Measuring Your E-Commerce Success Through the Use of KPIs
A Key Performance Indicator (KPI) is a measurable value that demonstrates how effectively a company is achieving key business objectives at different levels of the organization. Figuring out what to measure begins with clearly stating goals and understanding what areas of business impact those goals, whether those are related to boosting sales, streamlining marketing, or improving customer service.
E-commerce KPIs are numerous, and just looking at a list may be overwhelming. However, not every online store needs to track every KPI out there. For example, a seller that sells only on Amazon doesn't need to track website conversions but rather, how often they reach the Amazon Buy Box and the rate at which views become customers.
In this article, we’re going to discuss a simple Conversion Funnel strategy that e-commerce sellers can follow to drive new and existing customer retention.
It’s important to determine what steps customers must take to make a purchase through your site. This is known as the conversion funnel. If a user is on one page and needs to click a button, or submit information to proceed to the next stage then they’re in the "funnel". However, if they don’t make it to the end of the process, then they’ve ‘abandoned’ the funnel and were not converted. Let's go through the funnel:
Building Your Brand
What: You may sell the best products, but customers need to know who you are. Your main goal is to drive website visitors or landing page sign ups that will eventually become customers.
How: Search engine optimization, Social media engagement, Blog posts, Website traffic, Paid Ads/Sponsored posts. Monitor visits/views through Analytics from various sources to see where business is coming from and which marketing efforts are working to your advantage. Replicate your successes and adjust your failures.
You'll want to know:
- Unique visitors (New visitors)
- Total visits
- Page views
- How long a user stayed on your website
- # times appearing on the Buy Box of Amazon
- New vs. Returning visitors
- Media Mentions
- Referral Visits
What: Once users arrive at your site and has shown interest in an article or content offering, they may be considered a lead.
How: Create engaging content such as infographics, ebooks, white papers and promoting via Email campaigns, Blogs, Call-to-Action buttons on your website, referral programs?
You''ll want to know:
- First determine what is considered a lead. For simplicity, any new contact that comes in means that they have shown interest in your product. For the more advanced, you may want to think about the varying levels of a lead (Marketing Qualified vs. Sales Ready) in which you may assign a Lead Score.
- Where are these leads coming from (Source)
- What actions have these leads taken on gated content such as white papers or e-books (Content Type)
- How much it cost you to generate a lead (Cost per Lead).
Convert Leads Into Sales
What: How many touch points does it take to turn a lead into a sale?
How: Continue driving engagement through the use of content and special offers, email campaigns, search engines, social network engagement, cart abandonment re-marketing, website personalization and blog posts. By having clear CTAs (Call to Actions) and engaging content you’re encouraging higher conversion rates and less abandonment rates.
You'll want to know:
- Conversion rate (visitor to customer; lead to customer; prospect to customer)
- Cost per customer
- Number of new customers
- Revenue from new customers
- Where did the customer come from?
- Cart abandonment
- Checkout abandonment
- Email opens
- Coupon code usage
- Amazon Buy Box views
- Listing Views on Amazon
- Return rate
- Customer Support Inquiries
Increase Customer Loyalty
What: You now have a customer. Now, what does it take to make sure they are repeat customers?
How: Once you’ve attracted customers to your site make sure your call of actions and overall site is easy to navigate and user friendly. Track email campaigns, repeat visits to your store or sales channels and reward your best customers with special coupon codes to encourage frequent purchase.
You'll want to know:
- Who are your most active customers?
- What is the lifetime value of this customer?
- Will this customer refer other customers to your store?
- Which product resonate more with your customers?
- How many customer service inquiries have they made in the last 30 days?
- How long has this customer been buying your products?
- Total revenue from your customers.
- Average order value
- Conversion rates
- Coupon code usage
- Email opens
- Frequency of purchase
- Frequency of returns
Tools to Measure Your KPIs
These KPIs can be culled from site/landing page analytics tools like Google Analytics or Yoast, marketing automation platforms like Hubspot, email service providers like Mailchimp, or within your own inventory/order management infrastructure. Use data to streamline your decisions about purchasing process, product performance, usability, search engine or conversion rate optimization.
The easiest way to go about storing and measuring your numbers is through an excel spreadsheet. This will give you the insights you require to measure your performance as well as troubleshooting any numbers that aren’t meeting your expectations. Allowing you, as an e-commerce, to tackle any problem that may arise such as:
- A sudden increase in bounce rate on your site, which means your site, is moving slower than normal, or there are a number of bugs or dead links.
- A decrease in your monthly orders. Letting you know that your marketing campaigns aren’t affecting sales or leads coming from the site.
- A lower conversion rate. Allowing you to see if any changes you’ve recently made to your site are working to your advantage.
- An increase in your Pay Per Click (PPC). This will allow you to discover if you’re overspending and if you’re utilizing the proper keywords, on your ads, or your site.
Now, let's put it all together
Your goals and KPIs can be strategically used to convert more customers and drive higher profits. #workssmartsellmore.
- Reduce Product Sales lost due to out of stock by 50%. KPIs include current inventory, Estimated Lost Sales (Units), Avg. Unit Sales per Week, Sales Rank
- Boost sales 10% in the next quarter. KPIs include daily sales, conversion rate, site traffic.
- Increase Buy Box Wins by 25%. KPIs include Amazon Feedback rating, customer service metrics, Late Shipment %, Refund Requests.
- Increase conversion rate 2% in the next year. KPIs include conversion rate, shopping cart abandonment rate, associated shipping rate trends, competitive price trends.
- Increase Amazon Feedback rating 20 percent in the next year. KPIs include # times you have late shipments, # customer service inquiries, Feedback score tracking.
- Reduce customer service calls by half in the next 6 months. KPIs include service call classification, identify page visited immediately before the call, event that lead to the call.
E-commerce success is a data-driven entity that is in a constant state of alteration and fine-tuning. E-commerce professionals such as yourself must not only be on top of your business, but the numbers that make up the essence of your business. From measuring visitors, cart abandonment, monthly sales and the many other factors that make up an e-commerce you’re putting your company on the right track of achieving your goals in a timely manner.
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