Data is king in the world of ecommerce. If you’re not tracking your company’s data and analyzing every aspect of your business, you may be missing areas you can improve to ultimately earn more money.
With this guide, we will lay out the best key performance indicators (KPIs) to measure your success for 2021.
We’ll start with an overview of a KPI, including the characteristics one should possess to be valuable data. We’ll then give you a run-through of 19 ecommerce KPIs we think are most useful – with the formulas needed to calculate them.
What Is An Ecommerce KPI?
If you already know everything there is to know about a KPI and what attributes one should have, you can jump to the formulas here. If not, here is a quick primer.
A KPI is a measurement of how effective your business is at achieving set objectives. A KPI can be a variety of different variables specified by your unique business plan.
KPIs can be low-level and concentrate on specific departments (sales, marketing, customer service, etc.), or they can be high-level and focus on overall business performance.
What Is The Difference Between Ecommerce KPIs and Performance Metrics?
You probably remember the geometry adage, “a square is a rectangle, but a rectangle is not a square.” The same holds true for KPIs and Performance Metrics. A KPI is a metric, but a metric is not a KPI.
A metric can be any statistic of your business: your social media clicks, your website visitors, your revenue, the number of new orders. KPIs are your most important metrics, as these are the ones that genuinely demonstrate how your business is performing.
Ecommerce KPIs are also most often a calculation using two or more metrics (but not always). For example, here are two metrics you may have:
- Number of Website Visitors
- Number of Sales
If you divide the number of sales by the number of visitors, you’ll get your conversion rate – which is a KPI. We’ll get to more on these formulas later.
Before determining which KPIs contain the most valuable insight into your business’s success, it’s essential to understand what comprises a proper KPI and how to choose the ones that are pivotal to your gain.
With so much data available at your fingertips, knowing what information to use and how to use it gives you your real insight. Avinash Kashnik, a Digital Marketing Evangelist for Google and a Co-Founder of Market Motive, says it perfectly: “Most businesses are data-rich, but information poor.” In other words, the data is plentiful; you need to know and understand what to extract from it to give your business the most valuable information.
What Are The Qualities Of A Good Ecommerce KPI?
With so much data coming in and so many KPI options, which should your business monitor? Here are a few things to focus on:
- Your unique business goals: Choose KPIs that will affect your business specifically and support your overall performance. Set your goals using the KPIs. Rather than simply analyze them, you need a plan of what you’re trying to reach and how you’ll get there.
- Be realistic: Don’t choose goals based on market trends or competitors. Every ecommerce business is at a different stage, and your goals should reflect your unique business’s growth needs.
- KPIs should be measurable: The KPIs you choose to track should be quantifiable and qualitative to provide valuable insight for your company.
- Narrow them down: There are so many KPIs you could measure, but it’s essential to know which ones are the most meaningful for your business.
Below you will find some of the most important ecommerce KPIs for growth.
19 Ecommerce KPIs and Metrics To Track And Add Value To Your Data
1) Total Sales:
This is an important metric that comes into play for many of your other KPIs and their calculations.
It’s essential not just to track your total sales, but these sales figures need to be broken down by hour, day, week, month, quarter, and year. If you don’t have them broken down by every interval, you will have difficulty interpreting which of your sales and marketing efforts have worked the best and when..
You should also calculate your total sales with and without S&H fees.
2) Cost of Goods Sold (COGS):
This metric lets you know how much your business is actually paying to sell a product. This can include costs associated with manufacturing, your employee wages, advertising costs, and more.
3) Gross Profit:
Calculated by subtracting COGS from the Total Sales.
4) Conversion Rate:
This KPI is among the most important. Conversion Rate is the percentage of site visitors that end up purchasing. This is calculated by taking the total number of sales, dividing it by the number of visitors to the site, and multiplying by 100.
