Key performance indicators form an important element required to determine and explain how a company progresses towards its business and marketing goals. The most important thing in choosing the right KPIs for your e-commerce business is tailoring it to the stage in which your business is. The most common mistake businesses tend to make is tracking too much at once (no focus). There’s this thing about KPIs, and it’s right there in the name - KEY.
As with most things, it’s quality, not quantity. Center around a few metrics that correlate to the main areas you are looking to succeed in. As your business develops, you will naturally come to understand your main KPIs better and better. Here are some ideas for whatever stage you currently are at.
New Store: Understand User Engagement
If you’re a brand new shop, your most important objective is to get as many eyeballs to your store as possible, and understand what drives them to make the purchase. So your KPIs should be focused around acquisition (building the audience). Understand the structure of your visitors, investigate which campaigns produce leads, and what the conversion rates ends up being. Build you audience and evolve based on whether what you have to offer is what people actually want.
Key Metric: Amount of New Customers!
Auxiliary metrics: Bounce rate & high exit pages/products Visits to purchase (How many times did your customer have to return to your website before finally purchasing?) Purchases by referral
Growing Store: Understand User Retention
At this point in your company, this stage should be about keeping users repeat your business over and over. Now you need to grow, and increase revenue as much as you can. Don’t sweat over the small stuff just yet - follow the 80–20 rule. This idea states that 80 percent of your sales should come from 20 percent of your clients. Focus mostly on those 20 percent. You’ve learned how you need to optimize, now you need to grow!
Key Metric: Revenue!
Auxiliary metrics: Average order value Customer acquisition cost - CAC (How much did you spend in marketing dollars acquiring each single customer - that is having a visitor place an order? Bonus: Track CAC on individual paid campaign level) Pareto analysis: How much revenue do the top 20% of your customers contribute?
Mature Store: Optimize Revenue Per User
You can consider yourself a mature store once you’re confident you deeply understand what your customers want, and once you’ve been able to explore major growth channels. You’ve moved all the big stones out of the way - so it’s time to try to maximize revenue per customer. In this phase, the key is to not only keep your users loyal, your goal is to go about turning them into an army. You want them so excited about your product that they are volunteering your recommendation through word of mouth and on their social media channels.
Key Metric: Average Revenue Per User
Auxiliary metrics: Number of abandoned shopping cart sessions (What is the average value of items lying in checkout carts? What is the total value?) Customer Lifetime Value (Extremely important in calculating the amount of money you can spend acquiring a customer.) Conversion rate by cohorts (Understand how your users behave month by month - do they tend to order more 6 months into finding about you?)
Finally, it’s probably worth mentioning that all these metrics can be tracked with Google Analytics but there are a host of other tools online to help you get your main priorities in order.