“What can’t be measured, Can’t be improved” – that’s a popular saying about performance measurement.
What are KPIs and why should you be measuring them?
Key performance indicators – KPIs are the metrics that communicate or measures how well your business or organization performs while accomplishing your business vision, mission and goals.
Measuring KPIs to know how your business/online store is performing is crucial for its development and improvement based on the real data. Decision-making based on the statistics of your KPIs plays a significant role in moulding your business as the perfect choice for customers thereby enhancing your ROI.
eCommerce KPIs that you should never miss tracking on:
Listed below are 46 crucial eCommerce KPIs that you should be tracking to measure your performance on sales, operations, marketing and customer satisfaction.
Average Customer Lifespan (ACL) is defined as the sum of customer lifespan to the number of customers.
Average Customer Lifespan (ACL) = Sum of Customer Lifespan/Number of Customers.
Average order value (AOV) The average order value is defined as the average money an individual spends whenever the individual visits a website or an app.
Average Order Value (AOV) = Revenue/Number of orders.
Average Purchase Value (APV) is the ratio of the total revenue of an individual to the number of orders by the individual in a given period of time.
Average Purchase Value (APV) = Total revenue of an individual/ The number of orders in a given period of time.
Average Purchase Frequency Rate (APFR) can be defined as the number of purchases made in a given time period to the number of customers in the same period of time.
Average Purchase Frequency Rate (APFR) = Number of Purchases/ Number of
Customers.
Average Resolution Time is defined as the ratio of the total time taken to resolve tickets during the selected time period to the number of tickets resolved in the selected time period.
Average Resolution Time = Total time taken to resolve tickets The number of
tickets resolved.
Average Session Duration is defined as a Google Analytics metric that can report the average amount of time a user has spent on a particular website.
Bounce Rate can be defined as the percentage of site visits that are only single-page sessions, with the individual exiting without viewing a second page. It is used as a measurement of a website’s overall engagement.
Bounce Rate = Total number of one-page visits/The total number of entries to the website x 100
Customer Value (CV) is said to be the ratio of the average purchase value of an individual to the average purchase frequency rate of the same individual.
Customer Value (CV) = Average Purchase value of an individual/Average Purchase Frequency Rate of the individual.
Customer Lifetime Value (CLV) is a metric that tries to measure the maximum potential of spending of an individual throughout their lifetime with an organization. CLV is important as it tells us the potential to spend on an average that an organization can expect, which goes into the break-even analysis when an organization calculates their other expenses.
Customer lifetime value (CLV) = Customer Value x Average Customer Lifespan.
Churn Rate can be defined as the rate at which a customer stops doing any kind of business with an organization. It is frequently described as the percentage of service subscribers who discontinue their subscription within a given period of time.
Churn rate = Users at the beginning of Period-Users at the end of a period/Users at the beginning of period x 100.
Conversion Rate can be defined as the number of people converting or buying form a particular website or an app to the total customers visited the website or an app.
Conversion Rate = Number of people buying/ Total number of people visiting
the website or app.
Cost of Goods Sold (COGS) is also termed as the cost of sales or cost of services i.e. how much it costs to produce a product or services. The Cost of Goods Sold includes direct material and labour expenses which go into the production of every product or service that is sold.
COGS = Beginning Inventory + Purchase During the Period – Ending Inventory.
Cost Per Click (CPC) refers to the actual price an individual pay for each click in any pay-per-click (PPC) marketing campaigns.
Actual CPC = Competitor AdRank/Your Quality Score + .01
Cost Per View (CPV) means the price that gets paid when it is played, though it is not necessary to be watched the whole way.
Cost Per Thousand (CPM) also known as “cost per mile”, is a marketing term used to define the price of 1,000 advertisement impressions on a webpage.
Call to Action (CTA) is generally a statement designed to get an immediate response from the person reading it. It is used in businesses as a marketing strategy to get the target market to respond through action.
Customer Acquisition Cost (CAC) can be defined as the total cost of acquiring a new customer. It generally includes factors like advertising cost, the salary of the marketers, etc.
CAC = Total Cost spent on sales & marketing/ The number of customers acquired.
Click-Through Rate (CTR) is a metric that measures how many people click through an email in relation to how many people received the email.
Customer Satisfaction Score (CSAT) is defined as the customers’ responses to a very common survey question “How satisfies were you with your experience?” This is commonly answered with a numbered scale. One method to calculate the CSAT on a scale of 1 to 10 is
CSAT = Sum of all scores/Number of respondents x 10
Conversion Funnel is often known as “sales funnel”, which is generally the path the visitor takes until the end conversion. It is known as a funnel because there is a large surface area for users to enter the conversion funnel but still takes users to the same endpoint.
