Key eCommerce KPIs for Your Marketing Dashboard!

Selecting appropriate eCommerce KPIs (Key Performance Indicators) presents a complicated decision, as these choices are deeply dependent on the distinct strategies and objectives of each business. With the immense volume of data at the disposal of contemporary enterprises, it becomes too easy to miss out on vital insights.

It’s not feasible to track every bit of data, emphasizing the importance of sifting through to highlight the most pertinent information for consistent reporting.

There’s no one-size-fits-all solution, but there are several crucial metrics and eCommerce KPI benchmarks that have demonstrated their value for a broad spectrum of online businesses. This signifies the crucial data that is needed.

What are eCommerce KPIs?

eCommerce KPIs are essential metrics that help businesses identify the root causes of their successes and failures. By setting eCommerce KPI benchmarks, businesses can evaluate their performance against industry standards and their competitors.

In 2022, an overwhelming amount of data related to KPIs, including demographics, devices, browsers, keywords, goal values, conversion rates, bounce rates, exit rates, acquisition behaviors, and time, among others, presented a challenge to marketers.

However, tools such as Google Analytics and Amazon Seller Central offer businesses the necessary data to make informed decisions. Despite this, without the implementation of effective eCommerce KPIs, turning this data into quantifiable targets that delineate success proves difficult.

Why are KPIs for eCommerce important?

eCommerce KPIs are invaluable for making informed decisions about revenue marketing strategies, customer experience, and other critical areas. They play a crucial role in identifying successful strategies and highlighting those that need improvement.

These indicators not only reveal areas needing attention but also provide insights into possible solutions for existing problems. They assist brands in implementing necessary changes to grow their customer base and increase revenue.

Without such eCommerce performance metrics, decisions would often be made based on intuition or subjective opinions, which can be less dependable. Employing data-driven approaches for decision-making is a more effective strategy for ensuring the success of a business and is likely to meet the expectations of senior stakeholders, shareholders, and lenders.

What is KPI Tracking?

Understanding the primary key performance indicators (KPIs) is essential for achievement. eCommerce KPI Dashboards provide measurable metrics that present a transparent overview of a brand’s health and performance.

They assist in observing different aspects, including click-through rates, conversion rates, basket sizes, or user interactions. Such metrics are crucial in directing brands to make informed decisions, leading to increased revenue and market share.

How to choose which eCommerce KPIs to measure?

Firstly, it’s essential to select eCommerce KPIs crucial for the success of an eCommerce store. This involves clearly stating the highest priority business goals. With these goals in focus, working backwards from the desired endpoint helps determine which eCommerce metrics are most relevant for achieving this.

Examples of top eCommerce KPIs to track

These metrics provide important insights indicative of the success levels of eCommerce businesses at different stages of online development.

Aligning these KPIs with business objectives is crucial, as it aids in pinpointing which metrics are valuable to track.

1. Conversion Rates

Conversion rates serve as crucial eCommerce KPI, measuring the proportion of a target market that engages in desired actions, including clicks on social media links, interactions with Google search results, or various conversions on a website.

Among the key performance indicators (KPIs) for conversion rates to keep an eye on are the number of individuals subscribing to newsletters, creating accounts, joining loyalty programs, or completing purchases. An increase in conversion rates typically results in the improvement of other eCommerce metrics, reflecting positively on the overall performance.

On the other hand, a decline in sales and revenue can often be traced through a detailed analysis of conversion rate KPIs. Critical insights into a website’s engagement levels are provided by eCommerce conversion KPIs, with tools such as Google Analytics.

This analysis, which includes insights into additional product purchases, is invaluable for monitoring the impact of changes made to a website or third-party product listings, providing a clear view into the effectiveness of content without being skewed by traffic variations.

Furthermore, eCommerce KPIs play a pivotal role in recognizing situations of product cannibalization, a potential risk when introducing new product lines.

To calculate the conversion rate for a specific channel or cohort, the formula is as follows: the number of conversions divided by the number of visitors, multiplied by 100 to achieve a percentage.

Conversion rate = (Conversions ÷ Visitors) x 100

2. Average Order Value (AOV)

Understanding the average amount that customers spend per transaction is key for any online store. The Average Order Value (AOV) provides insights into how much customers are spending on average per purchase, serving as a crucial eCommerce KPI. This metric helps in budgeting for customer acquisition and understanding purchasing patterns.

