Key Performance Indicators for Ecommerce Websites

Running an ecommerce website can be a huge undertaking. It’s hard to know what you need to do, and where you need to focus your attention. This post will help you out by presenting 18 key performance indicators (KPI) for ecommerce websites that are proven to work!

These KPIs will cover everything from conversion rates and customer satisfaction metrics, all the way down to your profit margins. Implement these KPIs to watch your ecommerce business grow!

What is a Key Performance Indicator?

A performance indicator is a metric or measurement that can be taken to measure the progress of an organization, process, system, project, product, or service over time. Performance indicators are used in the fields of business management and digital marketing to assess organizational goals and objectives.

For example, in the case of an ecommerce website, a performance indicator could be how many visitors are coming to your site or what percentages of those visitors convert into customers.

Why are Key Performance Indicators Important?

Key performance indicators are important because they help you understand how your website is performing. Without KPIs, it’s hard to know what aspects of your website need improvement and where the best place would be for you to invest time or money in order to grow traffic or conversion rates.

Once you know these, you can then take steps in order to improve them and grow the success of your ecommerce site!

The Most Common Key Performance Indicators in Ecommerce

1.) Conversion rate

Conversion rate is the percentage of people who take an action (buying a product, signing up for your newsletter) after visiting your website. We have a useful tool for calculating your conversion rate, which you might find helpful! Conversion rates are one of the most crucial metrics you should be measuring, as they show if your landing page needs improvement or not. It’s also used as a benchmark against other websites.

Studies suggest that the average conversion point for a website is 2.35%, which means that only 23 out of every thousand visitors will convert into customers. This number has been steadily declining over the last few years due to increased competition, but it’s still an important metric to focus on!

2.) Customer satisfaction rating

This is the number that you get when customers rate their satisfaction on a scale from one to five, with five being extremely satisfied. You can also calculate this as customer complaints divided by total orders placed. A lower number of complaints means more happy customers!

3.) Cost of goods sold (COGS)

What do you spend to sell your product? It’s not just the materials, but also how much you pay to have it manufactured and sold by employees – among other costs.

4.) Product affinity

Product affinity not only tells you which products are purchased together, but it can and should inform cross-promotion strategies. Once you know what customers buy together, it’s easier to create cohesive promotions. You can provide coupons or discounts for items that are bought in tandem with your company’s core products and services.

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5.) Gross profit margin

This is the amount of money left after subtracting the cost of goods sold from total revenue. It shows you the amount of revenue that’s left to cover things like overhead, salaries, and other expenses.

6.) Return on investment (ROI)

This is the most vital and important KPI in your ecommerce business because it tells you how much money is being made after all costs is considered. This ROI number can be calculated by dividing your profit margin by the total cost of all marketing campaigns and other investments.

Read our 9 PPC Best Practices to Increase ROI post to learn more!

7.) Cycle time

Do you know how long it takes for a single product to be manufactured? The cycle time manufacturing KPI tells all. Tracking this metric will show the efficiency of your production output, and can help identify any problems with productivity or workflow inefficiencies early on before they become major roadblocks.

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8.) Social followers

This is the number of people who follow you on social media. This is an important metric because it shows how much interest your company has generated online and the influence that your brand can have!

9.) Customer service count

This is the number of customer service inquiries your company received. The lower the better because it means customers are having fewer problems with their shopping experience, or that they’re satisfied and don’t need to contact you for help!

10.) Email open rate

This is the number of successful emails that were opened by customers, or how many messages your customers are reading. It’s measured as a percentage that you want to stay as high as possible.

11.) Customer acquisition cost (CAC)

This is the cost of acquiring a customer. You want to increase this metric by targeting the right people with your marketing campaigns and through social media.

12.) Traffic source

The traffic source metric shows you where your site visitors are coming from. This is important because it tells you how to best focus your marketing efforts: what sites and publications people visiting your site come from, what keywords they’re using when searching for things that you sell, etc.

13.) Time on site

This metric is the number of seconds that a person spends on your website. A high time on site will help you grow because it means visitors are spending more time browsing and looking at different products, which leads to more revenue! Also, search engines love when people spend a lot of time on a website, so this can improve your rankings on Google.

