“You can only manage what you can measure.” And if you want to remain ahead of the curve in a highly competitive marketplace, it is essential to capably measure success. For this, monitoring of Key Performance Indicators (KPIs) becomes imperative, especially as players in the eCommerce space jostle for more market share.
KPIs can be likened to a GPS for an eCommerce business. They indicate if the business is following the right path and is getting closer to the destination and indicate a wrong turn.
KPIs provide the guidelines to refine the eCommerce experience for the user and evaluate pathways to capitalize success while proactively makiis ng improvements when needed.
KPIs fall under three main categories as their objective is to measure the goals and success of the eCommerce business. These are:
- Quantitative KPIs – These KPIs are measured using numbers to judge performance such as volume of site views or organic site traffic
- Process KPIs – These evaluate the efficiency of business processes and measure the success of internal processes
- Qualitative KPIs – These KPIs determine the satisfaction of the customer at a service level and are usually feedback from customers.
Some of the top KPIs to manage to improve the performance of an eCommerce business are as follows:
Website response rate
It is essential to know where the website traffic is coming from and how many people are able to access the website. Along with this, it is critical to evaluate the website response rate to determine if your customers are getting an optimized experience or a frustrating one.
Optimizing the eCommerce site’s load time has a direct impact on customer experience and customer satisfaction, conversion rates, and sales revenue.
- Statistics show that website conversion rates drop by an additional 4.42 seconds with every addition to the load time between 0 to 5 seconds.
- 70% of consumers admit that website responsiveness impacts their purchasing decision.
- The chances of customer bounce also increase by 32% if the page load time goes from 1 second to 3 seconds.
With KPIs in place, you can monitor website performance and identify what is keeping the site from performing optimally, loading fast, and delivering an elevated shopping experience.
So, your eCommerce site is seeing a lot of visitors. But what is the customer doing on the website? Are these website visits translating into purchases?
Monitoring the conversion rates and setting up KPIs to monitor these help businesses identify whether their customers are taking the desired action of buying something on the website. Looking at conversion rates gives businesses an idea of what the customers are doing on the website. It is a direct measure of the site’s user-friendliness, usability, design, ad effectiveness, net promoter score, and customer satisfaction levels.
Time to purchase
A report from the Nielsen Norman Group shows that nearly half of all online purchases occur within 28 minutes of the initial click. 75% occur within 24 hours, 90% by day 12, and the rest occur more than 4 weeks after the initial click.
Measuring the Time to Purchase hence becomes an important KPI to track since it gives the business clarity into how long it took for visitors to become customers. Tracking this KPI helps eCommerce businesses refine their marketing strategies, optimize site performance and deliver more contextual and personalized experiences.
Customer acquisition cost
Customer acquisition is important for every eCommerce business. However, what is the cost involved in customer acquisition? If a product, for example, costs USD 10 but the cost to acquire a customer stands at USD 15 then the cost to acquire the customer is too high and can amount to financial disaster. Keeping the customer acquisition costs too low also does not work out as it might cause the business to lose out on potential clients.
Setting up KPIs for customer acquisition provides businesses with clarity on the costs associated with obtaining new clients. This, however, does not involve the costs involved in retaining old clients. Customer acquisition cost KPIs track what a business spends on each marketing channel (Google Ads, Facebook, Instagram, etc.) to track the acquisition costs per channel as accurately as possible.
Doing this helps businesses determine how much margin they need to keep on every product or each customer to build a sustainable and successful business. Customer acquisition costs are also not static and keep changing as the business matures.
Cart Abandonment Rate
Shopping cart abandonment is the nemesis of eCommerce businesses. Research shows that the average shopping cart abandonment rate is 68.81% with the most recent study showing 74.52%. For mobile devices, this statistic stands at 85.65%. eCommerce stores lose almost $18 billion in sales revenue each year because of cart abandonment.
Monitoring cart abandonment rates thus becomes critical to the success of the business as it provides insights into the causes behind this action. An unoptimized user experience, unclear pricing and extra costs that suddenly creep up at the end, time-consuming account information, long check-out processes, inadequate payment options, etc. are some of the usual suspects that lead to cart abandonment.
Setting up KPIs to monitor this helps businesses fine-tune their site experience to stop this action.
Site performance under load
Setting up KPIs to constantly monitor site performance is essential now as eCommerce websites are becoming inherently complex with more interactive and powerful visuals and third-party integrations. While monitoring site performance is essential, it is equally important to monitor site performance during heavy traffic, for example during Black Friday sales.
Assessing how the site performs with high traffic is crucial for the success of an eCommerce business. Evaluating the website’s capacity to handle the load and a large number of concurrent users is critical as is ensuring that the back-end infrastructure does not get overwhelmed by traffic swamps.
With the right KPIs in place, eCommerce businesses can capably increase their conversion rates and average order value. They can decrease cart abandonment rates while also reducing customer acquisition costs. With KPIs, eCommerce businesses get data-backed information on improvement areas and opportunities to deliver more impactful, personalized, and contextual interactions with customers. KPIs directly impact customer experience positively and help businesses to improve their business outcomes. Remaining competitive in a tough market and better business outcomes then becomes an automatic consequence of these efforts.