KPI Metrics in E-commerce
KPI (Key Performance Indicator) refers to a performance metric. KPI metrics are important tools used to achieve business objectives and to measure and monitor organizational performance. These metrics can be widely used in different areas of business, such as digital marketing, sales, and human resource management.
What are KPI Metrics?
KPI metrics are particularly familiar tools in the operations of larger organizations. Regardless of the size of the company, KPI metrics play a particularly important role in e-commerce because they indicate whether the online store is profitable or not.
With the help of e-commerce KPI metrics, the realization of business goals online can be effectively evaluated and necessary changes made to achieve these goals. Therefore, it is important for e-commerce retailers and entrepreneurs to identify and choose the KPI metrics that inform how to improve the actual performance and goal achievement of the online store.
How do E-commerce KPI Metrics differ from Business KPI Metrics?
Examples of business KPI metrics include revenue growth, the number of leads and sales, customer satisfaction, and productivity growth. E-commerce KPI metrics differ from these in that they, of course, focus on the operation of the online store and the company's performance online.
E-commerce KPI metrics provide valuable and timely information that can be used to improve, for example, the store's performance and search engine rankings. Important e-commerce metrics that measure efficiency include visitor numbers, conversion rates, and shopping cart abandonment percentage.
By monitoring these metrics, for example, through Google Analytics, you will better understand how your customers behave online and how their experience in your online store can be improved to increase sales productivity.
Main KPI Metrics in E-commerce
KPI metrics are tools that, by monitoring, can improve the productivity of an online store by a significant margin. The most common and well-known e-commerce KPI metrics include visitor numbers and conversion rate, as well as customer acquisition costs, shopping cart abandonment percentage, and customer lifetime value.
Visitor Numbers and Conversion Rate
As the name suggests, visitor numbers measure how many people visit the online store. The conversion rate, on the other hand, indicates how many out of every hundred visitors end up making a purchase. The success of the entire online store crystallizes in these metric readings, as there is no sales without visitors and conversions.
Visitor numbers always vary somewhat seasonally, but online store traffic can be increased through search engine optimization and search engine and social media advertising. However, simply increasing traffic does not improve sales if the online store is not user-friendly. Therefore, it is good to look at these KPI metrics together.
Conversion rate, i.e., sales, is improved through conversion optimization. Depending on the online store, this can mean various measures - everything from improving the speed of the online store to renewing content, appearance, and technical solutions.
Customer Acquisition Cost
Customer acquisition cost indicates how much it costs the business to acquire a new customer. This is an important KPI metric because even small changes in customer acquisition costs can greatly increase the results of an online store.
Consider a scenario where your online store depends on expensive ads to get any visitors. Then, it is advisable to reduce customer acquisition costs by, for example, improving the organic (non-paid) visibility of the online store on search engines, so that customers consistently find their way there even when advertisements are not running.
Strengthened customer feedback in the online store increases trust, which can in turn reinforce and expedite the purchase decision once visitors have been attracted to the site. Attracting potential customers to an email list with a discount, for example, email marketing, is a cost-effective way to acquire customers.
Shopping Cart Abandonment Rate
The shopping cart abandonment rate indicates how many customers abandon their shopping carts and leave without making a purchase. This KPI metric is important, as it gives the online store the opportunity to improve the user experience of the shopping cart, engage customers, and improve results.
Typically a potential customer goes through several online stores before making a purchase decision, where every different shopping cart added to and every purchase process is impossible to complete.
However, an unusually high shopping cart abandonment rate often results from a poor user experience (long loading times, small buttons, self-emptying shopping carts, mandatory registration, etc.), an unsuitable payment method, or unexpected shipping costs, which can be reduced by optimizing the online store.
Customer Lifetime Value
Customer lifetime value tells you how much a customer generates for the business over time. This KPI metric thus provides information on how often a customer returns to the online store and makes repeat purchases.
Increasing customer lifetime value is crucial for the productivity of the online store, and in the ideal situation, customers are satisfied and loyal to the online store, which in turn lowers customer acquisition costs.
Improving the user-friendliness of the online store, offering fast deliveries, and focusing on customer service improve the customer's experience with the online store, which increases the likelihood that the customer will return to the store and purchase again.
Customers can also be tempted back to the online store using, for example, email automation; personalized messages and various offers that help increase conversions, but that alone is not enough to increase the customer lifetime value. The entire online shopping experience should be seamless.
Growing an Online Store with KPI Metrics
Growing the results of an online store requires careful monitoring of KPI metrics and making necessary changes. For example, search engine optimization can improve visitor numbers and optimizing the online store for conversions and marketing automation can reduce customer acquisition costs.
The readings of online store KPI metrics can also be improved by, among other things, working on the company's brand image, focusing on delivery speed and customer service, and targeting marketing to the right audience.
Which KPI Metrics should be implemented?
In addition to the aforementioned KPI metrics, there are numerous other metrics with which the profitability of an online store can be followed. However, it's not recommended to complicate things with too many tools, and we suggest choosing just a handful of the most important online store performance metrics (such as these ones we've mentioned), which you start developing in the short and long term.
Merely the existence and monitoring of KPI metrics is not enough to improve the productivity of an online store; more importantly, it is to respond to measurement results and create an action plan for improvement. So, the development work for KPI metrics should be regular and continuous. Adjusting them also becomes relevant when the set goals are achieved and/or they change along the way.
Do you need help developing KPI metrics and growing your online store sales? We can help you.
Contact us here.
Also, learn more about setting up an online store, Google advertising, and Facebook and Instagram advertising.
KPI Metrics in E-commerce
KPI (Key Performance Indicator) refers to a performance metric. KPI metrics are important tools used to achieve business objectives and to measure and monitor organizational performance. These metrics can be widely used in different areas of business, such as digital marketing, sales, and human resource management.
What are KPI Metrics?
KPI metrics are particularly familiar tools in the operations of larger organizations. Regardless of the size of the company, KPI metrics play a particularly important role in e-commerce because they indicate whether the online store is profitable or not.
With the help of e-commerce KPI metrics, the realization of business goals online can be effectively evaluated and necessary changes made to achieve these goals. Therefore, it is important for e-commerce retailers and entrepreneurs to identify and choose the KPI metrics that inform how to improve the actual performance and goal achievement of the online store.
How do E-commerce KPI Metrics differ from Business KPI Metrics?
Examples of business KPI metrics include revenue growth, the number of leads and sales, customer satisfaction, and productivity growth. E-commerce KPI metrics differ from these in that they, of course, focus on the operation of the online store and the company's performance online.
E-commerce KPI metrics provide valuable and timely information that can be used to improve, for example, the store's performance and search engine rankings. Important e-commerce metrics that measure efficiency include visitor numbers, conversion rates, and shopping cart abandonment percentage.
By monitoring these metrics, for example, through Google Analytics, you will better understand how your customers behave online and how their experience in your online store can be improved to increase sales productivity.
Main KPI Metrics in E-commerce
KPI metrics are tools that, by monitoring, can improve the productivity of an online store by a significant margin. The most common and well-known e-commerce KPI metrics include visitor numbers and conversion rate, as well as customer acquisition costs, shopping cart abandonment percentage, and customer lifetime value.
Visitor Numbers and Conversion Rate
As the name suggests, visitor numbers measure how many people visit the online store. The conversion rate, on the other hand, indicates how many out of every hundred visitors end up making a purchase. The success of the entire online store crystallizes in these metric readings, as there is no sales without visitors and conversions.
Visitor numbers always vary somewhat seasonally, but online store traffic can be increased through search engine optimization and search engine and social media advertising. However, simply increasing traffic does not improve sales if the online store is not user-friendly. Therefore, it is good to look at these KPI metrics together.
Conversion rate, i.e., sales, is improved through conversion optimization. Depending on the online store, this can mean various measures - everything from improving the speed of the online store to renewing content, appearance, and technical solutions.
Customer Acquisition Cost
Customer acquisition cost indicates how much it costs the business to acquire a new customer. This is an important KPI metric because even small changes in customer acquisition costs can greatly increase the results of an online store.
Consider a scenario where your online store depends on expensive ads to get any visitors. Then, it is advisable to reduce customer acquisition costs by, for example, improving the organic (non-paid) visibility of the online store on search engines, so that customers consistently find their way there even when advertisements are not running.
Strengthened customer feedback in the online store increases trust, which can in turn reinforce and expedite the purchase decision once visitors have been attracted to the site. Attracting potential customers to an email list with a discount, for example, email marketing, is a cost-effective way to acquire customers.
Shopping Cart Abandonment Rate
The shopping cart abandonment rate indicates how many customers abandon their shopping carts and leave without making a purchase. This KPI metric is important, as it gives the online store the opportunity to improve the user experience of the shopping cart, engage customers, and improve results.
Typically a potential customer goes through several online stores before making a purchase decision, where every different shopping cart added to and every purchase process is impossible to complete.
However, an unusually high shopping cart abandonment rate often results from a poor user experience (long loading times, small buttons, self-emptying shopping carts, mandatory registration, etc.), an unsuitable payment method, or unexpected shipping costs, which can be reduced by optimizing the online store.
Customer Lifetime Value
Customer lifetime value tells you how much a customer generates for the business over time. This KPI metric thus provides information on how often a customer returns to the online store and makes repeat purchases.
Increasing customer lifetime value is crucial for the productivity of the online store, and in the ideal situation, customers are satisfied and loyal to the online store, which in turn lowers customer acquisition costs.
Improving the user-friendliness of the online store, offering fast deliveries, and focusing on customer service improve the customer's experience with the online store, which increases the likelihood that the customer will return to the store and purchase again.
Customers can also be tempted back to the online store using, for example, email automation; personalized messages and various offers that help increase conversions, but that alone is not enough to increase the customer lifetime value. The entire online shopping experience should be seamless.
Growing an Online Store with KPI Metrics
Growing the results of an online store requires careful monitoring of KPI metrics and making necessary changes. For example, search engine optimization can improve visitor numbers and optimizing the online store for conversions and marketing automation can reduce customer acquisition costs.
The readings of online store KPI metrics can also be improved by, among other things, working on the company's brand image, focusing on delivery speed and customer service, and targeting marketing to the right audience.
Which KPI Metrics should be implemented?
In addition to the aforementioned KPI metrics, there are numerous other metrics with which the profitability of an online store can be followed. However, it's not recommended to complicate things with too many tools, and we suggest choosing just a handful of the most important online store performance metrics (such as these ones we've mentioned), which you start developing in the short and long term.
Merely the existence and monitoring of KPI metrics is not enough to improve the productivity of an online store; more importantly, it is to respond to measurement results and create an action plan for improvement. So, the development work for KPI metrics should be regular and continuous. Adjusting them also becomes relevant when the set goals are achieved and/or they change along the way.
Do you need help developing KPI metrics and growing your online store sales? We can help you.
Contact us here.
Also, learn more about setting up an online store, Google advertising, and Facebook and Instagram advertising.