14.) Bounce rate

The bounce rate is a good measure of how many visitors are only viewing one page before leaving. A high bounce rate is an indication that your visitors are not finding what they want on the first page. Why? Is it because of a lack of quality content, too many ads cluttering their view, or something else entirely?

15.) Revenue per visitor (RPV)

This is the amount of revenue generated per visitor. You want to increase this by focusing on making your website more effective and optimized for conversions.

16.) Churn rate

The churn rate reveals how long it takes for a customer to stop using your service. We have another helpful tool for determining your churn rate, which you might want to try out. It’s a valuable metric for determining how well your business is retaining and attracting new people.

17.) Customer lifetime value

The customer lifetime value is one of the most powerful tools for understanding and tracking your customers. We have another tool available for calculating customer lifetime value, which might help you find your CLV. It tells you how much a customer could be worth to your business over their relationship with your brand. You want to increase this metric by strengthening relationships with them and focusing on their needs.

18.) New customer orders vs. returning customer orders

This metric compares the number of orders placed by new customers vs. returning customers. If you want to grow your ecommerce site, then this metric is important because it shows how many people are coming back for more!

19.) Shopping cart abandonment rate

This is the percentage of people who added items to their shopping cart and then left the site without completing a purchase. This is a big deal because it means you’re losing potential revenue.

20.) Number of transactions

This is how many transactions took place on your site over a given period of time. It might not be the best metric to focus on, as it can vary based upon seasonality and other factors.

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21.) Customer retention rate

The number of customers who have purchased from you in the last six months divided by total sales over those past six months. You can also calculate this as ‘churned’ customers, which would be the amount of customers who have abandoned your site divided by total sales over the past six months.

22.) Average order size

This is how much the average order size is for your ecommerce website. It can be calculated by adding up how many products are ordered in total and dividing that number by the number of orders placed. The higher this value, the more money you’re making!

23.) Revenue

Revenue is the amount of money you generate from the sale of products or services. This is one of the biggest metrics as it shows you how you’re able to sell. It’s important to note that a business can make a lot of revenue, but still not turn a profit.

24.) Average order value (AOV)

The average order value is the average amount of money spent in a given transaction. This metric shows you the average amount of money that a customer is willing to spend. The higher this number, the better!

25.) Product inventory turnover rate

The money spent on inventory minus the cost of goods sold, multiplied by days in supply chain (or average lead time). This is really just another way to calculate turnover rate, but it’s helpful when you’re comparing businesses with different order fulfillment cycles and can’t use that metric.

26.) Total profit margin

Gross profit margin (after taxes) divided by net revenue (revenue after returns or discounts). If this figure becomes too low, then your business will start showing signs of not being profitable.

27.) Order defect rate

If your customers are submitting a return or cancelling their order right after it was placed. This figure is calculated by dividing the total amount lost from returns and cancellations by net revenue (after taxes) for the current year so far.

28.) Product return rate

Calculate as the number of products returned over past six months divided by total sales over those same six months.

29.) Break-even point

The point at which you are no longer losing money on a product or service (i.e., when costs = revenue). Many ecommerce businesses aim to break-even in the first year of opening their store.

30.) Return rate

This is how often people return items they purchase from you to get their money back, either because of an error with the order, problems with quality, size not fitting them right, etc. A lower number means that more people are happy!

31.) Cost per acquisition (CPA)

How much it costs for each new customer you acquire through an online marketing campaign or ad spend in relation to how many conversions they generated during the same time period. To determine your CPA, try out our cost per acquisition calculator!

Final Thoughts on Performance Indicators in Ecommerce

In conclusion, running an ecommerce business can be a huge undertaking! It’s hard to know what you need to do and where you should focus your attention.  Luckily, you can use the 18 key performance indicators in this post to measure how you’re doing and where you need to make improvements.

Disclaimer: WebCitz, LLC does not warrant or make any representations concerning the accuracy, likely results, or reliability of the information found on this page or on any web sites linked to from this page. This blog article was written by Timothy A in his or her personal capacity. The opinion(s) expressed in this article are the author's own and may not reflect the opinion(s) of WebCitz, LLC.