What Are KPIs for eCommerce?
Key performance indicators (KPIs) are metrics that can help you track and assess certain aspects of your business. KPIs are ideally highly specific, providing insights into the productivity of relevant business processes.
An eCommerce KPI can help you optimize the entire purchasing journey, and provide insights into aspects like customer engagement, shopping cart abandonment, order returns, bounce rates and more. Because all aspects of eCommerce are measurable, metrics and KPIs are critical to optimizing an eCommerce operation, overcoming competition and driving profitability.
In this article, you will learn:
- Top eCommerce Metrics to Track Your Performance
- Conversion Rate
- Cart Abandonment Rate
- Average Order Value
- Cost per Acquisition
- Site Speed
- Customer Engagement
- Return Rate
- How to Choose the Right KPIs for Your Business
- Focus on a Few Key Metrics
- Identify Both Lagging and Leading Performance Indicators
Top eCommerce Metrics to Track Your Performance
When setting up KPIs, it is important to create a system that makes sense to all collaborators. The metrics below serve as industry standards, used by the majority of leading eCommerce and marketing businesses.
Conversion Rate
In eCommerce, a conversion occurs when a user takes a desired action, like making a purchase. A conversion rate measures the percentage of users who completed these actions. To calculate this percentage, take the total number of “converted” users, divided by the total number of users, and turn the total number into a percentage.
Shopping cart abandonment measures how many users started a purchase, by adding products to their shopping cart, but eventually left the website and did not buy the items they selected. If the abandonment rate is high, there may be a problem with the check out or payment process. The process may be too complex, or there may be other concerns, such as users concerned about security or the trustworthiness of the brand or website.
Average Order Value
Average Order Value (AOV) is the average amount spent by users of an eCommerce site in one purchase. A related metric is Average Abandoned Order Value (AAOV), which is the average value of orders canceled at the checkout or shopping cart stage of a purchase.
To derive insights, track your AOV and break it down by dimensions like:
- Device type and browser/operating system
- Traffic source
- Paid campaign source
Knowing the sources that drive customers with the highest AOV can help you focus your marketing efforts to bring in higher-value customers, and increase return on investment.
Cost per Acquisition
Acquisition cost is the amount of money your organization spends to get a new paying customer. This includes:
- Paid advertising
- Promotions or discounts on list price
- Email nurture campaigns
- Any other investment made to bring in new customers
Analyzing cost per acquisition shows how much effort and monetary investment is needed to acquire paying customers. This should be compared with AOV and long-term metrics like customer lifetime value (CLV), to understand return on investment.
Site Speed
Website speed is a significant factor impacting user experience. Websites and checkout carts that are slow to load are often abandoned. Customers do not want to wait long, and expect good performance and efficiency from eCommerce sites. To ensure a positive experience, you can monitor the speed of your website using tools like Google’s PageSpeed Insights, optimize images on your website, and use a content delivery network (CDN).
Customer Engagement
Customer engagement KPIs measure the level of engagement between customers and eCommerce businesses. High engagement rates often indicate a deeper connection with brands, which often promote customer loyalty and retention. Typical indicators include social media shares and reactions, newsletter subscribers, and time spent viewing site pages.
Return Rate
E-commerce can only be successful if the customer is satisfied with the method of ordering, the goods and the speed of delivery, and has the right to cancel their purchase. At the same time, a high return rate carries a risk of loss, so online store managers need to pay special attention to the percentage of returned orders.
However, in the online fashion industry and some other eCommerce segments, returns may actually be encouraged, in order to solve customer concerns about fit of clothing and other personal items. In these cases, the returns metric should be treated differently.
How to Choose the Right KPIs for Your Business
Focus on a Few Key Metrics
There are many KPIs to choose from, and a lot of data to analyze. In theory, it is possible to keep track of many KPIs, but this might not be a good idea. Each KPI provides different insights, and not all might be relevant to your current situation and objectives. Instead, you can choose certain metrics that are currently relevant to your site and leverage the insights quickly.
Identify Both Lagging and Leading Performance Indicators
The majority of businesses focus mainly on identifying lagging performance indicators, which analyze events that happened in the past. Cart abandonment rate and website speed, both measure past performance.
Leading performance indicators, on the other hand, try to predict future events and provide insights into trends that have not happened yet. You can try, for example, to predict sales opportunities and then create marketing funnels accordingly, or predict future website traffic.
KPIs eCommerce with Netomi
Netomi works with eCommerce companies to improve critical KPIs related to eCommerce customer experience. The support a person receives is having impacts well beyond the customer service team. Consider these eCommerce stats:
- 90% of Americans use customer service as a deciding factor when choosing to do business with a company
- 78% of customers say the quality of service is fundamental to earning their loyalty and repeat business
- Seven in 10 U.S. consumers say they’ve spent more money to do business with a company that delivers great service
- 61% have switched brands due to poor customer service with nearly half having done so in the past 12 months
Consumers expect immediate resolutions to their issues across an increasing number of channels. Our AI-powered chatbot tools automate resolutions to over 70% of everyday tickets including order status, refund requests and order cancellations. Key features of the Netomi AI chatbot platform for eCommerce companies include:
- Natural Language Understanding (NLU): The Netomi AI can understand what your customers are saying no matter how they ask. So, whether they say “Where’s my order?” or “Is my sweater arriving today?” Netomi AI chatbots can provide the relevant response.
- Integrations: Netomi can integrate with backend business systems to provide personalized resolutions, not generic information.
- Deep Learning: Netomi’s platform leverages a combination of supervised and unsupervised learning to boost intent classification capabilities, increase confidence scores, and uncover new training opportunities.
- Omnichannel: eCommerce companies can meet their customers where they are. Netomi’s AI chatbots scale across email, social, messaging, chat and voice.
- Pre-trained AI with eCommerce skills: Netomi’s AI comes with pre-trained, thoroughly-tested eCommerce skills. Common eCommerce-specific topics like refunds, order modifications, order status and order cancellations have real-world experience making the bot able to understand a wider variety of ways a person might as a question from day one.
Would you like to learn about how Netomi helps improve eCommerce support KPIs? Check out the most powerful eCommerce chatbot on planet Earth.