Online businesses are always on the lookout for ways and means to enhance their performance and keeping track of their key performance indicators(KPIs) is one way of ensuring this.
E-commerce traders can make a better performance boosting decision by understanding which KPIs to measure their success in online sales.
When businesses regularly optimize their KPIs, it not only boosts their company’s performance but also highlights the grey areas that require improvement as well.
Therefore, for businesses it is crucial to be familiar with the link between e-commerce and KPIs and select them carefully to accurately measure the success of their online stores accurately, to stay ahead of the pack.
in short, KPIs are a measurement of how certain activities are successful within an e-commerce establishment and include Conversion Rate, Average Order Value and the number of orders per month, apart from some other relevant KPIs.
Without KPIs, businesses run the risk of making decisions purely on guesswork or unfounded predictions, rather than on solid data.
Note that KPIs by themselves have limited value. Their real power lies in analyzing the data they provide to create uniform strategies.
So it is important for you to familiarize yourself with the following Sales KPIs which are indispensable for understanding how your company is performing with regards to customer transaction and revenue generation.
- Conversion Rate (CR): CR measures the ratio of targets achieved with relation to the number of visitor hits on its website. Since improving CR is a top priority for brand boosting, getting reviews can help drive sales and re-assure future potential customers that they are making a sound choice. These targets may also be achieved through making the review process easy, through newsletters, loyalty programs, user generated content and social media campaigns.
- Average Order Value (AOV): The Average Order Value is used to calculate the average costs made on an order by a customer with the online merchant. This KPI helps the merchant to determine how much profit the business is making on each order. AOV is also of great help in understanding the buying behavior of its customers and provides a source of invaluable information about the businesses competitiveness.
Other examples of Key Sales KPIS are:
- Total Sales: Tracking sales on an hourly, daily or weekly basis to keep track of revenue flow
- Gross Profit: Evaluates the profit by deducting the total costs of items sold from the total sales
- Customer Retention Rate: Higher the customer retention rate, higher is the customer loyalty and satisfaction which are crucial for sustained growth
- Shopping Cart Abandonment Rate: High abandonment rate may point to friction in the checkout process
- Customer Lifetime Value: This is used to calculate how much an average customer will contribute during their lifecycle with your brand
- Revenue Per Visitor: The average revenue generated per site by a visitor is indicated by this KPI
Choosing and monitoring the right e-commerce KPIs
To select the appropriate KPI, make sure they align with your company’s specific objectives, like increasing sales or customer retention etc. Also ensure they are actionable and are linked with decisions that will drive your business growth.
It is also important to track KPIs effectively using tools like Shopify or Goggle Analytics and their built-in reporting tools. This will allow you to set a benchmark for comparing data over a period of time in order to monitor progress of your business goals.
Consistent monitoring will enable businesses to stay on track in making timely adjustments, ability to inform strategic decisions and drive effective actions with regards to customer service, sales, marketing and more.
Featured image credit: Windows/Unsplash
