In a general thought, Key Performance Indicators are more useful for bigger businesses to measure and monitor the success of key activities. But the role they play for small and mid-sized ecommerce business can’t be underrated.
A Key Performance Indicator, shortly and mostly used as KPI, is a measure of some process, event, or activity. For example, the KPI “unique visitors”, describes number of visitors visited your ecommerce store. This KPI should be monitored closely by all ecommerce businesses. If it is normally 500 people and suddenly downs to 400 people, that may be an alert that something is going wrong with your website, like your SEO, or Load Time, Marketing Campaigns (if there is). By monitoring that KPI daily, you can minimize the risk of losing ecommerce visitors.
KPIs show difference from a business to another. For example, large corporations monitor the “unique visitors” to find a way of turning them into customers. For an ecommerce business, in the beginnings, the main focus is to raise the number of “unique visitors”.
KPIs are also helpful for targeting company goals much more measurable, realistic and directly. As an example, you may want to raise the number of your unique visitors and with the help of monitoring “unique visitors” you realize that your weakest day is Sunday. You can set special campaign for Sundays and try to raise the number of visitors for that day.
Every ecommerce businesses must track 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. Also, you should track your pay-per-click advertising performance, social media metrics, email marketing results, to identify areas of improvement.
Most Common KPIs for Ecommerce
In my opinion, the important KPIs that ecommerce entrepreneurs should follow are:
Total orders per day, week, month
Time on site per visit
Page views per visit
Customer service open cases
Pay-per-click cost per acquisition
Pay-per-click total conversions
Average order value
Facebook new Likes
Twitter retweets and new followers
Email open, click, and conversion rates
How Can I Judge my KPIs?
In the beginnings, it is hard to decide if things are going well or not. There is no general answer, because every business has its own target and goal. After a while, your own range of KPIs will be visible and you can decide “average” values for your all KPIs to judge them as good or bad.
After having your average values, your KPIs will be ready to use for setting goals and measuring improvement. If you have PPC campaigns running right now, in fact, without noticing, you are already using this technic to improve your, Conversion Rate, ROI, and CTR. You can use the same thing with all the KPIs you have.
Track your KPIs Easier
Have a dashboard that includes most of your KPIs, then pull KPIs from all your various tracking tools and dashboards into a report on a weekly or monthly basis. This will provide you with a review of your past performances that identifies seasonal trends and necessary troubleshooting if KPIs deviate from their normal ranges.
Final words, use your KPIs for setting EFFECTIVE goals for your business improvement. KPIs work for almost every step of your business . Work with your staff to choose the steps that need improvement, decide your main KPI, and set a target for improvement in a specific time zone. That gives you a realistic and applicable goals.