These days, with every industry seeing an increasing amount of competition, digital marketing in particular, it is imperative for firms to periodically monitor their performance. By tracking the key performance indicators, businesses can assess which areas need what kind of improvement or pivoting. These indicators can be very specific to any business as not every business can track the same KPIs to assess their performance, Let’s see what are some of the most important ecommerce KPIs for tracking business and how they help you grow your business.
What are E-Commerce KPIs for Tracking Business?
A key performance indicator helps a business to identify how well or poorly they are performing in online retail and what areas they need to improve. They are mostly used for tracking online sales and engagement on the website. Parameters like average order value, leads and conversion rates, website traffic and average clicks can be easily accessed by tracking the specific indicators. The main purpose of these indicators is to help a company scale its business and take relevant measures to improve its overall performance and growth. E-commerce KPIs for tracking business help you figure out if your business is achieving its targets or not. If yes then how effectively and efficiently, and if not then what is pulling your business back?
There are as many e-commerce KPIs as you could think of but not every business can use every type of KPI to estimate the performance and growth. The choice of indicators purely depends on your business goals, both long-term and short-term. We have listed down e-commerce KPIs for tracking business examples so you can choose the ones that align with your business objectives!
Top 10 E-Commerce KPIs for Tracking Business
1. Conversion Rate (CR)
Conversion rate could be one of the most important e-commerce KPIs for tracking business. This KPI is crucial for businesses that want to measure how many people are actually converting into their customers. This KPI can help you evaluate how well your online business is doing as they in some way depict the actual sales your business has achieved through online retailing. Conversion rates can be measured by tracking the data of how many people have visited your website and actually purchased a product or subscribed to your business or services.
2. Cart Abandonment Rate
The shopping cart abandonment rate tracks the percentage of the number of consumers who added products to their carts but did not buy anything. When they abandon the purchase, it is a loss for the business. Thus measuring what percentage of customers do that will help you identify what issues occurred due to which customers did not make the final payment or place the final order.
3. Customer acquisition cost
This is one of the essential e-commerce KPIs for tracking business and measuring its growth and performance. How much cost you have neared to acquire new customers successfully can be determined with CAC. this KPI calculates all the costs that have been incurred by your business to acquire new customers including marketing and advertising costs, website development and maintenance costs and salaries of the sales staff in the business.
4. Return Purchase Rate
Another important indicator for tracking your business performance is the Return Purchase Rate. This helps you identify the percentage of customers who are returning your products after making a purchase. A higher Return Rate could be really bad since it would mean that the customers are not happy with your products or services or both.
5. Average Order Value
The average value of the order placed by your consumers can be a great way to identify the total sales and revenue of your online business. This will give you how much an average customer spends on your online store. You can use these e-commerce KPIs for tracking business advertising costs, coming up with a better pricing strategy and understanding the purchase patterns of the consumers.
6. Inventory Turnover
Inventory Turnover KPI can help you identify how quickly your current inventory is selling out. A high Inventory turnover rate will indicate a surge in sales while the lower rate will mean that your business is not generating as many sales as it is supposed to. You can predict and manage the right inventory levels and also prevent inventory from expiring if the sales are less and the inventory stock is in excess.
7. Return on investment (ROI)
One of the most crucial e-commerce KPIs for tracking business helps to truly assess the performance and profitability of your business. It assists in identifying whether your current strategies are actually working out or not. You can find out if the money you have spent is giving you handsome returns or if is it all going in vain. A higher ROI means that your marketing campaigns and strategies are working out for you while a lower ROI calls for you to revamp your marketing and investment decisions for better profitability.
8. Repeat Purchase Rate
The Repeat Purchase Rate KPI helps in identifying the number of customers who purchase products or services from your business more than once. This indicator is crucial because it helps you measure the percentage of customers who are actually happy with your products and services since they return to make a second purchase from your online store. Customer loyalty can be assessed using this parameter and the higher the RPR, the better it is for your business.
9. Customer Lifetime Value
This helps you predict the total amount of revenue that you can expect from a customer through your relationship with them. This helps you identify potential revenues on the basis of past purchasing patterns of the customers. This indicator is important for your business so you know which customers are worth your business and how you can improve their experiences in order to retain them for a lifetime.
10. Churn Rate
How quickly are customers leaving your website makes a huge difference for your business. Churn Rate KPI can help you identify potential problems on your website or in your products that are making the customers leave without showing any further interest. Pricing, low-quality pictures, lack of product descriptions or a poor or complicated website interface can lead to a higher churn rate.
Conclusion
Using the right e-commerce KPIs for tracking business can help your business grow in the right direction. These indicators can help you identify the actual cause of the decline in sales or low engagement on your website and thus help you come up with better strategies and plans to improve customer experiences. However, not every business can use the same indicators. Thus, your unique business objectives should guide the selection and monitoring of your KPIs. You can utilise Shopify to tack KPIs and improve the quality of your business.
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