Setting up an e-commerce store and expecting it to run successfully is a sign of foolhardy. You have to constantly keep track of the site’s performance so that you can make improvements as and when needed. With the help of KPIs or Key Performance Indicators, you can track the performance of your e-commerce site more efficiently. Performance indices help to assess sales, traffic, and profit – the three most important metrics to monitor on your e-commerce site to help improve your sales.
To minutely understand the performance of your e-commerce store, there are several KPIs you must regularly study. These will give you an insight into how well your online store is performing, whether you are investing your money in the right place, if your advertising budget is rightfully utilized and if you are being able to attract more customers? KPIs also help to assess customer loyalty.
The best eCommerce platforms are often successful because they regularly study KPIs and make necessary changes according to the data collected. In this article we shall be looking at the seven most important eCommerce KPIs and how tracking them insightfully can turn the fates of your e-commerce store.
- Conversion Rates
Conversion rates indicate the number of visitors who are taking action upon visiting your site. The action could be making a purchase, creating an account, inquiring about the product(s), etc. Most e-commerce site owners and managers agree that conversion rates are the most important KPI one must track religiously. Every other KPI (which is mentioned below) all have some takeaways from conversion rates. An increasing conversion rate is not only a good sign but also an indication that your marketing and advertising strategies are working effectively. From comparing month-to-month and year-over-year conversion rates, you can exactly pinpoint the reasons that are working to boost sales. Shopify, for example, has a user-friendly Conversion and Loyalty dashboard that gives detailed stats on conversion.
- Conversion Rate Per Traffic Channel
A more detailed KPI on conversion rate is the conversion rate per traffic channel. As the name suggests this KPI gives more information on where you are getting the greatest traction from. This gives you a clearer picture of the information channels which are working great for you and are attracting more customers. Loaded with this information, you can better allocate your budget into marketing channels that are performing better and moving money from the ones which aren’t performing desirably. This not only helps you allocate your money wisely but also makes drastic improvements to your conversion rates.
- Customer Lifetime Value
Customer Lifetime Value indicates how well you have connected with customers on a personal level. Personalized relationships with customers have become an important metric to measure the success of an e-commerce site and customer lifetime value is thus considered an essential KPI worth studying and understanding. Not only does it indicate how well your business is performing but it also reflects on your user connect initiatives. Building a connection with customers on a personalized level helps build their loyalty towards your brand and works beneficially for you in the long run. From improving their experience on your site to building a long-term relationship, your e-https://www.business2community.com/loyalty-marketing/3-ways-to-improve-your-customer-retention-rate-02239102commerce site can benefit in numerous ways when you pay attention to customer lifetime value.
- Customer Retention Rate
If your sole intention is to get new customers then, according to industry experts, your approach to building your e-commerce site is completely off the hook. Though it is necessary to continuously seek out new customers, it is equally if not more important to retain existing customers. The Customer Retention Rate KPI is a metric that draws attention to this. Retaining customers is considered a good sign. It positively reflects on your business efforts and means that your customers are willing to come back to make more purchases. More often than not repeat customers bring along with them new customers. Customer Retention Rate also determines what drives customers to come back or to not come back.
- Annual Repurchase Rate
It is most generally accepted that businesses who can claim to have loyal customers are doing something good. And when you have customers coming back to your e-commerce site, you can then focus your attention on improving their time and money on your site. The Annual Repurchase Rate helps you to focus on customer loyalty and product quality. The indices here help you to identify the products that are repeatedly being purchased by customers.
- Average Order Value (AOV)
Another important KPI that helps build your brand is the Average Order Value. This KPI helps to understand how much an average customer is spending on a per transaction basis. Monitoring the average order value of a customer will help you increase your business revenues as well as capitalize on upselling opportunities. When you have a higher Average Order Value per customer, you are in a better position to redirect your efforts towards acquiring new customers.
- Net Profit
While there are many other KPIs that can be mentioned as the last important one for tracking and growing your sales, the one which we think must be mentioned is the KPI that indicates your business’ net profit. If your indices indicate that you are making a profit, then it simply means you are doing the right things for your business. Profits also mean you have more opportunities to sustainably grow your business. When your business is giving you profitable returns, you can do more to attract new customers – like go for aggressive discounts, offer free shipping on all items, and lay more emphasis on digital marketing.
Ruining an e-commerce site is a hectic job and understanding what draws customers is essential. Studying and analyzing KPIs is important as it helps you understand what you are doing right and what you aren’t. With the analytics gathered through KPIs you can also channel your resources towards the necessary directions. From improving marketing efforts to attracting new customers you can do a lot with the indices gathered with the help of KPIs.