eCommerce metrics and KPIs: the path to profit

Part and parcel of eCommerce is managing the performance of the website and creating the right key performance indicators.

Metrics are needed in eCommerce – just like any walk of life. Just like how your teacher at school graded you, with eCommerce, you get to grade the performance of your eCommerce store. We call them KPIs – key performance indicators. KPIs are the measures that matter on the road to eCommerce success.

Our goal with our eCommerce business is pretty straightforward: to make it as simple as possible for shoppers to discover our store, then find the products they are looking for when they search online, and convert these shoppers into customers. To know whether we are achieving this goal, we need to know about our performance – which means we need to understand metrics and KPIs.

• A metric is any quantifiable, consistently defined measurement of performance. Sample metrics include average order value, page load times, conversion rate, and cart abandonment rate. You will remember we covered off these concepts in courses 1-3.
• A KPI (key performance indicator) is a specific metric that is important. A KPI is the specific target you want YOUR store to achieve. Typically, there are only a few of these important metrics that matter. For example, knowing the number of site visits is important, but not as important as the conversion rate, site performance or average order value.

Without metrics or KPIs, how can you gauge progress over time? You’d be making decisions based on ideas, opinions and preference. Not the sort of thing you want – or need to do when there is so much information at your fingertips. You need KPIs to focus on the tactics required to accomplish your goals.

We can further split our KPIs into two different types:

• Site performance: best practice is to monitor product page load times, landing page load times and customer drop-offs during checkout.
• Trading KPIs: whether the site is performing to your plans around revenue, conversion rate and average basket value. These trading KPIs are often divided into sales/revenue KPIs, marketing KPIs and operational KPIs.

KPI sources

The big benefit of eCommerce and digital marketing in general is the ability to measure metrics and optimise performance with very specific information. The list of eCommerce metrics you could follow is huge.

The good news is that eCommerce platforms like BigCommerce, Shopify and WooCommerce Analytics have reporting and data analysis tools to give you all the metrics and KPIs that you could possibly want – and more!

For example, BigCommerce and Shopify can show you visitor metrics, order trends, performance down to the individual product level, date ranges to check if the time of year impacts your sales, and revenue by customer segment. There is tonnes of information on what is happening across your store, product pages, homepage, checkout page and shopping carts. They can even show you the point where a shopper exit occurred and allow you to make educated guesses on why that happened.

Create your own dashboard

With so much data, it’s easy to get overwhelmed. The best way to fix this is to create an eCommerce dashboard with the KPIs you want as a hub for all the important business and performance data you need. Having a snapshot view of your store will highlight all the things you need to know on one or two screens. Shopify, WooCommerce and BigCommerce have these ‘out of the box’.

Judgement and KPIs

Your metrics and KPIs capture specific information for you to interpret and action. For example, knowing your KPIs means you will know how to keep a keen eye on search results, best sellers, and ratings and reviews.

However, key performance indicators are only partial measures of something. The word ‘indicator’ gives that away. As you can imagine, there are lots of variables that affect individual KPIs.

The data from your metrics gives you information in the form of numbers, percentages and statistics to help create an insight. Insight describes how those numbers behave to form a trend. Insights are over time, while data is about a point in time – in the past.

What you want to do is combine the data with insight – and combine with external expertise, knowledge and information to create a conclusion for the next action you should take. This will give you an insight and understanding – and a personal feel for your store.

In other words, KPIs are one thing; what is much more important is what you do with that information.

To find out about creating KPIs that matter, what they mean and what to do with them, go to the next step.