Increasing AOV is an efficient way to enhance both revenue and profit. The objective is to make the cost of acquiring a customer significantly lower than the amount they spend per order. It is recommended for stores to continuously work on raising their AOV by encouraging customers to add more items to their carts.

Approaches to achieve this might involve upselling, selling product bundles, or offering discounts when customers reach a certain spending amount.

Calculating the average order value involves dividing the total revenue by the number of orders received within a given period. Keeping an eye on this performance metric is vital for seeing how changes, such as offering bundle deals, making product recommendations, and modifying free shipping thresholds, affect order values.

AOV = Revenue ÷ total orders

3. Customer Lifetime Value (CLTV)

Monitoring the Customer Lifetime Value (CLTV) is crucial for businesses focused on enhancing customer retention or those specializing in high-end products. This key performance indicator predicts the total revenue a business can expect from a single customer throughout the duration of their relationship. For instance, if an individual spends $100 every year for five years, their CLTV would be $500.

CLTV is not just one eCommerce KPI metric but encapsulates several vital e-commerce other metrics such as average order value, conversion rate, and customer retention. This gives a comprehensive overview of an online store’s effectiveness and efficiency.

A close range between the CLTV and the Average Order Value (AOV) often indicates a decrease in repeat purchases, signaling that improvements in customer experience might be necessary to support further sales.

Building strong customer relationships through targeted marketing efforts and outstanding customer service is advised. Maintaining high-quality product standards plays a significant role in developing brand loyalty. Moreover, utilizing upselling and cross-selling techniques along with enticing incentives and rewards can be powerful motivators for encouraging repeat business.

4. Net Profit KPIs

In the realm of eCommerce, net profit often doesn’t receive the spotlight it deserves, yet it acts as a critical gauge of an online store’s comprehensive health.

For startups, reaching a state of profitability stands as a noteworthy milestone. Knowing the exact amount of profit made enables the allocation of funds toward marketing, improving customer service, and other growth-enhancing activities.

Likewise, for well-established companies, keeping a high net profit is a vital eCommerce Key Performance Indicator (KPI) that requires close monitoring. While the implications may differ in terms of the company’s survival, marketing, and sales teams undeniably focus on this metric.

It’s vital to take into account how significant changes, such as modifications to shipping policies, special promotions, discounts, the introduction of low-margin product lines, and advertising tactics, impact net profit.

Even though such strategies might boost conversions, they also hold the possibility to undermine the financial bottom line. Therefore, when these strategies are in play, closely tracking both net profit and profit margin becomes imperative.

Net profit = total revenue - total expenses

5. Customer Acquisition Cost (CAC)

Understanding the financial outlay required to draw in a new customer is crucial, and this is where Calculating Customer Acquisition Costs (CAC) comes into play.

It involves considering both overheads and the expenses linked to marketing and sales efforts aimed at customer acquisition. For example, a CAC of $20, juxtaposed with an Average Order Value (AOV) of just $10, hints at a loss, whereas an AOV of $100 suggests a potentially profitable scenario. This indicator is incredibly important for establishing appropriate pricing, especially for companies involved with low-margin products.

As a brand improves its visibility and awareness, its Customer Acquisition Costs are likely to see a reduction, rendering it an invaluable Key Performance Indicator (KPI) for goal-setting purposes. Yet, analyzing the cost of acquiring new customers on its own does not offer a full picture for making informed decisions.

It’s imperative to look at CAC alongside other metrics, such as AOV, to achieve a well-rounded understanding of a business’s performance.

To calculate CAC, one should take the total outlay dedicated to drawing in new customers—primarily marketing expenses—and divide it by the quantity of customers acquired during the same period.

CAC = Cost of customer acquisition ÷ customers acquired

6. Cost per Acquisition (CPA)

This concept mirrors the previously mentioned Customer Acquisition Cost (CAC) Key Performance Indicator (KPI). However, with Cost per Acquisition, the focus shifts towards the expenses incurred to attract not only paying customers but also new leads and non-paying users.

When an eCommerce Strategy is crafted to boost awareness through various initiatives such as distributing free samples, running newsletter campaigns, or offering gated content, keeping an eye on this eCommerce KPI proves to be exceptionally valuable. It holds particular significance for early-stage eCommerce businesses and retailers that deal with high-value items. This eCommerce KPI also presents a unique opportunity to be analyzed more intricately on specific platforms, like Facebook or Instagram.

