E-commerce KPIs are probably not everyone’s cup of tea. However, it’s a necessary evil when evaluating your performance as a business.
For e-commerce businesses, it’s how you find out your store’s strengths and weaknesses. Finding out your weak spots shows you exactly where you can maximise your revenue potential. But also find out where you can eliminate wasteful activities.
Here I’ll take you through the e-commerce KPIs every marketer needs to track for making educated decisions moving forward.
E-commerce KPIs for Digital Marketers
1. Conversion rate
How well are you converting window shoppers into paying customers?
That’s where your conversion rate helps you out.
Your website conversion rate is when a visitor completes a desired action on your e-commerce store, such as placing an order.
Purchases / Total Visitors = Conversion
With the formula above you can see how much of your traffic you’re converting into sales.
To take your analysis further, you may want to look into micro-conversions which are looking at every step of your checkout process and seeing where people are dropping off.
Identifying which cohorts convert best can also be very insightful, as you see whether a certain demographic or referral channel is performing better for you.
2. Purchases per Year
You may have a high conversion rate, but what if you have a lot of one-time shoppers? Then you are probably spending loads of money acquiring new customers and not leveraging your existing customer base.
By looking at purchases per year, you’ll be able to determine whether you should focus more on customer acquisition or retention.
If you have a case like the one I mentioned above, then you should take the time to invest in retention and email marketing to bring existing customer back to you.
3. Average Shopping Cart Value
You now know how many people purchased from your e-commerce shop. Now you need to know approximately how much they spent while shopping on your website.
The average shopping cart value is a good indicator of how much visitors spend during one session. Again, when using your cohorts – you can see whether certain marketing campaign increased or decreased your average shopping cart value.
Total Revenue / Number of Orders Taken = Average Shopping Cart Value
Once you have this figure, you’ll want to compare it with your customer acquisition costs. This helps to identify which of your marketing campaigns are profitable and where you should be investing your money.
4. Abandonment rate
What’s the opposite of your conversion rate? It’s your abandonment rate, which represents a percentage based on people who did not complete the checkout process.
There are multiple steps during your checkout process before visitors finally click “buy”.
Here you’ll want to analyse each step to see where your checkout process is “leaking” and optimise those steps to increase checkout completions.
5. Cost of Customer Acquisition
The key to a profitable e-commerce business is simple. Spend less than you’re making.
To see whether your marketing campaigns are profitable, you need to know your customer acquisition costs. This helps you determine whether you’re losing or gaining money from your marketing and sales activities.
Marketing and Sales Expenditure / Number of Customers
Once you know your CAC, you’re able to optimise campaigns based on that figure and your revenue per customer.
6. Revenue per Customer
This e-commerce KPI is as simple as it sounds. It measures the revenue you’re receiving from your customers.
Total Revenue / Number of Customers = Revenue per Customer
With the formula above, you’ll find out how much revenue each customer brings in for you.
If revenue per customer is higher than your CAC, then great!
But if that’s not the case, then you need to focus on improving the following areas:
- Refining your targeting
- Optimising conversion rate
- Increasing your average shopping cart value
- Improving customer retention
- Decreasing abandonment rate
7. Cost of Keywords and Search Terms
If you’re running a paid search campaign, pay attention to your cost per clicks of your keywords and search terms.
You’ll need to experiment to see what works here and identify the campaigns generating the highest return for you.
Fortunately, you can view the estimated CPC of keywords in Google’s Keyword Planner during your keyword research.
8. Recommendation Purchasing Rate
Want to increase your average shopping cart value? Adding a recommendation engine might do the trick for you.
This is a simple way for you to drive additional purchases and can easily be integrated with a plugin like Nosto.
Once added remember to keep track of how much additional revenue you recommendation engine is generating for you.
9. Email Click-Through Rates
Yep, email still is still a thing, and for e-commerc,e it can be a great customer acquisition channel.
According to Custora, email accounts for more than 7% of all e-commerce user acquisitions – making it the second most effective channel behind organic search. What’s more, 86% of customers like receiving promotional emails from companies they do business on a monthly basis, while 15% would like them daily (Statista, 2015).
Checking your email click-through rate determines the effectiveness of your email marketing campaigns by looking at how many people click the links to your e-commerce shop. After all, you want your subscribers on your website to buy something in the end.
Here’s what you need to look out for:
- Conversion rate from email campaigns
- Unsubscribe rate
While there are more KPIs to look at, it’s best to keep things simple. Once you have identified the KPIs to focus, just keep on tracking them on a monthly basis to get an overview of how your e-commerce business is performing. The purpose of tracking KPIs is to identify areas to optimise and improve.
Did you spot a KPI missing? Let me know in the comments.