The digital world has brought us many good things, especially for businesses. At a strategic level, it is essential to make decisions based on facts, or as we would say now, on data . It is one of the keys to success, as it allows us to be clearer, more accurate, and to better understand our customers and their behavior. Let's focus on the most important KPIs for an e-commerce.
The good news is that it is now super easy to measure this data, with tools like Google Analytics , or the statistics within each CMS ( Content Management System ), such as Shopify , PrestaShop , WooCommerce , Magento , etc.
For an online business, such as an e-commerce, it is crucial to do a good analysis of its metrics. These metrics tell us about the customers who enter our website, their behavior, such as how many pages they have visited, and for how long, sales, best-selling products, etc. Knowing area code malaysia list how to read them and knowing which statistics you should prioritize is key for your business, that is, the most important KPIs for your e-commerce.
But measuring is one thing, and knowing which data really matters is another. The first thing to know is the difference between metrics and KPIs.
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KPI's vs Metrics
KPIs that EVERY e-commerce should measure
KPI's vs Metrics
Metrics are data . That is, all the data that tells us about the performance of a business, as well as data of general interest. For example, number of visits, sales in a month, followers on Instagram, investment in marketing, age and gender of your users, and so on.
But KPIs are much more than just data, they are the metrics we use to measure objectives . The literal translation of KPI is Key Performance Indicator . In other words, they are indicators of the fulfillment of strategic objectives. And in general, KPIs are the result of mathematical operations based on metrics. A very common way to measure a KPI is as a percentage, since it gives you an overall view of your objective and whether you are achieving it.
Presenting data in dashboard. Measuring the most important KPIs for an e-commerce
Therefore, before knowing which KPIs to analyse, you need to have defined your business objectives . For example, imagine that your goal for the end of 2020 is to increase your website traffic by 50%, then your KPI is the percentage increase/decrease in the differential between visits in 2020 vs. those in 2019 ((no. of visits in 2020/no. of visits in 2019) x 100).
Another example, and the most common among all e-commerce, is sales. Your goal for 2020 may be to invoice 100 thousand euros, then your key metric will be the % of turnover you need to reach those 100 thousand euros. This will allow you to organize your actions throughout the year, and plan what investments in marketing and sales you will have to make to reach that goal.
KPIs that EVERY e-commerce should measure
As we mentioned before, a KPI helps us measure our goals. And there are 3 common goals for any online business: increasing sales, increasing the conversion rate and increasing website traffic.
Let's look at the most important KPIs for an e-commerce. What data do we need to measure to analyse whether we are meeting our objectives?
Objective #1: SELL MORE
Obviously we are going to compare the sales of this period with the previous period as well as the turnover , but there are also other factors to take into account. For example, the e-commerce conversion rate (i.e. of all the users who visit the website, how many have purchased), and the number of visits .
Objective #2: HIGHER CONVERSION RATE
If we want a greater number of visits to become purchases, there are several KPIs that help us see the performance of our e-commerce. Thanks to these, we can see if there are phases, stages, or parts of the website that need to be changed/improved.
You have to analyze the conversion rate , the "added to cart" abandonment rate , the funnel within the payment process: that is, the % of users who abandon the payment process , it may be at the beginning because a lot of personal data is requested, or at the end because the payment method is very long, trends in the type of shipping , or the prices , if it is very expensive, or I only sell with discounts.
Digital marketing funnel. Increase conversion rate in an e-commerce
Objective #3: MORE VISITS TO THE WEBSITE
Every business wants to grow, and to grow you have to make yourself known and reach more people. In an e-commerce this translates into website traffic. The KPIs to take into account are: website traffic (volume of visits), traffic sources (where those visits come from), CTR ( Click-Through Rate ), the click rate on the link/ad that leads to the website and the bounce rate ( abandonment rate ).
It is true that the more people visit us, the more likely we are to make more sales. But we must not fall into the temptation of just wanting a lot of traffic. We must make sure that these visits are of quality , that is, users who are really interested in our product. This way we will achieve greater profitability and we will be known by people who really like our brand.
EXTRA Objective: DIGITAL ADVERTISING
In many cases, to achieve the objectives mentioned above, digital advertising is used, such as SEM or social media ads through Facebook Ads, Instagram Ads or Pinterest Ads . And to know if the investment in digital advertising is really profitable, there is a fundamental KPI: ROAS .
ROAS is the return on investment in advertising . For example, if the ROAS of your Facebook Ads campaign is 3, for every euro you have invested, you have obtained 3€ in return. It is also very easy to calculate, divide the income by the advertising investment, and multiply it by 100 to see it as a percentage.