To determine the cost per acquisition, one simply needs to divide the total acquisition cost by the number of conversions achieved.

CPA = Costs of conversion acquisition ÷ number of conversions

7. Cost of Goods Sold (COGS)

The Cost of Goods Sold (COGS) is identified as a vital metric for online retailers of all sizes. It is often mentioned as the ‘cost of sales,’ focusing on evaluating the direct costs associated with producing the sold goods.

COGS sheds light on manufacturing and production expenses specifically for online retailers, carefully excluding overhead and marketing costs. It is important to note that COGS can vary depending on the accounting principles used in its calculation. For a detailed understanding of COGS, the following resource from Investopedia provides comprehensive insights: Investopedia article on COGS.

COGS = Beginning Inventory + Purchases - Ending Inventory

8. Return on Ad Spend (ROAS)

Return on ad spend (ROAS) is recognized as a vital eCommerce KPI metric in the eCommerce sector. It demands significant attention from digital marketers. It shares similarities with the cost per acquisition metric but stands out due to its specific emphasis.

Unlike the cost per acquisition, which focuses on the overall cost of acquiring a new customer, ROAS specifically concentrates on the revenue generated by advertisements. This connection highlights how ROAS directly affects the calculation of cost per acquisition, thus distinguishing them as interrelated yet distinct metrics in the realm of eCommerce.

These metrics serve different purposes. For example, the cost per acquisition metric does not consider the value of the order, which could overlook the substantial revenue derived from an expensive customer acquisition effort.

ROAS, conversely, assesses the financial outcome by comparing the investment in advertisements to the revenue they produce, providing a thorough view of an advertisement’s efficacy.

At its core, ROAS is determined by dividing total sales by total ad spending, offering a valuable measure of the profitability of ad expenditures. ROAS underscores the significance of this metric, particularly when sales are driven by paid sources, by highlighting the potential profitability of a crucial, albeit volatile, metric.

9. Shopping Cart Abandonment Rate (SCAR)

Tracking the shopping cart abandonment rate (SCAR) is essential for eCommerce businesses as it signifies the percentage of shoppers who abandon their purchase before completion, affecting sales, customer experience, and branding.

A high abandonment rate could signal issues with the intuitiveness and reliability of the checkout process, pointing to areas requiring enhancement. Solutions may include incorporating more payment methods or collaborating with prominent providers to boost conversions by addressing concerns like shipping fees and payment options.

Reducing the abandonment rate is a viable method to increase revenue, conversions, and customer satisfaction, which may also help in reducing customer acquisition costs. It is recommended that businesses aim for ambitious targets for this eCommerce KPI.

To calculate the abandonment rate, one should divide the number of completed sales by the number of created carts and multiply the result by 100, as illustrated below:

SCAR = (Sales ÷ Carts) x 100

10. Product Performance KPIs

An eCommerce KPI Dashboard tailored to evaluate product-level performance proves invaluable for eCommerce marketing managers, enabling a deeper comprehension of each product’s market impact. It is recommended that attention is also given to category-specific eCommerce KPIs.

For brands distributed through third-party retailers (e.g., Amazon, Tesco), monitoring each product’s performance on these platforms is vital.

Identifying top-selling products on third-party retail sites and seeking methods to improve sales figures is crucial. Knowing which products are preferred and where they are being purchased allows a brand to efficiently manage its online retail presence. It’s vital to collect product-specific conversion details for all the brand’s offerings featured by the retailer.

When using several attribution platforms, understanding which retailer is leading in conversion rates or generating more traffic presents a challenge. By adopting a Where to Buy Solution, one can simplify the collection of these insights, among others, into an easy-to-understand report, as showcased in the accompanying video.

11. Basket Level Performance

Basket-level performance metrics play a crucial role in comprehending the total makeup of online shopping carts. By pinpointing which complementary brands or products are being added to these carts, valuable insights can be derived regarding the preference for certain competitor brands over others.

Through this analysis, it becomes possible to understand customer choices, such as what was bought in place of another item, pinpointing where and to which competitor the sale was lost.

For example, when there is a notable influx of traffic to a specific retailer’s product page, but the purchase is made from a competitor, this indicates a potential issue that needs addressing.

