There are lots of metrics that are important for e-commerce. Traffic, subscribers, conversions, social media reach, on-site engagement, customer loyalty - the list goes on!
It’s enough to make your head spin! But what if you had to pick just four key KPIs? In this post, we want to take a look at the most vital metrics for e-commerce stores. 

Properly tracked, they’ll give you a complete big-picture overview, ensuring that your attention stays in the right places. They’ll also allow you to take a strategic, revenue-driving approach to improving all aspects of your e-commerce store.

What is a KPI?

A key performance indicator (KPI) is simply a performance metric measured against a company objective. For instance, if your company sets outs to increase its average order value by 20% in the next twelve months, your KPI will be the average order value over that given period of time.

Generally speaking, KPIs should meet all five of the SMART criteria. They should be specific, measurable, assignable, realistic and time-related.

It’s also worth mentioning that powerful analytics tools can reduce the hassle of having to track and calculate important metrics. Running an e-commerce store is hard enough, without the additional headache of having to organize heaps of data.


1. Visitor to Customer Conversions

This is probably the most important KPI overall. There may be numerous ways of breaking this metric down, such as new vs. existing customers and different traffic sources, but ultimately this is what it comes down to.

It’s the single best measure of your e-commerce store’s performance and the biggest contributor to your bottom line.

How many of your site’s visitors are making a purchase? 

Recent research shows that average industry conversion rates hover around 3%.

There are lots of different on-site elements that can impact conversions. The real key is to hone in on the opportunities that present the biggest possible impact and test alternatives.

Practical Tips

  • Low-friction check-out is key when it comes to boosting conversions. Remove all unnecessary obstacles to purchase, include a variety of payment options, and automate processes (such as log-in and one-click purchasing) wherever possible.

  • Test different types of media, like video, to gauge their impact on engagement, especially at the check-out stage. “Add-on” and “related” purchases are best shown at this stage.

  • Collect customer feedback after purchase (or cart abandonment)  to ascertain what motivated them to buy or why they didn’t go through with a purchase. Staggered payment plans can often be useful for overcoming buyer hesitancy. Direct feedback can be immensely useful for ascertaining brand trust.


2. Cost-Per-Customer

One of the easiest ways to boost revenue is to focus on lowering the average cost-per-customer. This requires both an on-site and off-site perspective.

eCommerce stores that make a long-term commitment to monitoring and improving their overall cost-per-customer are in a strong position to develop a customer-generation strategy that optimizes the best channels, targets the best markets and improves costs over time.

It can be difficult to put a price on visitors from particular sources, such as those that arrive through organic search or content marketing, for example. It’s still important, however, to try and gauge the level of marketing resources allocated to these types of marketing activities, even if doing so demands a long-term approach.

It’s also vital that you know exactly what your maximum cost is. This will allow you to kill ineffective campaigns before they seriously dent your bottom line.

Practical Tips

  • Evaluate all sources of traffic (paid, organic, referrals, direct etc.) and tie these channels with specific purchases.

  • With paid acquisition channels, especially online advertising, testing is the key. Try different types of copy, images, target audiences etc.

  • Explore free sources of traffic like organic search and social media marketing, word-of-mouth and referrals. These can often be hugely effective at driving down to overall costs.


3. Loyalty

There are a number of ways to gauge customer loyalty. One of the easiest is to track the number of customers that return to make a second purchase. Another is to measure the churn rate of subscribers in your loyalty scheme.

As it becomes more difficult and more expensive to acquire new customers, maintaining your current customer base should be high on the list of priorities.

Customer retention is far cheaper than acquisition.

A strong focus on developing customer loyalty also requires a personalized approach.  Understanding the types of products, offers and promotions that individual customers prefer can be a big factor in driving future purchases.

The level of loyalty your customers have also directly affects your average customer lifetime value, another key metric.

Practical Tips

  • Use analytics tools to fully understand existing customer preferences and behaviors. Pitch offers based on order histories, location, age-group etc.

  • Introduce a loyalty scheme. Most online retailers have some kind of loyalty programme for their customers and offering one can provide a competitive advantage.

  • Allow customers to access both your loyalty scheme and your store across a range of touch points. Mobile purchases continue to rise and more people are now using new tech to buy products online.

  • Streamline the returns process.

  • Monitor and improve the quality of your customer service. Customer service is growing in importance as a key competitive differentiator.


4. Cart abandonment

This metric is important enough to warrant its own entry.

Cart abandonment rates are ridiculously high. e-commerce should strive to limit drop-off at all stages of the buying process. Average cart abandonment is just under 80%.

There are a number of reasons that people abandon their orders, from unexpected costs to lengthy registrations. Whatever the case, your job is to identify and seal up these leaks as soon as possible.

Practical Tips

  • Streamline registration with automatic payment options like Google Wallet and Paypal.

  • Show shipping costs before customers confirm their purchase.

  • Minimise the number of promotions that customers have to view before purchasing.

  • If there are any offers, discounts or added bonuses (like next day delivery), then emphasize these. 

This is a guest post written by Skubana. Skubana is an all in one ERP that unifies omnichannel operations for online merchants such as inventory management, order fulfillment, purchase orders and analytics.