If you’re running an eCommerce business, you can’t rely on guesses and gut feelings to grow your business. Instead, you need to track important KPIs to analyze the performance of your eCommerce business and make data-backed decisions.
The number of sales, website traffic, and revenue is some of the common KPIs that every eCommerce brand track and analyze. However, if you want deeper insights into your customer behavior, website performance, and other aspects of your business, you need to track KPIs that align with your overall business goals.
In this article, we have collated a list of the important eCommerce KPIs to gather deep insights that can help you make crucial business decisions and grow your business to the next level.
What is Ecommerce KPI?
E-commerce KPIs are key performance metrics that you can use to analyze the performance of the overall company, teams, and individuals against the overall business goals.
Whether you are a solopreneur, a small or a large company, you must have defined the goals for your company in terms of profit, revenue, or market share that you want to achieve in a month, quarter, or yearly. So, to ensure that every individual and team is contributing to achieving those goals, you need to define some metrics based on which their performance can be measured and tracked – those metrics are called KPIs.
By tracking these metrics, companies can determine what is working for them and what isn’t. Based on this, you can optimize their strategy to improve the performance and thus the results.
List of Important Ecommerce KPIs
Now that you know what KPIs are and how they can be useful in growing your business, in this section, I have listed KPIs that you may want to track for the sales, marketing, and customer service teams.
Ready? Let’s get started.
Ecommerce KPIs for the Sales
Sales KPIs imply how your online store is performing in terms of revenue and conversions. Using these KPIs, you can gather insights into how your store website is performing and what can be improved for better results.
Here are the important eCommerce sales KPIs you should track –
1. Average Order Value (AOV)
Average Order Value is sometimes termed as an Average Market Basket. It lets you identify how much customers spend per order. Mathematically, it is calculated as:
AOV = Total Revenue/ Number of Orders
You can use this metric to create offers based on minimum order amount to encourage customers to spend more on your store.
2. Gross Profit
Gross Profit is a crucial eCommerce KPI for any business owner as it shows how much money the company makes in profit after deducting the amount it costs to you in manufacturing or outsourcing from other sources.
It is calculated as –
Gross Profit = Total selling price of goods - Total purchasing price of goods
The higher the Gross profit you can gain, the better your business is performing. You can increase the price of goods on your website for higher gross profits, but for that, you should have price control, which comes only with strong brand loyalty.
3. Conversion Rate (CR)
Conversion reveals how many visitors on your website are getting converted or becoming your customer. Conversion rate is calculated in terms of percentage which determines the rate at which visitors are purchasing your products.
Conversion Rate (CR) = (Total visitors on the Website/Total Conversions) ✕ 100
The more the CR, the better your eCommerce site is performing. And by implementing proper strategies, you can easily improve the conversion rate for your online store.
4. Shopping Cart Abandonment Rate (CAR)
CAR shows how many visitors are abandoning the Shopping cart after adding products. It helps you determine at which rate shoppers are leaving your site without completing the purchase.
CAR = 1 - (Total Completed Transactions/Total number of Shopping Carts) ✕ 100
There can be any possible reason why customers leave a Shopping cart without completing the purchase – you need to identify the common reasons and resolve them to improve the CAR for your online store.
Generally, the lower the shopping cart abandonment rate, the better your website is performing. You can read our guide on how to reduce shopping cart abandonment to improve the results.
5. Customer Lifetime Value (CLV)
CLV makes you aware of the fact that how much a customer is valuable to your brand over the duration of their association with your brand. It is calculated as –
Customer lifetime value = (Annual Profits contribution by customer X Number of years as customer ) – the Customer Acquisition Cost
CLV is a direct indication of how loyal customers are to your brand. By providing quality products, excellent customer services, and offers, you can easily gain their loyalty and thus improve the CLV.
6. Churn Rate
It determines the rate at which the customers are leaving your brand or are not renewing subscriptions. It can be calculated using this formula,
Churn rate = (Lost customers in a time period / Customers in the same time period) x 100
You can track the churn rates monthly, quarterly, or yearly. if the churn rate for your store is high, you need to figure out the reason behind it and resolve it ASAP before losing more customers.
7. Customer Acquisition Cost (CAC)
This eCommerce KPI determines the cost that you are spending in acquiring a new customer. Your acquisition cost should be as low as possible for a higher profit margin on products.
It can be calculated as follows,
CAC = Cost spent on acquiring customers/No. of new customers
The cost spent is usually the amount you spend on marketing and advertising in a period of time to acquire new customers. As a marketer, your goal should be to keep the CAC lower than the selling price of products for positive results.
8. Repeat Purchase Rate (RPR)
It is also known as the Retention rate, the number of customers who returns to your online store to make more purchase. It is another metric to measure customer loyalty toward your brand.
RPR = Purchases from Repeat Customers/Total Purchase
Higher RPR is generally considered better for business growth as it shows customers are loyal to your brand and are willing to spend more. Read our complete guide on increasing customer retention rate to find effective strategies to improve RPR for your store.
Ecommerce KPIs for Marketing Team
Sales KPIs are important, but you can’t drive sales without effective marketing strategies. And, to measure the effectiveness of your marketing efforts, you need to track KPIs beyond the number of clicks, impressions, etc., – you need to track KPIs that show how marketing campaigns contribute to your overall business goals.
So, here are some of the important eCommerce marketing KPIs that you must track.
