As an ecommerce business owner, tracking the performance of your online store is essential to determine its success. By measuring the right Key Performance Indicators (KPIs), you can evaluate how well your ecommerce store is performing and identify areas that need improvement. In this article, we’ll discuss the essential ecommerce KPIs that you should track to measure your online store’s performance.
Why Tracking KPIs is Important for Ecommerce
Tracking KPIs is crucial for ecommerce businesses because it helps you make data-driven decisions. By understanding your business’s performance through KPIs, you can adjust your strategies to optimize your store, attract more customers, and increase sales. Without KPIs, you’ll be making assumptions about your business’s performance, which can lead to ineffective marketing strategies and lost sales.
Essential Ecommerce KPIs
Conversion Rate
The percentage of website visitors that carry out a desired activity, such making a purchase, is known as the conversion rate.A high conversion rate means that your website is effective in persuading visitors to make a purchase, while a low conversion rate indicates that there may be issues with your website’s design or marketing strategies.
To improve your conversion rate, optimize your website’s design and user experience. Make sure your website is easy to navigate, has clear call-to-actions, and is mobile-responsive. You can also improve your website’s loading speed and use customer reviews and social proof to build trust and credibility with potential customers.
Average Order Value (AOV)
The average order value (AOV) is the average amount of money spent by a customer per order. A high AOV indicates that your customers are spending more money per order, which can increase your revenue and profit margins.
To increase your AOV, consider offering upsells and cross-sells. You can offer complementary products or services that are relevant to the customer’s purchase, and bundle products together to offer discounts or special promotions.
Customer Lifetime Value (CLV)
Customer lifetime value (CLV) is the total amount of money a customer will spend on your website during their lifetime. By tracking CLV, you can determine the value of your customers and adjust your marketing strategies accordingly to increase the number of repeat customers.
To increase your CLV, offer excellent customer service and personalize your marketing efforts. You can offer loyalty programs, provide personalized product recommendations based on their purchase history, and offer exclusive promotions to your loyal customers.
Cart Abandonment Rate
The percentage of consumers that add products to their carts but do not proceed with checkout is known as the cart abandonment rate. A high cart abandonment rate can indicate issues with your website’s checkout process or high shipping costs.
To reduce your cart abandonment rate, optimize your checkout process and make it easy for customers to complete their purchase. You can offer multiple payment options, simplify the checkout process, and provide clear shipping costs upfront to avoid surprises at checkout.
Traffic Sources
Tracking your website’s traffic sources can help you understand where your visitors are coming from and adjust your marketing strategies accordingly. By identifying which sources are driving the most traffic and sales, you can optimize your marketing efforts and increase your revenue.
To increase your website’s traffic, consider using search engine optimization (SEO) strategies such as optimizing your website’s content with relevant keywords, building quality backlinks, and improving your website’s loading speed. You can also use social media advertising, email marketing, and influencer marketing to drive traffic to your website.
Return on Advertising Spend (ROAS)
The income produced by your advertising activities is measured by the term “return on advertising spend” (ROAS).By tracking ROAS, you can determine the effectiveness of your advertising strategies and adjust them accordingly
Implement a loyalty program to increase customer lifetime value
Provide free shipping or reduce shipping costs to decrease cart abandonment rate
Invest in effective advertising strategies to improve your return on advertising spend
Regularly engage with your email subscribers to improve email open rates
Create engaging social media content to improve social media engagement
Improve customer service or product quality to increase customer satisfaction score and net promoter score
Optimize inventory management to increase inventory turnover
Streamline your shipping and fulfillment processes to decrease shipping and fulfillment time
Reduce costs or increase revenue to improve profit margins
Conclusion
Measuring the performance of your eCommerce store is crucial to determine the success of your business. By tracking KPIs, you can evaluate how well your online store is performing, identify areas that need improvement, and optimize your strategies for better results. The essential eCommerce KPIs you should track include conversion rate, average order value, customer lifetime value, cart abandonment rate, traffic sources, return on advertising spend, email open rate, social media engagement, customer satisfaction score, net promoter score, inventory turnover, shipping and fulfillment time, and profit margin. Use analytics tools and consider implementing the tips discussed in this article to improve your eCommerce KPIs and ultimately increase your revenue and profitability.