Furthermore, it has been observed that when customers add a product from one brand to their cart, they often pair it with another specific product, hinting at the potential for developing complementary partnerships between brands. Such strategic collaborations could enhance sales figures for both involved products.

12. Net Promoter Score

Most eCommerce KPI metrics in eCommerce are geared towards understanding financial performances, such as revenue and profit. Yet, the Net Promoter Score (NPS) presents an insightful perspective by focusing on the customer experience.

Assessing customer experience in an eCommerce context poses a challenge because of its intangible aspects. Differing from other key performance indicators in eCommerce, the Net Promoter Score cannot be fully understood through data analysis alone; it relies on obtaining direct feedback from customers.

To figure out the NPS, it’s crucial to categorize customers into groups: those who are promoters, passives, or detractors. This categorization is based on asking customers about their likelihood of recommending the business to someone they know on a scale from 1 to 10.

Customers responding with a score of 6 or lower are deemed detractors, those with 7 or 8 are considered passives, and scores of 9 or 10 indicate promoters. The NPS is calculated by subtracting the percentage of detractors from the percentage of promoters:

NPS = % of Promoters - % of Detractors

13. Non Branded Product Performance

Non-branded product performance metrics serve as essential tools for comparing a brand’s position against its competitors. This measurement comes into play when a consumer, initially intending to purchase a product from one brand on a retail site, decides to buy a similar product from another brand instead.

Exploring this metric helps uncover the reasons consumers might favor a competitor’s products, providing insights that could be used to improve one’s unique selling proposition (USP).

It’s beneficial to undertake comprehensive competitor research. Through a careful analysis of the competition, a brand can discern why their products might not be the first choice for consumers.

If there’s a pattern of consumers consistently preferring competitors’ products, it’s pivotal for the brand to reconsider how its products are described, showcased, marketed, or priced.

Keeping an eye on this crucial performance indicator can be made easier with tools designed to analyze consumer purchasing preferences and platforms that offer shoppable media solutions.

14. Device of Choice

Recognizing the various platforms, such as desktops, mobile devices, tablets, or other internet-enabled devices, where digital content and brands are accessed, is of utmost importance. This recognition of the consumers’ preferred method of interaction has a profound impact on both the customer experience and the rates at which customers convert.

With the ongoing increase in mobile shopping, the need to optimize websites for mobile users has never been more critical. Failure to provide an optimized experience across all internet-enabled devices could result in a significant drop in sales.

Keeping track of device eCommerce KPI metrics is crucial for understanding the consumption patterns of digital content and identifying where online purchases are made. Being aware of the devices through which consumers access content is fundamental in creating websites that offer outstanding user experiences.

It is recommended for brands to pinpoint which devices lead to the highest and lowest conversion rates. Armed with this knowledge, they can strategically allocate their advertising budgets across different devices in a way that is both efficient and cost-effective.

Which eCommerce Key Performance Indicators are the most important?

In the world of online retail, no single performance metric is considered the most crucial because each metric sheds light on different facets of a business’s operations.

Metrics like net profit and cost of goods sold offer insights into a business’s overall profitability and the financial cost of preparing an item for sale. On the other hand, customer acquisition costs and return on ad spend focus on the expenses related to revenue generation and customer acquisition.

By consistently tracking these important eCommerce key performance indicators and observing their trends, businesses can maintain a detailed understanding of their online store’s performance. This strategy allows for the timely identification of areas for improvement and the early detection of potential issues before they become significant problems.

Importance of eCommerce Benchmarks

Proper comprehension of eCommerce KPIs is rooted in the practice of eCommerce benchmarking. It is crucial for brands to know how their metrics stack up against industry standards to ensure they remain competitive.

There are numerous resources available that allow brands to grasp the eCommerce KPI benchmarks applicable to their sector. For example, certain entities provide their clients with industry benchmarks via comprehensive brand performance data, enabling them to accurately determine their standing in relation to their competitors.

Final thoughts

Exploring from conversion to retention, these eCommerce KPIs are designed to support business growth. Yet, the landscape of eCommerce KPIs is extensive. For those interested in delving deeper into the critical KPIs essential for an eCommerce strategy, further insights can be found in a downloadable ebook.

For those seeking additional insights into analyzing the discussed metrics or wishing to comprehend eCommerce benchmarks better, it’s recommended to speak with an expert.