conversion rates are one of the most important metrics for ecommerce websites and customer data. Conversion rates are often used to measure whether or not a customer purchases after viewing an item or placing it in their cart. However, they can also be used for any action on the website, like signing up for a newsletter. A low number of conversions can indicate your website is not user-friendly, that the item was too expensive, and many other things depending on the situation.
  5. Cost per acquisition (CPA): How much money you spend to get new customers. Higher customer acquisition costs are associated with lagging digital marketing efforts and too-expensive items.
  6. Customer lifetime value (CLV): This is the total amount of money that your customer is anticipated to spend on your website over the course of their lifetime. This is an indicator of how loyal customers are to your website and whether or not they’ll make purchases in the future.
  7. Repeat purchase rate: This metric is related to conversion rates, as it’s the percentage of customers who make a second, or repeat, purchase on your site. Higher repeat purchase rates indicate that customers value your products and will continue to return.

Financial KPIs For Ecommerce

Next, we’ll turn to Financial KPIs. If you’re familiar with accounting, then many of these KPIs will sound familiar to you. These KPIs are often used as general business metrics when managers analyze their accounting records and balance sheets.

  1. Churn rate: Churn rate measures the opposite effect of the repeat purchase rate. It measures the percentage of customers who, within a given period of time, don’t order anything from you or cancel your service. Think of it as a way to measure how many customers you lose over time. Churn rates can be a great benchmark of how sustainable your business is in the long run and can also be used for estimating cash flow.
  2. COGS (Cost of goods sold): COGS is used to measure the direct costs associated with selling your product. This is usually fixed and variable costs (i.e., ecommerce software costs, materials, labor, etc.). As COGS increases, more of your profit margin gets eaten up.
  3. Gross margin: Gross margin tells you the difference between the total revenue made from sales and COGS. Gross margin is a way to measure your profitability.
  4. Net income: Net income tells you how profitable your business is.
  5. Operating expenses: These are the total costs associated with running your business. Operating expenses include everything from marketing, wages, rental costs for your website, checking account fees, and even the cost of the product. If you're struggling here as a newer business, try no- or low-cost solutions for certain needs: free inventory management software, for example. 

Other Significant KPIs For Ecommerce

These KPIs don’t fit into the previous category but are still significant for ecommerce and general business practices. We felt they were still essential, so let’s take a look:

  1. Customer satisfaction: Customer satisfaction is how you measure how satisfied your customers are. This can include order satisfaction, service satisfaction, etc. In any case, it’s up to you to decide which parts of customer satisfaction you’d like to track. This type of feedback is essential because it gives you a direct insight into customer responses.
  2. Traffic sources: Tracking your traffic source may end up being more qualitative than quantitative, but you can still track the amount of traffic from any given source. Understanding traffic can help you and your marketing gurus figure out where you need to direct your resources to better gain new customers.

An important caveat to remember when analyzing KPI trends is that each metric should not be the end of your analysis and that ecommerce metrics should be considered in conjunction with others.

For example, analyzing your bounce rate might suggest that your products aren’t quite what customers are looking for. However, depending on the timing of when customers leave your website, it may be indicative of other problems with your ecommerce site, like UX/UI optimization, pricing, customer experience, SEO, payment processing issues, etc.

Remember, always analyze your KPI metrics in conjunction with others to build a fuller picture.

KPIs Are The Measure Of Your Success

KPIs are key to your success in the ecommerce world. They can help you identify trends and help give your business goals more direction. KPIs give you an inside look into your business and important metrics, so utilizing them is key. Remember, the KPIs you pick to measure will depend on your business and what metrics are most significant to your ecommerce store’s bottom line.

When working in ecommerce, measuring website visitors, conversions, number of sales, average order value, and gross profit are among the most important. Once you get started, you’ll become a KPI master in no time.

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By Magnus Eriksen

Magnus Eriksen is a copywriter and ecommerce SEO specialist with a degree in Marketing and Brand Management. Before embarking on his copywriting career, he was a content writer for digital marketing agencies such as Synlighet AS and Omega Media, where he mastered on-page and technical SEO.