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7 Ecommerce KPIs to Start Tracking First

Every business needs to measure and manage (read: optimize) results. These quantifiable metrics are known as key performance indicators, or KPIs. These are the metrics that matter most to your business. And ecommerce KPIs are no different. 

In fact, some might argue that ecommerce KPIs are some of the easiest to track and measure. This is because your business operates online and everything (more or less) is trackable. 

All transactions are conducted online so if your tracking is set up properly. You’ll be able to monitor sales and where they came from all the way to their lifetime value. The same cannot be said for other types of businesses. For example, online advertising is easy to track and monitor and optimize compared to print or TV advertisements of old. 

KPIs not only help a business look internally at how they’re performing and how to improve certain areas, but as Investopedia puts it, “KPIs specifically help determine a company’s strategic, financial, and operational achievements, especially compared to those of other businesses within the same sector.”

Here are the seven ecommerce KPIs every online store should be tracking and actioning, in alphabetical order. 

Ecommerce KPI #1: Cart Abandonment Rate

One of the biggest challenges in ecommerce is cart abandonment. This is when someone puts something in their virtual shopping cart on your website and then doesn’t follow through with the purchase. 

According to Statista, there are several reasons for cart abandonment, most include:

  • Shipping (expensive, not free, costs not clear before checkout, slow shipping options)
  • Researching for future purchase
  • Discount codes don’t work or no discount available
  • Have to re-enter info

Primary reason for digital shoppers in the United States to abandon their carts as of Nov 2018

Cart abandonment ecommerce KPIs

Source: Statista

Ecommerce KPI #2: Conversion Rate 

The conversion rate of an ecommerce store is simply the number of conversions (or sales) divided by the number of visitors to your site multiplied by 100 to give you a percentage. 

conversion rate ecommerce KPIs

This KPI helps you understand how many visitors are required (on average) to make a sale and based on that, you can envision how many visitors you need to attract to your site in order to achieve your sales goals.

Ecommerce KPI #3: Cost Per Acquisition (CPA)

Cost per acquisition indicates how much it costs your business to get each customer. (You might also see it referred to as cost per conversion.) This KPI becomes important because if you’re spending excessively on acquiring new customers, then it might be time to rethink that strategy or tactic. 

For example, if you’re spending $100/month advertising on Facebook and each customer from Facebook spends an average of $10, then you would need a minimum of 10 new customers through this channel in order to break even, and you only start seeing a profit as of the 11th customer. 

If your Facebook ads bring in 12 or 13 customers, this tactic might not be worth it. But if your Facebook ads bring in 100 customers every month, then it’s a good plan to keep going. 

In this same example, if you’re spending $100/month on Facebook ads and the average customer spends $250, then you know you’re targeting the right audience and should continue with this tactic even if you only see one or two new customers per month. 

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Ecommerce KPI #4: Customer Lifetime Value (CLV)

Simply put, customer lifetime value is how much a customer will spend with your brand in total (not just with one purchase or per year, but total). This KPI is important because it not only helps you understand customer behavior within your shop but also whether it’s more important to nurture existing customers or spend your money and efforts in search of new customers (or both). 

There are more specific ways to calculate CLV, but in very simple terms the calculation can be:

customer lifetime value ecommerce KPIs

Ecommerce KPI #5: New vs Returning Customers 

New vs returning customers is important to keep track of because it helps you understand and compare the cost to acquire new customers vs having customers return. This is also known as churn. More often than not, it’s more profitable to have returning customers spend less than it is to try to acquire new customers.

Ecommerce KPI #6: Return on Ad Spend (ROAS)

Return on ad spend is one of those KPIs that doesn’t get enough air time. Most people lump return on investment (ROI) in as the same thing, but there is a slight difference between the two metrics. 

ROI is calculated after expenses, aka the net results, and helps you evaluate if a campaign was worth the investment. ROAS, on the other hand, compares how much you spend with how much you earn over the lifetime of the customer. 

As ClickGUARD puts it, “ROAS… uses revenue generated by the advertisement which includes recurring revenue too. Thus, ROAS includes customer lifetime value and is a more robust metric.”

return on ad spend

Ecommerce KPI #7: Traffic (Site Traffic)

The traffic to your website (the number of visitors) is important in helping you understand and measure other KPIs. Although one could argue it’s not a critical KPI, because of its importance in other calculations, it is imperative to track. 

One example would be new and returning visitors to your website. Similar to new vs returning customers, this helps paint a picture of how many times someone comes back to your store before they purchase. 

So, if you know based on previous data that your customers typically visit your website once or twice before making a purchase, then you know to expect that in your analytics

Tracking Your Ecommerce Success and Growth

At the end of the (work) day, there are many, many, many different ecommerce KPIs your team can track. 

What matters most is consistency and action. You need to consistently track the same KPIs on a regular basis in order to understand the trends that are specific to your business. This will also allow you to action any sudden changes (read: spikes) in either direction. Because the beauty of ecommerce is our ability to act on and optimize these results on a regular and frequent basis.