KPIs, key performance indicators, are the bread and butter of any eCommerce business that wants to be SMART: Specific, Measurable, Achievable, Realistic and Time-bound. They can help shop owners understand why shoppers exit before completing a transaction, commonly known as checkout abandonment, or how the expanded version of an eBook isn’t doing as well as the shorter version.
What is a KPI?
One of the best definitions of KPI compares the term to a race car. The difference in the speed of pit stops to the weight of the car to engine performance will determine whether or not that car achieves its ultimate goal, which is winning. Depending on the type of race, the factors will vary but the goal is the same. Just like with different race cars, KPIs for your business will differ. For smaller businesses, checkout abandonment is a percentage that’s extremely important to minimize so that it can generate maximum profits. Larger corporation may look to minimize the time between orders and final payment with the same goal in mind, maximum profits. No matter what the business, understanding revenues, inventory, marketing performance, social media metrics can shed light on overall performance.
Which KPIs are Important?
Page views show how many times a certain page is viewed by a customer or visitor. On its own, page view statistics can indicate the amount of traffic to a particular section of your site. If you have many page views on the help page, this may be an opportunity for you to provide some additional clarification or about a subject that people don’t understand. When you combine page views with bounce rate, you may see that people while there is a lot of traffic to the site, people are choosing to exit the site from that page at a particular rate. The higher the bounce rate, the more likely that page could have a problem. Understanding your eCommerce analytics means paying attention to gross margin, new visitors, unique visitors, average order value so that you can properly read your site’s performance.
Establishing Your Baseline
There are a lot of posts out there that will tell you what a normal KPI rate is. The truth is that while that assessment may be accurate for one site, it may not be so for another. The first thing to do is to establish your baseline. That’s the starting point of any kind of analysis. If you have a baseline, you can better understand how deviations in certain metrics affect your overall goals for the worse or better. Once you’ve established your own standard of normal KPI, then you can set goals to improve conversions, speed or any other metric so that you maximize your profits and customer retention over time.
Understanding your eCommerce KPIs means looking at the external influences that could be affecting your internal performance. These could include a recent paid advertising campaign, traffic from other sites and search terms people may be using to find you. One of the best ways to understand your customer more is to monitor your search logs. What people search for within your site may give you a clue to lucrative trends.