And you don’t lack reason. The truth is that about the KPIs for eCommerce (key performance indicators or said in Christian, key indicators that tell you how you are doing things) rivers of ink have run (OK, billions of pixels have been lit), but in general in a way quite obscure and not accessible to the layman who has an e-commerce store and wants to know what he has to look for. First, let’s clarify the terms. Too many times we confuse metrics with KPIs.
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KPIs Vs Metrics
If we talk about metrics, we simply mean data. To numbers that we obtain from a tool such as Google Analytics, if we talk about a website, or any of the social network tracking tools, in addition to the data that the networks themselves give us (for example, number of followers on Twitter, number of RTs, mentions….). All these are metrics, raw data, some of which we can use as KPIs if we are interested, but not all.
In general, KPIs are usually the product of mathematical operations based on metrics. Although there are tools that can calculate them for you, if your budget is limited or you don’t want to break your head by trying which tool suits what you need, many of them will have to be made by yourself by pulling a spreadsheet.
If you have no strategy, you do not need KPIs for eCommerce
As simple as that: KPIs are indicators of compliance with strategic objectives. Therefore, if you have not previously defined what your goals are, you will hardly find the right KPIs for eCommerce to know if you are on your way to achieving them or not. In fact, a very common phenomenon is the excess of information.
Handle a lot of data but not be able to draw conclusions from them, because you are not sure what you want to achieve. So first take your time to define what your strategy is and what your objectives, whether we talk about your business in general or if it is a specific action or promotion.
Beware: “I want to sell more” is not a strategy. It is to start the house on the roof. Sales are the result of a process that has many stages, and that is where you must act, in each of those stages, making decisions whose final result will be a certain level of sales. And in each of those stages you have to have an indicator that tells you if you are fulfilling what you intended or not.
That is the real utility of the KPIs, becoming a dashboard of your business, just like a car not only informs us of the speed at which we are going, but it has a multitude of indicators and red lights that turn on if something. It goes wrong, because the sensors that capture the data tell the electronic brain of the car that something is not working and it responds by turning on a red light on the instrument panel.
Go ahead that the definition of the right KPIs depends, as we said before, on your concrete strategy. However, we can classify the most common ones in relation to the aspects that are to be measured. Here are some examples (they are not all possible, we are not so daring, but you get an idea)
- KPIs related to the investment effort
Since attracting customers costs money, we can relate the investment we make in marketing with the final result or with different parts of the process:
Cost per lead
The leads are not the gross visits to your website, but those that you have had to “fish” in social networks, through e-mail marketing, in a blog or on third-party sites. You have all that information for free in Google Analytics and you can put it in relation to what you have invested in that “fishing” effort.
The important thing about merely advertising actions is not how many clicks they generate, but how many of those clicks become sales. A KPI in this case could be the% result of dividing the total cost of a campaign among the sales attributable to that particular campaign. So, you can know the profitability (the famous ROI or Return of Investment) that these campaigns generate and what it costs you to get a sale. This is very useful when comparing the effectiveness of different types of campaigns or testing A / B.
- KPIs related to user behaviour on the web
For sales to arrive it is necessary that a significant part of the users complete the sales process. Entering measurement criteria through KPIs at key points of the process (the famous sales funnel / conversions) can help you a lot to know which parts of your eCommerce store are fulfilling the predetermined objectives and where you should act.
It is the% of visits that end up becoming sales. It gives us information about the whole process as a whole- It is one of the recurring KPIs in any analysis, but, although it is very useful, it does not give us information on where in the process the abandonments of potential customers occur. It is more useful if we make a breakdown of the% of conversions according to the source of the visits, since it will tell us in which channels, we are more effective.
A case of a metric that is obtained directly from Analytics and that can be used as a KPI. Measure the percentage of dropouts on the home page without making any interaction with the web. It is a good indicator of the effectiveness of this page to retain visitors, as well as it indicates if the “call to action” of this page are being effective.
Average purchase value
Total purchases for a period divided by the number of buyers. It gives us information on profitability (if we combine it with the cost per lead or advertising performance) as well as whether or not we are close to the sales target per customer that we have set.
It informs us of the% of visitors that are not new, but have already visited the website before. If we break it down by channels of origin of the visits it is a good indicator of the degree of loyalty that we are getting.
The% of abandoned shopping carts and sales not completed tells us if something fails in the checkout process, in addition to indicating which products the abandonment occurs most frequently. The latter can give us clues about the degree of competitiveness of our products compared to the competition, or if we are abusing shipping costs.
We could include many more KPIs for eCommerce, related to social media activity, online reputation or brand appeal, among many other things. The above only applies as an example, since the design of the KPIs must be customised according to each business and its particularities.
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