In 2022, key eCommerce KPIs to Monitor

The eCommerce market is expanding at an incredible rate. Global eCommerce sales will reach $5.5 trillion by 2022. It’s crucial that your business attracts new customers and keeps them coming back in today’s highly competitive market.

It is up to you to figure out how. First, you need to identify which eCommerce KPIs are important.

 

It may be difficult to determine which KPIs are most important in the long-term. The wrong KPIs could lead to wasted time, money, and other resources that could have been better directed elsewhere.

This guide will help you choose the best KPIs to use for your eCommerce business. These questions will be answered:

• What are eCommerce KPIs (Key Performance Indicators)?
• What eCommerce KPIs should be tracked?
• How do you choose KPIs to help your eCommerce business?
• What tools are best for tracking eCommerce KPIs

Let’s just get started, without further delay!

What are eCommerce KPIs (Key Performance Indicators)?

 

eCommerce KPIs (Key performance indicators) are a collection of quantifiable measures that can be used to evaluate the business’s performance over a period of time. These indicators provide insight into your efforts.

KPIs can help you measure success with your eCommerce strategy as well as to troubleshoot and adjust course as needed. There are many KPIs that you can choose from. What should you pay attention to?

Our team has worked with hundreds of companies and compiled a comprehensive list KPIs eCommerce businesses should track. These KPIs will help you get a solid idea of your business’ performance and where there are opportunities for improvement.

You want to learn about common misconceptions in eCommerce business development?
Read our article 8 Business Development Myths For eCommerce Store Owner

 

Track eCommerce KPIs for Maximum Sales

 

You spend your day (and nights) trying to increase sales for your eCommerce business. Let’s look at the most important eCommerce KPIs to gain valuable insight into your business’s inner workings.

• Conversion rate

 

Definition: The conversion rate is the percentage that customers took action after visiting your store. If you sell laptops and there are 100 people who visit your site and 20 of those visitors buy laptops, your conversion rate will be 20%. To determine how effective your marketing efforts are, you can calculate conversion rate and adjust as necessary.

How do you calculate? Divide the total traffic by the number of orders and multiply it with 100.

How you can improve: To increase your conversion rate, it is important to understand why people don’t convert. They may not see the value in your product, don’t trust you or doubt that you will be able help them achieve their goals with your product. You can improve your product and your store design to make it easier for customers to find what they are looking for.

• Conversion rate for traffic channel 

Definition The conversion rate per traffic channel refers to the percentage of customers who visited your store through a particular traffic channel. This helps you understand which channels drive the highest conversions. This KPI allows you to compare performance across traffic sources, and decide whether or not to invest in particular channels.

How do you calculate? Divide the number of conversions by the traffic to that channel.

How you can improve: Understanding where your current performance is good and where it is not is the first step. After identifying which channels are converting the least, you can start to identify what needs to be improved. You can analyze your sales funnel, the sequence of steps users go through before making a purchase. Then you can consider ways to make it more efficient. It is important to optimize all traffic channels for conversions.

• Customer Lifetime Value 

Definition. Customer lifetime worth (often called CLV, CLTV or LTV) measures the revenue generated by a client over the course of a relationship with your business. It includes every purchase made by a customer, starting with their first order and ending with their most recent transaction.

How do you calculate? Add the average purchase price to the number of purchases.

How can you improve: The best approach to increasing customer lifetime value is to put emphasis on customer experience. Good service, great products and competitive prices can all help increase your CLV. A high CLV for a particular brand or category might indicate that it is time to expand into related areas such as accessories or new colors/styles to increase sales.

• Customer Retention Rate (CRR 

Definition. Customer retention rate is the percentage that customers remain loyal to a brand. Companies must monitor customer retention rates to find out if customers are returning and what is driving them away.

How do you calculate? Take the number customers at the beginning of your business (E), subtract the new customers acquired over this period (N), divide this number by the total clients at the beginning of the year (B), then multiply this fraction by 100. Customer retention rate: ((E-N)/B)*100

How do you improve: Let your customers know that you value them and listen to their concerns. Make sure clients feel valued and appreciated by your company.

•  Repurchase Rate

Definition The repeat purchase rate, also known as the repurchase rate, is the percentage of customers that have bought more than once from a company in a given time frame. It is a measure of customer loyalty and retention. Also, it shows how likely customers are to purchase from you again. The purchase rate can give insight into your company’s ability to retain customers.