Cost Variance is basically defined as the process which indicates how much over or under budget the project is. It is generally used by program managers to determine the best way to utilize their remaining resources.
Cost Variance (CV) = Earned Value (EV) – Actual Cost (AC).
Drop Shipping can be defined as a supply chain management process in which the retailer does not keep goods in stock instead transfers the customer’s details and shipment details to either the manufacturer or another retailer or a wholesaler, who then ships the goods to the customer.
Exit Rate can be defined as the percentage of visitors to a page on the website from which they exit the website to a different website.
Email Open Rate is the percentage of people who open the email sent by any organization.
Email Open Rate = Number of Emails Read/Number of Delivered Emails x 100
Gateway also commonly referred to as the “payment gateway” is the platform that processes payments for online purchases.
Gross Profit Margin can be defined as the probability ratio which measures how much of every dollar of revenue is left over after paying the cost of goods sold.
Gross Profit Margin = (Revenue- Cost of Goods Sold)/ Revenue
Hit Rate is defined as the ratio of the number of completed sales to the number of sales attempts.
Hit Rate = Number of completed sales/Number of sales attempted
Lead Scoring can be defined as the methodology that helps us rank the leads to determine their sales-readiness.
Landing Page is generally a page where a visitor “lands” after they click on a link in an email, or ads from Google, Bing, YouTube, Facebook, Instagram, Twitter, or similar places on the web.
Minimum Cart Value can be defined as the check of the products before the checking out process of an individual on an E-commerce website or an app. It is also known as the “Product Count”
Monthly Recurring Revenue (MRR) is the amount of money paid monthly to an organization for the subscriptions of products or services by the customer.
Net Promoter Score (NPS) can be stated as an index ranging from -100 to 100 that measures the willingness of a customer to recommend an organization’s products or services to others.
Number of Sessions can be defined as the process in which an individual visit
to any website and proceeds to browse.
New Visitors Vs Returning Visitors: New visitors are those navigating to a website for the first time on a specific device, whereas returning visitors are those who have visited the website before and are back for more.
Organic Traffic is the way the user finds a website through a search engine query.
Page per Visit can be defined as the web analytics measure which helps us to identify, how many pieces of content a particular user or a group of users view on a single website.
Repurchase Rate is defined as the number of customers who repeatedly visit a website or an app to the overall customers in the given period of time. The repurchase rate helps to understand the business that an organization is doing form its repeated customers.
Repurchase Rate = Customers with > 1 orders/ total customers in the given period of time.
Retention Rate can be defined as the percentage of customers that an organization has retained in a given period of time.
Retention Rate = ((EC-NC)/SC) x 100, where:
EC – Number of Customers at the end of a period.
NC – Number of new customers during that period.
SC – Number of Customers at the start of that period.
Return on Ad Spends (ROAS) can be described as, the profits made by, and attributable to, advertising campaigns. The main aim of the calculation is to determine the effectiveness of a marketing campaign.
ROAS = Revenue/Cost
Responsiveness of a Website is the ability of a website to react quickly and positively irrespective of the technology or the computing device used.
Search Engine Optimization (SEO) is the process of enhancing websites to increase the visibility of the website and gain better rankings. SEO is a form of digital marketing method that uses Google and other search engines to bring users to a website by organic listings.
Subscribers Growth Rate can be defined as the growth of the individuals subscribing to a particular page within a given period of time.
Subscribers Growth Rate = Subscribers in the Present-Subscribers in the past/Subscribers in the past
NOTE: The variables (i.e. subscribers in the present and the subscribers in the past) should be in a given period of time.
Shopping Cart Abandonment is defined as the process in which an individual adds products to the cart on a website or an app but does not proceed to complete the purchase.
Cart Abandonment Rate = Number of transactions completed/The number of shopping carts created x 100
Site Traffic refers to the total number of visits to a website. The higher the site traffic, the higher the people are using the website.
Value per Visit is defined as the ratio of the number of visits to the total value created.
Value per Visit = Number of visits/Total value created
Web Traffic can be defined as the amount of data sent and received by a visitor to a website.
Conclusion:
KPIs can be confusing and overwhelming. But you should invest your effort and time into measuring and improving crucial KPIs. Because that is where your eCommerce success lies in.
Not only eCommerce but for any business, KPIs are the crucial components of your growth.
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