Performance should inform business decisions and KPIs should drive actions.
Key performance indicators (KPIs) are like milestones on the road to online retail success. Monitoring them will help ecommerce entrepreneurs identify progress toward sales, marketing, and customer service goals.
A performance indicator is simply a quantifiable measurement or data point used to gauge performance relative to some goal. As an example, it may be a goal for some online retailers to increase site traffic 50 % in the next year. Relative to this goal, a performance indicator might be the number of unique visitors the site receives daily or which traffic sources send visitors (pay-per-click advertising, search engine optimization, brand or display advertising, or a YouTube video).
For some goals there could be many performance indicators — often too many — so often people narrow it down to just two or three impactful data points known as key performance indicators. KPIs are those measurements that most accurately and succinctly show whether or not a business in progressing toward its goal.
Setting Goals and Identifiying KPIs
Selecting KPIs begins with clearly stating goals and understanding what areas of business impact those goals. Of course, KPIs can and should differ for each of an online retailer’s goals, whether those are related to boosting sales, streamlining marketing, or improving customer service.
Here are a few examples of goals and associated KPIs:
GOAL 1 — Boost sales 10% in the next quarter. KPIs include daily sales, conversion rate, site traffic.
GOAL 2 — Increase conversion rate 2% in the next year. KPIs include conversion rate, shopping cart abandonment rate, associated shipping rate trends, competitive price trends.
GOAL 3 — Grow site traffic 20 percent in the next year. KPIs include site traffic, traffic sources, promotional click-through rates, social shares, bounce rates.
GOAL 4 — Reduce customer service calls by half in the next 6 months. KPIs include service call classification, identify of page visited immediately before the call, event that lead to the call.
It should be easy to see that there are many performance indicators, and the value of those indicators is directly tied to the goal progress measured. Monitoring which page someone visited before initiating a customer service call makes sense as a KPI for GOAL 4 since it could help identify areas of confusion that when corrected would reduce customer service calls, but that same performance indicator would be almost useless for GOAL 3.
With the idea that KPIs should differ based on the goal being measured, it’s possible to consider a set of common performance indicators for ecommerce. Here are 32 common ecommerce key performance indicators. Just remember that the performance indicators listed below is in no way exhaustive.
32 Key Performance Indicators
Sales Key Performance Indicators:
Hourly, daily, weekly, monthly, quarterly, and annual sales
Average order size (sometimes called average market basket)
Shopping cart abandonment rate
New customer orders versus returning customer sales
Cost of goods sold
Total available market relative to a retailer’s share of market
Product affinity (which products are purchased together)
Product relationship (which products are viewed consecutively)
Marketing Key Performance Indicators:
Unique visitors versus returning visitors
Time on site
Page views per visit
Day part monitoring (when site visitors come)
Chat sessions initiated
Facebook, Twitter, or Pinterest followers or fans
Pay-per-click traffic volume
Number and quality of product reviews
Brand or display advertising click-through rates
Affiliate performance rates
Customer Service Key Performance Indicators:
Customer service email count
Customer service phone call count
Customer service chat count
Average resolution time
Once you have set goals and selected KPIs, monitoring those indicators should become an everyday exercise. And most importantly: Performance should inform business decisions, and you should use KPIs to drive actions.
Lui Robert De Luna is a self made, self started Entrepreneur, UX Designer and Digital Content Creator. He loves coffee, his dog Chocho and travel specially getting into weird mis-adventures. When he's not managing E-commerce websites and crafting great social and digital campaigns, he is perfecting his art of cinematography and directing, his passion is making odd music videos! hummmmmmm visit his site www.luisdeluna.com to see his work : )