How do you calculate? Divide multiple customers by total clients.

How to improve: Customers who want to increase their repurchase rates should work hard to improve customer satisfaction. This could be achieved by offering excellent customer service or discounts for repeat customers. This goes without saying: ensure that your products meet customer expectations regarding quality, value, durability. Since 2022, customer retention has become a major focus. Because it is becoming more difficult and expensive to attract new customers, this has led to an increase in customer retention. Online shops are changing their business models to create deeper relationships with customers. They offer loyalty programs, rewards points and personalized recommendations using AI/ML technology.

• Average Order Value (AOV 

Definition: The average order value is the sum of all orders placed in a specified time period. The AOV is a measure of the revenue potential for your business and can be used to improve your marketing strategy.

Calculate: Divide total revenue by total orders.

Upselling is one of the best ways to increase your AOV. Upselling refers to offering customers additional products or services that may be of benefit. You might suggest insoles if someone purchases shoes from your shop. Cross-selling is also possible. Cross-selling can also be used. For example, if someone purchases a pair of shoes you might recommend that they also buy shoe polish.

• Shopping Cart Abandonment rate (SCAR) 

Definition: Scoring refers to the percentage of customers who add an item in their shopping cart, but don’t complete the purchase. It can be due to many factors, including the customer’s perceptions of value and poor navigation. Some shoppers might abandon their carts due to technical problems on your website. If they feel the price is too high, others may abandon their carts.

Calculation: The SCAR formula is calculated by multiplying the total sales by the initiated sales by 100.

How to improve Shopping cart abandonment can be a serious problem for online retailers. A study by Baymard Institute found that 69.82% shoppers abandon items from their shopping carts. Retailers can decrease shopping cart abandonment rates by offering free returns, accurate product information, making checkout as easy as possible, and providing detailed product information. Perhaps you will need to clarify your shipping policies so customers understand how long it takes to receive their orders. Issues with the checkout process are one of the main reasons customers abandon a website.

Are you looking to make it easier for customers to purchase your products? Watch this video to learn how to optimize your checkout.

 

• Gross Merchandise Valu (GMV) 

Definition: The Gross Merchandise Valu is a measure that shows the total sales of goods in a particular period. GMV is used to determine the success of an eCommerce company. It shows how successful a company has been.

How do you calculate: Multiply your total goods sold by the price of each product within a specified period.

How do you improve It is important to increase your GMV in a way that your company remains profitable and offers good deals. Increase customer engagement by regularly communicating with customers, discounting old stock and expanding your reach with international shipping options.

• Return on Investment (ROI 

Definition: Return on Investment is the measure that measures the profit generated by a particular marketing campaign. It is a comparison of the amount that you have spent and the amount that you have earned.

How do you calculate? ROI = Net profit/Cost of investment * 100

How can you improve Better data is key to a higher ROI. Start by identifying customers with high value and rewarding them with loyalty programs. You can also create personalized shopping experiences by using past purchases.

• Return on Ad Spend 

Definition: The return on ad spend is a measure of marketing effectiveness. It measures the revenue generated by a campaign compared to the amount that was spent on it. ROAS allows you to determine if your marketing efforts are bringing in the right results.

How do you calculate: ROAS = Revenue attributable ads / Cost ads

How do you improve Retargeting ads are a great way to increase your ROAS. Retargeting lets you target people who have visited your store before and are more likely to purchase again. This increases your ROAS as you spend less on new customers and more money on repeat customers. You get more value for every dollar you spend on advertising.

• Cost per Acquisition (CPA 

Definition: The cost per acquisition measures the cost of acquiring one paying customer at a campaign/channel level. CPA is important because it allows companies to assess how successful their marketing campaigns are in generating sales.

Calculate: Divide total cost by number of customers you have acquired through the same campaign/channel.

How do you improve: CPA stands for Cost Per Acquisition. The idea behind CPA states that companies should not spend more on marketing than what they make. You can improve the cost per acquisition by changing the type of ad shown to users, running more targeted ads that are specific for each target audience, and increasing the quality of landing pages.

• Customer satisfaction score (CSAT Score) 

Definition. The CSAT score is a measure of how satisfied customers are with a company’s products and services. This score is calculated by sending a survey after each purchase or support interaction.

