The Top 5 Ecommerce KPIs and Metrics for Your Retail Website

February 26, 2021 |
Reading Time: 7 minutes

Key performance indicators (KPIs) are like a GPS for your e-commerce business—they can tell you when your business is headed in the right direction or when it’s taken a wrong turn. With these all-important metrics, you can hone and refine your e-commerce site to better capitalize on your successes while making improvements where needed, and these are the kinds of changes that can help your business generate more revenue.

Let’s discuss the most important KPIs you should track for your ecommerce business.

What is a Key Performance Indicator?

Key Performance Indicators (KPIs) are quantifiable values that measure the performance of business objectives. They often directly reflect the success or shortcomings of business operations and help companies assess the best areas to focus their efforts to improve their performance.

For instance, a common KPI for online retailers is organic traffic or traffic generated from search engines, such as Google or Bing. Using a tool such as Google Analytics, organizations can begin to track their organic traffic metrics and calculate an average baseline performance. If their organic traffic is low, they can start to shift efforts towards content creation or SEO to help increase organic traffic. By reporting the monthly organic traffic for their site, the organization can use organic traffic as a KPI to assess whether their efforts are paying off.

Some of the most common KPIs businesses measure include:

  • Lifetime Value of a Customer (LTV): Revenue X gross margin X average # of repeat purchases.
  • Customer Acquisition Cost (CAC): Total marketing investment/ # of customers acquired.
  • Keyword Rankings: The position your site ranks for a particular keyword search.
  • Bounce Rate: The percentage of single-page sessions in which there was no interaction with the page.
  • Goal Completions: The total number of conversions.
  • Goal Value: The total value produced by goal completions on your site. This value is calculated by multiplying the number of goal completions by the value you assigned to each goal.
  • Return on Investment (ROI): The amount of money you gain compared to the marketing cost.
  • Return on Ad Spend (ROAS): Revenue earned compared to the amount spent on an advertising campaign.
  • Follower Growth: The number of followers on a social media platform increased over a period of time.
  • Social Media Engagement: Number of interactions with your social media content, including likes, shares, comments, messages, mentions, and tags.

What is a Retail KPI?

There are many retail KPIs businesses can use to measure the success of their business. Many retail KPIs are not applicable in an ecommerce environment, including sales per square foot or sales per employee. However, many other KPIs are essential for businesses to track to measure the success of their online storefront. Some of the most common retail KPIs in ecommerce include:

  • Conversion Rate: The number of purchasing customers/ total number of visitors. For instance, if 100 people visited your website and only five people purchased something, the conversion rate would be 5%.
  • Average Transaction Value: The average amount of money generated from shoppers visiting your website (total revenue/ number of transactions). For instance, if you earned $10,000 from 1,000 transactions, the ATV would equal $10.
  • Gross Profit: The total cost of goods sold – the cost of goods sold. For instance, if a business sold $20,000 worth of merchandise and it cost $12,000 to produce the goods, the gross profit would be $8,000.
  • Shopping Cart Abandonment Rate (CAR): Divide the total number of completed purchases by the number of shopping carts created multiplied by 100. For example, if there were 50 completed purchases and 400 shopping carts created, the CAR would equal 87.5%. [1- (50/400) x 100 = 87.5%].
  • Repeat Purchase Rate (RPR): The percentage of customers that complete multiple purchases. # of customers who made a purchase in a given time period divided by the total number of customers x 100. For instance, if you had 200 customers and 50 of them completed multiple purchases, your RPR would be 25% (50/200 x 100 = 25).

What KPIs Are Most Important?

KPIs are essential for businesses to track because they are an accurate way to measure the goals and success of your ecommerce business. To identify the best KPIs to track for your business, it’s best to determine what goals are most important for your business.

For instance, if your business wants to grow its social media presence, measuring follower growth and social media engagement are excellent KPIs to measure the success of your efforts. If increasing the amount of traffic to your site is your primary goal, keyword rankings and organic traffic are crucial KPIs to measure.

Types of Key Performance Indicators

KPIs fall into various categories, and it’s crucial to measure KPIs in multiple different categories. The most common types of KPIs in ecommerce include:

  • Quantitative: KPIs measured using numbers. There are two types of quantitative KPIs: continuous and discrete. Examples of quantitative are organic traffic and site views.
  • Process: KPIs that evaluate the efficiency of business processes. They are essential metrics to assess because they can help leaders measure the success of internal processes. For instance, if customers submit an average of 50 help tickets a day but only ten are resolved, a merchant must address how it can improve internal processes to resolve more help tickets in a timely manner.
  • Qualitative: KPIs that are not measured using numbers. Qualitative indicators help merchants assess customer satisfaction or service level. A standard qualitative KPI a business can use is a survey. If customers submit low satisfaction scores, a company can use the feedback to improve performance.