1. Website Traffic
It is the most important metric for an eCommerce website and most of the KPIs you will see are related to the website traffic. It is the number of people who visited your online store during a specific period of time.
You can track and analyze your website traffic using analytics software like Google Analytics. It is a free tool that tracks your website traffic in real time and provides various data on website visitors.
2. Average Session Traced on the Website
The average amount of time that a visitor spends on your store at a single visit determines the average session traced on the website.
Average Sessions = Total Session Duration/Total Number of Sessions
3. Pageviews Per Session
This eCommerce KPI tells you the average number of pages that a customer visits to reach his desired product.
Higher pageviews per session will degrade your website performance as a whole.
Pageviews per Session = Total number of Pageviews/Total Number of Visitors
4. Bounce Rate
The number of visitors who decide to leave after visiting only a single page of your website. You should aim to reduce this number by making your website more compelling for the users.
Bounce rate = Total Number of one page Visits/Total Number of Entries to your Website
5. Email List Growth Rate
This eCommerce KPI evaluates the growth list of email records. This is the most important KPI to upgrade your overall performance.
Email List Growth Rate = [(Total new subscribers-Total Unsubscriber)/Total Subscribers]✕100
You can refer to our guide on eCommerce email list building for some proven and actionable strategies you can use to grow your email list.
6. Email Bounce Rate
The number of emails sent by the sender but not delivered to the receiver. With a higher email bounce rate, your performance degrades as users will not be aware of your deals on time. You should opt to change your email hosting service.
Email Bounce Rate = (Total Emails that Bounced/Total Email Sent) ✕ 100
7. Email Open Rate
This eCommerce KPI tells the rate of emails that were read by the recipients. It is calculated as follows –
Email Open Rate = (Total Unique Open/Total Emails Sent Successfully) ✕ 100
For a higher email open rate, you can start by using compelling subject lines that intrigue customers to find what’s inside it. You can refer to our list of eCommerce email subject line examples for some ideas.
8. Email Click-Through Rate (CTR)
The rate of email receivers who clicked on the link that was attached by you in the email. The email CTR is calculated as follows –
CTR = (Total Individual Clicks/Total Email Opens) ✕ 100
One of the effective ways to increase your email CTR is to be clear with your CTA and guide recipients to take the required actions.
9. Email Conversion Rate
This eCommerce KPI reveals the rate of customers who purchased something by clicking on the link attached to the email.
Email Conversion Rate = (Total Conversions from Email/Total Emails Sent) ✕ 100
The higher the email conversion rate, the more impactful your email campaign is, which eventually leads you to higher profit.
10. Average CTR
Average CTR gives you an insight into how catchy your meta description is that attracts traffic to your online store.
Average CTR = Total Clicks that Ad Receives/Total Number of Impressions
Ecommerce KPIs for Customer Service Team
You can’t succeed in an eCommerce business without offering proper customer support. Customers always have queries related to products, shipping, returns, etc. And, you have to be there to help them with their queries.
So, here are some of the important eCommerce KPIs that you must track to analyze the performance of your customer support team –
1. Customer Satisfaction Score (CSAT)
This specific eCommerce KPI can be measured by a customer survey. This implies you have to take customer responses after every purchase.
CSAT= Sum of all Scores/Total Respondents
The survey questions can be, How satisfactory was your experience shopping with us? Or How was your experience with our product?
The customer responds on a scale of 1 to 5/10. The better the number you get on the scale, the better your performance.
2. Net Promoter Score (NPS)
The NPS KPI tells you how likely buyers are to refer your brand to a friend or colleague, giving insight into your relationships with customers and loyalty. It is calculated as follows –
NPS = % of Promoters-% of Detractors
Based on your score, you can identify three varieties of users, which are as follows –
- Promoters = respondents who give 9 or 10 scores.
- Passives = respondents who give 7 or 8 scores
- Detractors = respondents who give a 0 to 6 score
3. Customer Service Email Count
This eCommerce KPI measures the total number of return emails that the customers send back to your customer service team.
4. Refund/Return Rate (RR)
The return rate or refund rate determines the cost that you charge when any customer returns an order.
RR = [(Customer Value-Original Value)/ Original Value] ✕ 100
A high refund rate implies you are disappointing customers’ expectations, which results in a connection burst in your relationship.
5. Customer Service Phone Call Count
This measures your customer services team’s availability to the customer via phone.
6. First Response Time
This represents the average amount of time it takes to respond to a customer’s query. Try to optimize it as much as possible.
7. Average Resolution Time
It measures the amount of time required to resolve any issue by your customer service starting with the point when the customer first came with his issue. Try to keep it as low as possible to maintain your growth.
8. Customer Service Chat Count
Some online business owners exhibit live chat on their eCommerce websites. If you have a live chat facility then you should have a customer service chat count.
9. Active Issues
This eCommerce KPI indicates how many issues are still in progress.
10. Hit Rate
Hit Rate = Total sales of single product/Total customers who contacted for the customer service team
Ready to track the KPIs for your business?
Now, this is the correct time to say that knowledge is Power!
Starting an eCommerce business is easy, but running it to increase revenue and achieve business goals is another game. You need the right data to measure every aspect of the business and build a great team to help you use these data to achieve better results.
In this article, we have shared many important eCommerce KPIs, but it doesn’t mean that you have to track all the metrics – just pick the ones that match your business goals and configure your analytics reporting tools accordingly.