How do you calculate? CSAT Score % = (Summ of All Scores / (Summ of Maximum Scores) x 100

How can you improve: While customer feedback is important for improving your business, it’s also true customers may not always be satisfied with the experience. It’s important to find out what customers don’t like about your business and resolve it so everyone is happy. It’s not about whether they will buy from you again, but also whether they would recommend your services to others.

How do you choose KPIs for your eCommerce business?

 

Albert Einstein stated, “Not all that can count counts, and certainly not everything that counts.”

All key performance indicators are not equally important for the success of your eCommerce company. These are some important things to keep in mind when selecting your KPIs.

• Set goals

Next, determine your long-term and short term goals. This will help you to understand what your KPIs are aiming at when you analyze them. If your goal is to double customer satisfaction by 2024, then it makes sense to create a KPI that measures customer happiness each year. This will allow you to see where you are at the moment and whether you’re making progress.

• Begin with the important things

It can be tempting to want to have all the information about your business. However, it can be overwhelming to keep track of all the KPIs and make it difficult to focus on the most important. There are only two things that really matter when it comes to selecting KPIs for eCommerce businesses: customer satisfaction and revenue. A company can’t survive without these two metrics. Start by looking at these two metrics, and then go from there.

• Your reality should be reflected in your KPIs

It is important that you choose KPIs that are most relevant to your company. Do not worry about comparing every KPI to another company. The most important thing is that the KPI makes sense for you and helps you reach your goals. KPIs can either be quantitative or qualitative. It doesn’t really matter what kind of KPI you choose, as long as they are accurate and help you understand the business’ performance.

• KPI should be related to other KPIs

Effective KPIs should always be related to other KPIs. This will give you a complete picture of your company’s performance. You need to assess how each of your KPIs performs together if you want to gauge the health of your company. If you want to improve marketing strategies, make sure you’re also improving customer service and product quality. To increase sales and content marketing, you can use eCommerce marketing to show more about your product. This ensures that you don’t focus on one thing at the expense or other areas.

• KPIs must be actionable

Most importantly, ensure that your KPIs help you to understand what improvements you need. KPIs can be used as a tool to improve your performance and help you reach your growth goals. Both you and your team should understand them.

It’s easy to get lost in numbers when you sell products online. Not all KPIs will be helpful in reaching your goals. To ensure you are tracking the right things, it is important to understand what each KPI stands for and how they relate to each other.

The Best Tools to Track eCommerce KPIs

 

There are many tools available for tracking eCommerce KPIs. Here are some of the top tools to track your eCommerce KPIs.

• Google Analytics

Google Analytics allows you to track every aspect of your traffic and sales. It is free to set up and it is easy to use. Google Analytics offers a lot of useful features to help you understand your customers. You can see which pages are the most popular, what devices visitors use, and how long they spend on each page.

• Semrush

Semrush provides a variety of features that will help you to analyze and optimize your marketing campaigns. Marketers of all levels can use the software, from novices to professionals.

• Amplitude

Amplitude has been rated as one of the most powerful eCommerce analytics tools on the market. It provides businesses with instant insight into what is working and what isn’t, so that teams can make positive changes. It provides detailed analysis of user behavior which allows for understanding different audiences.

• Glew

Glew provides all-in-one eCommerce analytics tools for Magento, Shopify and WooCommerce stores. It provides customer insights, merchandise analytics, and performance reports. Glew offers powerful insights to help business owners make the right decision at the right moment.

If you are new to eCommerce, it can seem daunting to analyze data. But with the right tools, it is easy. If you don’t regularly analyze your data, you might miss opportunities to improve customer service, increase sales, or cut costs.

Are you looking to start an eCommerce business? We provide a full range of Magento development services to ensure a unique shopping experience. Get in touch with our experts to answer all your questions.

 

Last Thoughts

There you have it. You must track key eCommerce KPIs in order to be an online retailer by 2022. These KPIs, along with a better understanding of your marketing performance will allow you to make informed business decisions and utilize your resources more efficiently.

You have many responsibilities as a business owner. These include managing inventory, refunds, inventory control, and fraud protection. It’s important to review your KPIs and compare them with industry benchmarks to see how you are doing in comparison to other businesses in your sector.

source https://www.gomage.com/blog/ecommerce-kpis/