E-commerce Key Performance Indicators (KPIs) are important to the success of your online store. Using KPIs, you can measure how well you and your team are performing against principal marketing and business objectives. As a digital marketer, you can use these indicators to identify the tools and techniques required to achieve success with your e-commerce store.
To make the most out of KPIs, it is important that you are using well-defined and quantifiable metrics. As a result, you will have an easier time measuring how close or far your e-commerce store is from its objectives. To make the most out of KPIs, it’s important to access real-time KPI results, as they allow you to implement improvements in your digital marketing techniques.
Some Important KPIs To Set On Your E-Commerce Store
There are many e-commerce KPIs you can use to monitor the performance of your digital marketing campaign. However, many of these KPIs will not make the most of your resources. Here are some essential KPIs for e-commerce websites that can help you to improve your performance and expand your business.
Cost-Per-Customer Acquisition (CAC)
Cost-Per-Customer Acquisition is an important KPI for e-commerce sites that are often overlooked. CAC is calculated by dividing the total amount of money spent to acquire customers divided by the total number of customers acquired. This KPI helps you estimate the cost of attracting potential customers.
- Amount of Money Spent to Acquire Customers ÷ No. of Customers Acquired = Customer Acquisition Cost
It is important to the success of your e-commerce business to keep CAC in consideration. For example, if your online store sells a product to customers at $1,000 and is investing $100 for acquiring a customer, under CAC you are profitable. However, for products that sell at a lower price, it is not effective to invest significant financial resources into acquiring a single customer. Thus, if you are running an e-commerce business, it’s important to monitor your Cost-Per-Customer Acquisition. Understanding this KPI helps you to allocate your marketing budget appropriately and generate the most profitable leads.
Cart Abandonment Rate
Cart Abandonment Rate is another important KPI for e-commerce sites. Cart Abandonment refers to customers who add items to their shopping cart and then leave the site without making a purchase. This e-commerce KPI can tell you how effective your website is. If your Cart Abandonment Rate is low, it is expected to generate more revenue and you likely have a user-friendly e-commerce site.
- (Number of Completed Transactions ÷ Number of Shopping Carts Created) x 100 = Cart Abandonment Rate Percentage
If you perform this test and find your website has a high abandonment rate, there can be several causes. Some common reasons include a complicated checkout and payment process, or high shipping costs. To lower your Cart Abandonment Rate, consider changing to a more user-friendly shopping and payment service by looking for a platform that prioritizes delivering speed and flexibility to the end-user. Monitoring each friction point can help in reducing abandonment and generating more sales.
Average Order Value
If you are looking for an effective way to boost your e-commerce revenue, consider improving your Average Order Value (AOV). An essential KPI for e-commerce websites is the average order value, which allows companies to estimate the average sales by customer per order. Increased AOV from customers ensures higher customer acquisition costs and greater profits.
- Total Revenue ÷ Total No. of Orders = Average Order Value
Average Order Value is an important KPI for e-commerce sites, as it allows you to measure the capitalization on both cross-selling and upselling opportunities. As the AOV increases, you can spend more money on customer acquisition programs.
Setting KPIs Can Optimize Your E-Commerce Store
To make the most of your e-commerce site’s resources, it is important to use KPIs that point out weaknesses in your online presence. The right e-commerce KPI metrics help you to track your website’s performance and understand what areas need improvement. Learning about these KPIs lets you understand the core components of your e-commerce business so you can make decisions that accelerate your business growth. KPIs can be confusing and overwhelming at times, so it’s always a great idea to consult reliable digital marketing agencies or professionals for help.