1,674 sales from 20,000 visitors in the day
1,674 / 20,000 = .08
.08 x 100 = 8% Conversion Rate
5) Conversion Rate By Channel:
Calculated the same way as the Conversion Rate KPI, except broken down by channel. This KPI gives you a better idea as to where to best utilize your budget and marketing efforts.
A channel is a unique source of traffic. Organic Google rankings are one channel, Facebook advertisements are another, and your monthly email newsletter is yet another.
Example from above:
Of 1,674 sales conversions, 1,000 arrived at your website from a tv commercial, and 674 arrived at your website from a Facebook promotion.
Your conversion rate by channel would be these broken down calculations to get a picture of traffic sources that work best.
6) Conversion by Device Type:
Like the above Conversion Rates, this one is broken down into device types. Did your visits that converted to sales come from mobile? Desktop? Android? Apple? This KPI can help you determine the devices that you need to focus your optimizations on. Device type also gives you insight into the habits of your customers, information that can factor into your marketing efforts. For example, if you notice you convert way more visitors on desktop computers than mobile devices, maybe your product is less of an impulse buy.
7) Customer Lifetime Value (CLV):
Another of the most important KPIs, as the CLV is the overall health of your customer relationship and retention efforts. Your ecommerce business can increase this number over time by focusing on customer service and increasing customer loyalty.
The CLV also factors heavily into your CPO (more on this later). If your CLV is $1,000 because your customers tend to spend $100 per month and last for 10 months, then maybe you can spend more money getting new customers, even though that initial purchase is just $100.
8) Cart Abandonment Rate (CAR):
How many visitors add your product to their cart but leave the site before they check out?
According to the Baymard Institute, the average ecommerce online shopping cart abandonment rate is nearly 70%. You want to do what you can to decrease this number. If it’s too high, you may need to evaluate where the friction lies in your process or what factors are causing them to turn the other way. Is your checkout process complex? Do you have website errors? Are your shipping costs too high? These are a few reasons they may be leaving.
The CAR is calculated by taking the number of completed transactions and dividing it by the number of shopping carts created x 100.
72 completed transactions out of 158 shopping carts
72 / 158 = .46
.46 x 100 = 46% Cart Abandonment Rate
9) Average Order Value (AOV):
This metric is how much a customer typically spends on a single order. This is calculated by dividing all sales by the number of customers.
$14,452 in sales across 210 customers
$14,452 / 210 = $68.82 AOV
AOV really comes into play when you’re working on your post-transaction upsells and your offers. For example, if you sell a $30 yoga mat you may think your AOV will be $30. But if you offer a couple bundles at checkout, like Buy 2 Get 1 Free for $59.99 and add some post-transaction upsells to purchase related products or additional quantities at a discount, your AOV could (and should!) very well be closer to $60.
10) Revenue Per Visitor (RPV):
This calculation combines both the conversion rate and the AOV to paint a big picture. This is how much revenue each visitor is bringing in.
$14,452 in sales across 4,598 visitors
$14,452 / 4,598 = $3.14 RPV
11) Add to Cart Rate:
This is not one of the most popular metrics, but it is undoubtedly vital. This lets you know you’re attracting the right people and if what you’re offering meets the expectations of what they came for.
To calculate this, take the total number of visitors that added an item to their cart and divide it by the total number of visitors.
12) Return on Investment (ROI):
How much have your efforts earned you in your ecommerce business? The higher this number, the better. The ROI takes into account everything you’ve spent to get what you did in profits.
This is calculated by subtracting how much you’ve spent marketing a product from your total profit from the product. Then this number is divided by that same spending, and the result is multiplied by 100.
You should consider breaking this down by source to completely understand where your efforts were best rewarded.
You spent $2000 to market your product with Facebook ads. You brought in $17,500 with the campaign.
($17,500-$2000) / $17,500 = .89
.89 x 100 = 89 % ROI
13) Cost Per Order (CPO):
Total advertising campaign cost divided by the number of orders = CPO
Example: $2000 spent on the campaign where you received 83 orders.
