Building an e-commerce empire that wows your customers and allows your business to thrive demands precision and insight.
Don’t just navigate blindly; understand your numbers intimately with the right KPI’s.
First off, what the heck is a KPI?
It stands for Key Performance Indicator and they act as your compass, revealing the true health and trajectory of your business.
They are the “key” (no pun intended) to measuring your success. They illuminate how well your business aligns with its goals, providing critical insights for strategic decision-making.
There are an incredible amount of KPI’s you can use but you don’t want to get overwhelmed like I initially did, thinking you must check every metric.
And be careful not to get caught up in “vanity metrics”, such as likes & comments. Having 10,000 likes looks great and they cause social proof to kick in, but they do NOT add any pesos to your bottom line.
Track too many, and you’ll struggle to do anything meaningful with the data.
We will cover 15 extremely powerful KPI’s, and then I will give you my personal non-negotiable TOP 3 KPI’s (if you only use 3 to begin, these are the ones I recommend!)
🔍 Did You Know?
According to Oberlo, “From 2023 to 2027, the largest annual ecommerce sales growth is forecast to take place in 2024, and the smallest in 2027. Experts predict that in this period, total sales will increase by $2.3 trillion. This is an overall rise of 38.9% and marks an average annual growth rate of 8.6%.”
How Should I Choose My KPI’s, I Am Overwhelmed!
Don’t worry, I got your back!
Just know that KPI’s can radically change from niche to niche and it is not a one size fits all decision.
Tailor your KPI selection to your unique goals with this 3 step approach:
1. Define Specific, Actionable Goals
- Increase site visits
- Grow product line or customer base
- Improve customer loyalty
- Expand your email list
- Boost revenue through upsells
2. Identify Relevant KPIs
- Ensure KPIs are measurable, timely, actionable, and relevant.
- Select 3-5 KPIs per goal to avoid data overload.
3. Track and Iterate
- Track progress consistently for optimal results. (personally, I use Google Analytics)
- Utilize tools like Google Data Studio for visual insights.
The Top 13 E-commerce KPIs
Now that you have an idea of how to select your KPI’s, let jump into my list of the Top 15 eCom KPI’s that will allow you to scale to the moon (once you know how to pull the correct levers)!
1. Net Profit
– Calculate overall profitability after expenses.
– Track monthly, quarterly, and yearly to understand the profitability of your business
2. Customer Retention Rate
– Evaluate the percentage of customers that a company retains over a given period of time.
– Track over a quarter, a year, or more and get a good balance between repeat and new customers.
3. Time on Site
– Analyze average time spent on your site.
– Track weekly, monthly, quarterly, and yearly to understand how engaging your content or store is (or is not)
4. ROAS (Return on Ad Spend)
– Assess advertising effectiveness with revenue earned per dollar spent.
– Track weekly, monthly, quarterly, and yearly to understand how effective your advertising is (Neilsen states a good ROAS benchmark is a 4:1 ratio — $4 revenue to $1 in ad spend)
5. Cart Abandonment Rate
– Identify and minimize abandoned carts for increased sales.
– By tracking how many customers abandon cart, you can discover bottleneck issues in your marketing funnels
6. Conversion Rate
– Calculate the percentage of visitors turned customers.
– Observe and refine based on your industry and customer shopping behavior. (Adobe Digital Index 2020 Report Into Consumer Electronics, says that 3% is the average funnel conversion rate in most industries.)
7. Number of Orders
– Gauge total orders for accurate inventory management.
– Monitor monthly, quarterly, or annually. (inventory management can be hard, but is crucial to master on platforms such as Amazon)
8. Traffic Volume
– Measure website traffic to gain valuable insights into your audience & their behavior
– Monitor weekly, monthly, quarterly, and yearly (allowing you to make strategic marketing decisions and to optimize your website and products)
9. Overall Sales
– Monitor product units and gross revenue.
– Analyze sales on a daily, weekly, monthly, quarterly, and annual basis. (determine if your business is scaling or folding)
10. Organic Search Rankings
– Enhance traffic through SEO by tracking your organic search rankings.
– Organic rankings means you do NOT have to pay for your placement (paid traffic is great and allows you to focus efforts on targeted keyword… organic is silently bringing qualified search traffic to you for FREE!)
11. Average Order Value (AOV)
– Measure customer spending per order.
– Track monthly, quarterly, and annually (increasing AOV allows you to grab MORE sales with the same effort by using order bumps, cross-sells or upsells!)
12. Customer Lifetime Value (CLV)
– Calculate the average customer’s long-term value.
– Assess annually for strategic insights. (this important metric tells you what the maximum you can spend to get a customer and STILL stay profitable!… knowing this # allows you to lose money on the front end because you confidently know that over a certain time period you will be up HUGE in profits aka Loss Leader)
13. Customer Acquisition Cost (CAC)
– Determine the cost of acquiring a new customer.
– Tracking this will allow you to see how much each customer costs to obtain so that you can plan your budget perfectly (with the accurateness of a forensic accountant)
Now you know the most important 15 KPI’s that will guide you to success in ecommerce!
However, I understand the brain very well and have been studying human psychology and behavior for the past decade.
Take a goal that has 15 steps… the brain will look at that as “too much” and take fight or flight. Elite goal achievers know that to convince the brain to take action you want to create super small goals.
You want to build a habit of walking daily in nature? First build the habit of consistency.. Simply commit to putting on your walking shoes and taking a 5 minute walk. Your brain won’t fight you on this.
Say you want to create a workout plan. If your plan is to workout for 7 days a week for 3 hours each while eating healthy for the next 6 months your brain will self sabotage and you will be one of the millions that set a New Years goal and quits 2 weeks into the new year.
Your brain will talk you out of anything that is too hard. You must build the discipline to get to that point. Most people can’t just take a huge goal like that and execute; their brain (and the constant internal chatter) will shut that down and you will find yourself scrolling on social media or Netflix instead. Now that’s easy! And it provides me with tons of dopamine (the feel good hormone).
With that bit of golden knowledge, guess what you should do right now?
You should take the list of 15 and select only 3. I don’t know about you, but just thinking of checking 15 metrics every day starting out is stressful… oh, but 3, my mind can handle that. The brain is like, “no cause for concern, this is too easy” and then over time you build the habit.
If you are just starting out and want to pull some meaningful data to drive your eCom site forward…
Here are my Top 3 (short & sweet):
- Conversion Rate: to see how effective your marketing or products are in comparison to how much you have spent (if your traffic is exploding but your bank account is still empty, that IS a major problem)
- Customer Acquisition Cost (CAC): To see at what cost you are obtaining new customers and if it is close to your ideal customer cost (so you can REALLY dial in your budget)
- Cart Abandonment Rate: critical to locate issues within your marketing funnel steps (diagnose the issue and then go back to increasing your conversion rate, which then lowers your CAC)
Conclusion: Optimize, Iterate, Succeed!
Choosing the right KPIs isn’t just about data; it’s about wielding the right tools to shape your e-commerce destiny. Track, iterate, and watch your business soar! 💼✨
Which e-commerce KPIs are steering your ship? Share your insights in the comments below! 👇 #EcommerceSuccess #BusinessOptimization #KPIsMatter