One of the biggest mistakes that small businesses make is related to the fact that they consider any value as a KPI indicator. Here is the next question: how can you choose the right KPI indicators that exactly fit your business?
First, you should know that the KPI indicators of an eCommerce site differ from those of a presentation website or news site.
What are the KPI indicators of an online store
Choosing the right KPIs indicators for an online store is not a step by step process, but there are a few things you need to consider:
First of all, you must carefully define your business objectives and only when you`ve done that, you can set the desired KPI indicators. It`s good to start only with a few KPI indicators. Normally, there are set between 4 and 10 key performance indicators for a business. A good start, especially if you have an online store, is to set sales growth or the improvement of your customer service as a KPI indicator.
For example, Mark Hayes, Shopify CEO, has compiled a top with KPI indicators` for online shops, including all 32 of them. Here are four examples of e-commerce objectives and associated KPI indicators:
1. The first objective is to boost sales by 10% in the next quarter. Associated KPI indicators are daily sales, conversion rates, and site traffic.
2. The second objective is to increase the conversion rate by 2% in the next year. Here are the associated KPI indicators: cart abandonment rate, the delivery rate associated trends, competitive prices.
3. The third objective is to increase site traffic by 20% in the next year. In this case, KPI indicators are represented by site traffic, traffic sources, click rates, actions on social networks, bounce rate.
4. The last objective that Mark Hayes considers important is to reduce to half the number of customer service calls in 6 months. In this case, KPI indicators include: customer service calls ratings, identifying the page visited before the call and the event that led to that call.
KPI indicators vary from one industry to another. We can tell you which are the positive and negative KPI indicators for e-commerce stores.
Let's start with the positive KPI indicators
Here are some examples that you can observe:
- conversion rate - if you're focused on results, then this is an excellent KPI indicator to take into account. It would be better to divide the conversion rate into several parameters: the conversion rate of email registrations, the conversion rate of emails, the conversion rate per Google click etc.
- average order value - it can be a valuable KPI indicator, especially if the data is used to test cross-sell and up-sell mechanisms and other promotional marketing methods.
- cart abandonment rate
- visitor loyalty - this KPI indicator measures how often people return or interact with your site.
- task completion rate - it will give you the exact reasons, directly from the customers, about your site performance which allows you, as an online store, to do the exact changes visitors want, not those you want to make.
Also, there are a number of KPI indicators related to traffic and sales. They will help you know the exact number of sales per hour/day/week/month/year.
KPI indicators that monitor the traffic of an online shop:
- Overall site traffic – which includes every site visit, no matter how the visitor got there. It can be divided into several categories (referral traffic, paid search traffic, organic search traffic, direct traffic) and is used to highlight an increase/decrease of the total number of visitors. This KPI indicator is important for any company, because the number of visitors always means new potential customers and thus, sales.
- Traffic from social media sources
- Traffic from search engines
- Granular search engine keyword traffic – you can see them in Google Trends and they represent the most searched keywords/syntax's used by those browsing the Internet
- Branded traffic
- Individual product traffic – which of the products listed on the site are most visited. Answering this question will help you to better understand what attracts visitors and how they interact with your site.
- Unique visitors vs. returning visitors
- Time spent on site – how much time your visitors are spending on your site.
- Page views per visit – this value tells you how much visitors interact with your site.
- Primetime – this will help you determine which is the best time to place your marketing materials on the homepage
- Top landing pages – helps you determine which products are most popular on your website and also helps you strengthen your efforts to increase traffic
- Top exit pages
- Traffic from PPC advertisement
- Visitor markets – use this KPI indicator to identify traffic sources that work best for your business and to develop strategies specially designed for them.
- Bounce rate – this KPI indicator represents the percentage of users who leave your online store after visiting a single entry page (landing page). The causes are multiple: the content on the page is not relevant enough for what they were looking, loading speed is slow or errors occur, etc. The goal is to have a bounce rate as low as possible.
- Ages of visitors
- Gender of visitors
- Technology preferences of visitors – if most of them come from mobile platforms, you need to optimize your site as good as you can for this device.
- Most searched – visitors are looking either for a specific product or a specific category.
KPI indicators that monitor the sales of an online shop:
- Sales in the currencies you established on site: EURO, USD, GPB etc.
- Number of orders
- Average order size – this value can become a KPI indicator in two ways:
- A / B testing on the product page - you can test images, buttons, descriptions and so on. It's a lengthy process, but in many cases A / B testing of a button can make you happy and satisfied enough to continue the testing process.
- Pop-up on product pages
- Average order value – this KPI indicator is calculated using the formula - total sales value/number of orders received and it will help you understand how's your cash flow, how big is the engagement of your site visitors and what you can do in the future to increase the value of the same traffic.
- Orders by product – helps you see what products are bestsellers
- Orders by product groups
- Number of returns
- Return order size
- Refunds for the returned orders
- Shopping cart abandonment rate - a high shopping cart abandonment rate can show there are problems with how the site was designed (the shopping cart page is too long and difficult to complete, etc.) or with the sales strategy (various hidden costs or extra charges occurring at check-out time, increased shipping and handling fees etc.). You can increase the cost transparency, you can ease the process of completing an order, you can come up with special offers and you can remove any barrier that could prevent customers to place the order.
- Checkout abandonment rate – the best solution is to use an output system which gives visitors another reason to stay on the site. You can either use a survey that asks why they leave the site or a pop-up that offers them a discount.
- Cart return rate
- Cart return time
- Overall conversion rate - helps you identify the percentage of people who click on your site and buy a product, subscribe to your newsletter, download an application etc. This KPI indicator depends on many factors, such as call-to-action messages, price policy, marketing strategy, commercial offers, certain periods in which shopping rates increase (holidays), reputation in social media etc.
- Social media conversion rate
- Search engine conversion rate
- Brand traffic conversion rate
- Unique visitors vs. returning visitors - the cart return rate is the first step towards conversions, but it`s also a step towards customer loyalty and should always be compared with the number of new visitors. Make sure your customer support efforts are serious, in order to create a strong bond with those who have already placed orders on your site or who plan to make a purchase in the future.
- Average visits before first purchase
- Average marketing cost per conversion
- Top performing markets – where are your customers from? This will help you learn how to present your products and how to direct your messages.
In the end, we advise you to set your goals for all these numbers and even though it may be hard for you in the first few years to achieve your goals, careful monitorization will allow you to refine your goals and to be closer to what you can achieve.
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