Practical Ecommerce

21 Key Performance Indicators for Ecommerce Businesses

Key performance indicators are becoming common in large corporations as a way to measure and monitor the success of key activities. But they can also play an important role in any sized ecommerce business.

A KPI — key performance indicator — is simply a measure of some process, event, or activity. An example is checkout abandonment, when shoppers exit before completing an order. This KPI should be monitored closely by all ecommerce businesses. If it is typically 10 percent and suddenly goes to 15 percent, that may be an indicator that something is broken on your website, like your SSL, your shipping estimator, or your credit card authorization. By monitoring that KPI daily, you will mitigate the risk of losing business if something breaks.

Establishing KPIs

KPIs differ among businesses. For example, large corporations monitor the time between orders and final payment, striving to reduce that cycle. For an ecommerce business, checkout abandonment is an important KPI and lowering that percentage generally leads to higher revenue.

For strategic and operational planning, KPIs are also used for SMART goals — Specific, Measurable, Achievable, Realistic, Time-bound. As an example, you may want to set a goal to improve your checkout abandonment from 10 to 7 percent in six months. Or, you may want to set customer service goals to reduce the average number of open cases from 10 to 5 in three months.

All businesses should regularly monitor their revenue, cash position, receivables, payables, and basic accounting reports. If you have an inventory and higher-end accounting system, you can also monitor your cost-of-goods sold and gross-profit margins daily. Beyond that, you should monitor pay-per-click advertising performance, social media metrics, email marketing results, and marketplace sales (such as Amazon, eBay) to identify areas of improvement. Virtually any measurement can become a KPI as long as you have a means of capturing the data in a fast and consistent method.

21 KPIs for Ecommerce

Baseline KPIs should always be monitored, and acted on if they deviate from their normal range. KPIs used for goal setting may change, as may the target range of those KPIs.

In my experience, the important KPIs that ecommerce merchants should monitor are as follows.

  1. Unique visitors
  2. Total visits
  3. Page views
  4. New visitors
  5. New customers
  6. Total orders per day, week, month
  7. Time on site per visit
  8. Page views per visit
  9. Checkout abandonment
  10. Cart abandonment
  11. Return rate
  12. Gross margin
  13. Customer service open cases
  14. Pay-per-click cost per acquisition
  15. Pay-per-click total conversions
  16. Average order value
  17. Facebook “talking about this” and new Likes
  18. Twitter retweets and new followers
  19. Amazon ratings, response and order turnaround time, and open cases
  20. Email open, click, and conversion rates
  21. Referral sources: percent from search, direct, email, pay-per-click, other

Your business may have many more than this if you outsource fulfillment, have a high percentage of call-in orders, and so forth.

What’s a Normal KPI?

You may be wondering what the normal range is for these types of KPIs. In general, there is no answer, as every business is different. Develop your baseline over time and become aware of your typical operating ranges.

Once you have established your standard ranges, you can begin to use KPIs to set goals and measure improvement. More than likely you already do that with PPC advertising — with targets for click throughs, cost per acquisition, and cost per click. Perhaps you set targets regularly to improve those metrics. You can do the same thing with all the KPIs listed above.

Make Monitoring Easy

If you don’t have a dashboard that is capable of displaying most of your KPIs — this usually requires a higher-end, highly integrated system — then pull KPIs from all your various monitoring tools and dashboards into a spreadsheet on a weekly or monthly basis. This will provide you with a snapshot of your historical performance that identifies seasonal trends and necessary troubleshooting if KPIs deviate from their normal ranges.

Monitoring Peaks and Valleys

KPIs are also useful to check your normal cycles. In a simplified example, if you suddenly get a bump of new customers and don’t really understand why, you may want to look at your social media activity or referral KPIs to identify new traffic sources. Perhaps your “talking about you” KPI in Facebook is high because of a new product someone is talking up. Likewise, if your gross margins are suddenly much lower, it may be because your cost of goods sold has increased or because more customers are taking advantage of free shipping. In short, use your dashboards or any other tools you can to monitor your KPIs on a daily basis if possible.

Summary

Seasoned ecommerce managers can often predict revenue based on the number of visitors, checkout abandonment, cart abandonment, and other factors. More importantly, they can flag problems immediately.

Use your KPIs for setting SMART goals for your business improvement. KPIs can be identified for almost every operational area — from shipping to traffic to conversions. Work with your staff to identify areas for improvement, choose your baseline KPI, and set a target for improvement in a specific timeframe. Then you have a measurable goal.

Dale Traxler
Dale Traxler
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Comments ( 14 )

  1. Mike Darnell February 10, 2013 Reply

    KPIs are bread and butter of successful e-commerce for sure. This article explains really well how to go about choosing and setting up your own set of KPIs to track. I especially like the part about finding your own baseline.