What Is the Difference Between Metrics and KPIs?

The main difference between metrics and KPIs is that KPIs measure how effective a company is meeting its target business goals while metrics evaluate processes’ success. For instance, reducing your ecommerce return rates is a great metric to evaluate the effectiveness of your operations.

Top Ecommerce KPIs

There are dozens and dozens of metrics you can use to measure your site’s performance. The best KPIs are typically simple, real-time, and quantifiable measurements that can directly affect a company’s profitability.

It’s integral for e-commerce retailers to partner with seasoned and experienced specialists at quantifying KPI data and showing businesses how they can integrate that KPI information into an online strategy that reaps the rewards.

Here are some of the most essential KPIs that can make all the difference in your ecommerce retail business:

top ecommerce kpis

1. Site Traffic

It’s vital to know how many people are coming to your site, but it’s also essential to know where that traffic is coming from. Are people finding your e-commerce site via organic search, Instagram marketing, or a pay-per-click ad? What keywords are driving people to your website? With this KPI, you can focus your marketing efforts and see what campaigns are bringing in results.

2. Conversion Rate

Of course, it’s one thing to get people to your website, but it’s something else entirely to get them to take action, whether that means placing an order or joining your email list. Conversion rate is calculated as a percentage, dividing the number of conversions by the number of site visitors during a set time period, then multiplying that number by 100.

There are numerous types of conversions, and you can measure different ones according to your business goals. Purchases are obviously the ultimate conversion, but you could also see how many people click on a video, sign up for e-newsletters, or visit a particular page on your site. You should be aiming for at least a 2.42% purchase conversion rate, which is the worldwide average.

3. Shopping Cart Abandonment Rate

Let’s say that the purchase conversion number isn’t what you want it to be. You’d want to take a look at this KPI, which can help pin down why site visitors are loading up their shopping carts but not pulling the trigger on ordering.

Typically, 69 of every 100 carts are abandoned before purchase. Perhaps the shipping fees are too high, or it takes too long to enter information to place an order. Pinpointing where these obstacles are in the ordering process can help you fix them, with the ultimate goal of improving that purchase conversion rate.

It’s worth your time: Business Insider estimated that in 2014 alone, abandoned carts represented $4 trillion in unsold merchandise, but with the right corrections, 63% of those lost sales could have been recovered.

If someone does purchase, you better make sure you can smoothly fulfill their order. Check out our quick guide on how to improve 3pl ecommerce fulfillment.

4. Average Order Value (AOV)

Purchases are also a great KPI source. The AOV is a simple calculation of your revenue divided by your number of orders. Obviously, the higher your AOV, the better it is for your revenue. Working with the right partner on your KPI can help you determine new ways to increase your AOV, such as offering free shipping with a minimum purchase amount or bundling products together.

5. Customer Lifetime Value (CLV)

Happy customers are more likely to be repeat customers, and that can be good for business. How good? That’s where this KPI comes into play. This figure calculates how much revenue can be generated from an average customer’s lifetime spending habits on your e-commerce platform.

Long-term customer retention can be a cornerstone of a successful online retail business: Bain & Company found that customers who had spent around three years shopping at a particular site spent 67% more than customers who were new to a site. This KPI combines three metrics in its calculations:

  • Your brand’s AOV.
  • The average number of purchases a customer makes per year.
  • The average time period for customer retention.

Transform Your Ecommerce Storefront With Intelligent Commerce

KPIs are a foundational tool for building a successful e-commerce platform. Nogin uses solution-driven data to help you grow the most important metrics to your brand and the best fit with your business goals.

Connect with us and learn more about how our expert team members can collaborate with you on creating a robust ecommerce strategy that will grow and energize your online retail operations to meet your brand’s goals and objectives best. Leverage our advanced and proprietary wholesale ecommerce platform and ecommerce services to explode your online revenue.

We’ve helped many clients transform their online storefront, including Blank NYC. They achieved a 100 percent growth in the first year, with a conversion rate up over 50 percent. Schedule a quick call below and check out more of our ecommerce guides below: