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KPI metrics in e-commerce

KPI metrics in e-commerce

KPI (Key Performance Indicator) means a performance metric. KPI metrics are important tools used to measure and monitor the achievement of a company's goals and the performance of an organization. Metrics can be widely used in various business areas, such as digital marketing, sales, and human resources management.

What are KPI metrics?

KPI metrics are very familiar tools, especially in the operations of larger organizations. Regardless of the size of the company, KPI metrics play a particularly important role in e-commerce as they indicate whether the online store is generating results or not.

With the help of e-commerce KPIs, the achievement of a company's online goals can be effectively assessed, and necessary changes can be made to achieve these goals. Therefore, it is important for the e-commerce operator and entrepreneur to identify and select those KPIs that indicate how the actual performance of the e-commerce and the achievement of goals can be improved.

How do e-commerce KPIs differ from business KPIs?

Examples of business KPIs include revenue growth, the number of leads and sales, customer satisfaction, and productivity growth. E-commerce KPIs differ from these metrics in that they naturally focus on e-commerce operations and the company's online performance.

E-commerce KPI metrics provide valuable and up-to-date information from the online store, which can be used to improve, for example, the store's performance and search engine ranking. Important e-commerce efficiency measuring and important KPI metrics include visitor numbers, conversion rate, and shopping cart abandonment rate.

By tracking these metrics, among others, with the help of Google Analytics, you can better understand how your customers behave online and how their experience in your online store can be improved and the store's profitability increased.

Key KPIs in E-commerce

KPI metrics are tools that, when monitored, can significantly improve the productivity of an online store. 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 rate, and customer lifetime value.

Visitor count and conversion rate

About E-commerce KPI Metrics The visitor count, as the name suggests, measures how many people visit the online store. The conversion rate, on the other hand, indicates how many out of a hundred visitors end up making a purchase. The readings of these metrics encapsulate the entire success of the online store, as without visitors and conversions, no sales are generated.

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, merely increasing traffic does not improve sales if the online store is not user-friendly. Therefore, it is good to examine these KPI metrics together.

The conversion rate, or 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.

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Customer acquisition cost

Customer acquisition cost indicates how much it costs a company to acquire a new customer. This is an important KPI metric, as even small changes in customer acquisition costs can significantly increase the profitability of an online store. 

You can consider, for example, a situation where your online store is dependent on expensive advertisements to get any visitors at all. In such a case, it is advisable to start reducing customer acquisition costs by improving the online store's organic (non-paid) visibility in search engines, so that customers find their way through search results consistently even when the ads are not running.

Customer feedback confirmed in the online store increases trust, which in turn can strengthen and accelerate the purchase decision once visitors have been brought to the site. Attracting potential customers to the email list, for example in the form of a discount, i.e., email marketing, is an affordable way to acquire customers.

"‍" is a zero-width joiner character used in digital text processing to combine characters without adding a space. It doesn't have a direct translation in English as it is a formatting character.

Cart abandonment rate

Cart abandonment rate indicates how many customers abandon their shopping cart and do not complete the purchase. This KPI is important as it provides the online store with the opportunity to improve the shopping cart user experience, engage customers, and enhance results.

Typically, a potential customer goes through several online stores before making a purchase decision, making it impossible to complete each product added to the cart and transaction.

However, an exceptionally high shopping cart abandonment rate is often due to a poor user experience on the online store (long loading times, small buttons, self-emptying cart, mandatory registration, etc.), unsuitable payment methods, or unexpected shipping costs, which can be reduced by optimizing the online store.

"‍" is a zero-width joiner character used in digital text processing to combine characters without adding a space. It doesn't have a direct translation in English as it is a formatting character.

Customer Lifetime Value

Customer Lifetime Value indicates how much a customer generates for the company over time. The KPI metric thus provides information on how often a customer returns to the online store and makes repeat purchases.

Increasing the customer lifetime value is extremely important for the productivity of e-commerce, and ideally, customers are satisfied and loyal to the online store, which in turn reduces customer acquisition costs.

Improving the user-friendliness of the online store, offering fast deliveries, and investing in customer service enhance the customer's experience with the online store, which increases the likelihood that the customer will return to the store and make another purchase.

Customers can be enticed back to the online store through email automation; personalized messages and various offers that also help increase conversions, but this alone will not increase the customer's lifetime value. The entire online shopping experience should be seamless.

Growing E-commerce with the Help of KPIs

Increasing 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 figures of e-commerce KPIs can also be improved by, among other things, working on the company's brand image, investing in delivery speed and customer service, and targeting marketing to the right audience.

What KPI metrics should be implemented?

In addition to the above-mentioned KPIs, there are numerous other metrics available to track the profitability of an online store. However, it is not advisable to complicate matters with too many tools, and we recommend selecting only a handful of the most important performance metrics for your online store (such as the ones we have mentioned) to focus on developing in the short and long term.

The mere existence and monitoring of KPI metrics is not enough to improve the productivity of an online store; rather, it is more important to react to the measurement results and create an action plan to improve them. The development of KPI metrics should therefore be regular and continuous. They should also be updated when the set goals are achieved and/or they change along the way.

Do you need help developing KPI metrics and increasing e-commerce sales? We can assist you.

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