$2000 / 83 = $24.10 per order
14) Churn Rate:
An important metric, especially for those who utilize continuity marketing in their ecommerce business, such as a product subscription. This is calculated by dividing the number of churned customers (those who have left your subscription) by the total customers (x 100)
14 customers canceled their product subscription in April out of your 1000 subscribers.
14/1000 = .014
.014 x 100 = 1.4% Churn Rate for April
15) Inventory Levels:
An important metric that tells you how much product stock you have, how long it has been sitting idle, and how quickly your product has been selling.
16) Site Traffic:
The total number of visitors to your ecommerce landing page
17) Time on Site:
How much time a user is spending on your site. More time is excellent, as it means they are engaged with your product, interested in what you’re offering, and aren’t being turned away. This time spent should involve blog content, videos, and other interesting, unique content – not spent in the checkout process. The checkout should be quick and seamless.
18) Bounce Rate:
The number of users who exit the site after viewing the page. They did not click around or investigate your product further; they simply took a glance and left. This rate is significant, as you’ll need to analyze it to understand and remedy why customers aren’t sticking around.
Bounce rate is calculated by the total number of one-page visits divided by the total number of site entries (x100).
Your site had 190 visitors leave out of 1600 that visited your site that day (the other 1410 visitors clicked something and explored, they didn’t necessarily purchase)
190 / 1600 = ~ .12
.12 x 100 = 12% Bounce Rate
19) Net Promoter Score (NPS):
This is a unique but vital KPI. It is one that requires customer input to calculate it. The Net Promoter Score is based on a 0-10 scale on how likely your customer is to recommend your product to someone else.
This KPI offers the most direct insight and feedback from your customers into how satisfied they are and how well your word-of-mouth marketing might work.
To calculate this, you must first ask the question: How likely are you to recommend our product?
Those who give you a 9-10 are considered promoters. These people may talk positively about your product to others. A 7-8 is passive, meaning they may not say anything at all. And 0-6 are detractors. These are people that may offer negative feedback to friends and family, hurting your profits.
The NPS is calculated by taking the % of promoters and subtracting the % of detractors. You’ll certainly want this to be a positive number. A negative score, meaning the critics outnumber your advocates, can be a cause for concern, and you’ll want to investigate reasoning promptly.
Setting Goals With Your KPIs
The determination of which KPIs are imperative data for your business growth comes both before and after your goal setting. You may decide which KPIs fit best, set goals, and later determine a different goal and group of KPIs that may better help your business.
Here are some key performance indicator templates that show you examples of goals with some KPIs you might use to track and reach a goal:
Goal: Increase sales by 30% in the next year
KPIs You Might Use:
- Total Sales (Daily, Monthly, Quarterly, Yearly)
- Conversion Rate
- Conversion Rate by Channel
Goal: Grow landing page traffic by 20% in the next quarter
KPIs You Might Use:
- Site Traffic (Per Day, Week, Month, Quarter)
- Bounce Rates
Goal: Increase Each Customer’s Spending By 10%
KPIs You Might Use:
- Revenue Per Visitor (RPV)
- Average Order Value (AOV)
- Product Affinity
There are many more KPIs you can measure, and even some you can come up with that best fit your unique business and goals.
Many of the goals you set can utilize KPIs you wouldn’t necessarily think about, so it’s crucial to analyze and understand your data. For example, you may want to explore the KPI of Time Spent on Site for increasing customer spending. While not directly related to their order value, you may find that those who spend the most time on the site have the highest order values.
Are you looking to increase your company’s key performance indicators? Mojo is an enterprise-level ecommerce platform used by top marketers that streamlines your sales and makes meeting goals seem effortless.
With unlimited A/B testing capabilities, you can make simple adjustments that tweak your KPIs’ performance to meet your goals better and faster.
Mojo boasts the highest conversion rates for your ecommerce business. Average conversion rates (data from June 2019):