  2. Louise Robertson February 11, 2013 Reply

    A great list and account of key factors to track. Glad to see that revenue from cart abandonment and checkout abandonment are included in this list.

    http://www.cloud-iq.com

  3. Atlasseo February 12, 2013 Reply

    There is nothing more important of your Web Analytics success than identifying the right Key Performance Indicators for your business… http://www.atlasseo.net

  4. kgkaraoke February 12, 2013 Reply

    We pay for conversions, not for clicks, as clicks by themselves are worthless. Pay-per-click is not only a waste of money, but is also a venue that is wide open to fraud.

  5. Dale Traxler February 12, 2013 Reply

    Kgkaraoke – you miss the point. By tracking KPIs for clicks, you can evaluate whether you are wasting your money or not as well as whether you are receiving the level of traffic you are targeting. Whether good or bad, KPIs help you understand it your business is performing the way you want.

  6. Nathan Grimm February 12, 2013 Reply

    There are a couple key points about KPIs that this article misses.

    First, 21 KPIs is way too many. Let’s say that 5 of these statistics improved by a huge margin and 16 got worse by a small amount, did you do a good job? In your job function, how many of these metrics can you even influence? How much time will it take to gather all of this information into one place? My point is, figure out which 2-5 metrics you can directly influence and make an obvious difference to your business’s objectives.

    Which brings me to my next point: KPIs need to be related back to overall business goals. A great example of this is percentage new visitors. You want lots of new visitors right? That means your brand is reaching new customers. But wait, one of your business’s key objectives is market penetration. You want more money from the same customers. Now your goal is to get a higher percentage of your existing customers to come back and purchase which will probably result in a lower percentage of new visitors.

  7. jadepcg February 12, 2013 Reply

    Nathan has said it best. 21 KPIs is far too many. Personally, I break down my KPI’s into 3 buckets that measure Acquisition, Visitor Behavior, and Actions. Breaking it down into smaller groups makes it easier to manage and determine what KPIs are necessary and which ones are just vanity.

    This is a link that I used to help learn about the basics of KPIs, and once you have an understanding of the basics then it makes it easier to determine how you should be measuring your performance. Remember, every business is unique and has unique goals, so one person’s KPI template may not be the exact fit for you.

    http://www.pcg-services.com/resources/applying-key-performance-indicators-build-business/

  8. Dale Traxler February 13, 2013 Reply

    Great comments! 21 is way too many. Choose the ones that make sense for your business. A lot depends on the areas you are looking to improve!

  9. Chris Pollock February 22, 2013 Reply

    I agree that 21 seems like a few too many, but I appreciate the sharing. As always, the monster task here is gathering and aggregating this data into a central report that can then be analyzed for a action and meaning.

  10. Ionut Grossu March 4, 2013 Reply

    In my opinion, which I built and run couple of e-commerce websites, you need to have a lot of KPIs, but of course depending on the stage (level) of the business you are.

    If you are at the very early stage you will look more to the traffic, revenue, returns, and couple of marketing KPIs as the writer of the article wrote.
    When the business is growing of course you need to improve and become better and better. Therefore you enter into deeper details and the KPIs will be more then 100. Of course couple of them will be held by middle management positions, but even so, more then 21 KPIs will be held by top management.
    In general each department will have their own KPIs. Purchasing (Buying), Content, Customer Support, Marketing, Logistics, HR, Accounting, Legal, etc. All those departments will have their own KPIs.

    The key business decisions are taken into the management board and they will take care of the most important KPIs, like revenue, margin, cost of operations, returns, theft and loose, ROI, etc. Like in all P&L you do for any kind of business. This is business administration.

  11. Lilliana N. Garvin September 20, 2013 Reply

    You had tough some excellent key factors for eCommerce sites and about the normal KPI is awesome.Here is another blog where some other points are mentioned @ http://www.adluge.com/blog/marketing-intelligence/5-key-performance-indicators-for-an-ecommerce-site-in-2013/

  12. Apalife.com September 29, 2013 Reply

    Can someone help me ? What formula is caculating the KPI of Ecommerce. Or What formula does I got a KPI ‘s Ecommerce.

  13. Sreeram December 19, 2013 Reply

    Nice & handy list of KPI’s. I would also add couple of conversion rates – Visitor to signup and signup to buyer.

    KPI’s are really important to attain goals and monitoring performance. We help ecommerce businesses track them at http://ubiq.co

  14. Aleksey Savkin February 6, 2014 Reply

    Hi Dale,

    In my article (http://www.bscdesigner.com/3-layers-of-sales-kpis.htm) I’m sorting out sales KPIs. Instead of long lists of KPIs that one can find on Internet and that are in most cases pointless, I suggest to have a balanced view on sales KPIs:
    – There are KPIs based on conversion rate that are great for process monitoring;
    – There are leading KPIs like “Time to answer a prospect’s query, hours” that influence sales outcomes directly;
    – There are KPIs that help sales managers to see a big picture.

    What do you think? Does an approach suggested to KPIs in the article helps in comparison to having a plain list of KPIs?

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