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Key Performance Indicators (KPIs) For ECommerce To Keep An Eye On Your Business

    Knowledge makes you strong!

    But what do we really get out of the huge amounts of data that ecommerce retailers collect?

    In this article, we’ll answer that question.

    Every website keeps track of what users do on their mobile apps and ecommerce sites. With this information, we can figure out the return rate, the number of orders that were placed successfully, and other key performance indicators. These ecommerce KPIs help increase sales, fix problems, and grow the business.

    What Is a Key Performance Indicator

    A key performance indicator is a type of metric that helps your business track its progress. You can find the most important things and make a plan for success. Ecommerce Key Performance Indicators (KPIs) help you make a plan to reach your business goals.

    Important eCommerce KPIs to Watch

    How do you know which ecommerce KPIs are important for your business? This may depend on your brand, but here are a few ways to measure it.

    Rate of Cart Abandonment

    When a customer leaves items in your cart without buying them, we call that a “abandoned cart,” and the rate that goes with it is the “abandoned cart rate.” This means finding out how many people left the site right before they bought something.

    The point of knowing this KPI is to understand the problem that the customer is trying to solve.

    Was it because of how you made the page, how hard it is to pay, or because the page was slow? When you know the reason, you can fix the problem and lower the Cart Abandonment Rate.

    • Experts say that you can get back a lot of these customers if you figure out the KPI and fix the problem.
    • Cart abandonment rate = 1 – (Total completed transactions)/(Total shopping carts made) x 100

    Since this is a problem that every ecommerce site has, looking at the percentage of this ecommerce KPI can help you find out more.

    Cost of getting a customer

    The customer acquisition cost is the second ecommerce KPI on the list. This is the amount of money you need to spend to keep or bring on a customer. For instance, if you spent $100 to get 10 new customers, your CAC could be $10 per customer.

    You have to know what your CAC is. It lets you know how much money you’re spending on each customer, and lowering this value increases your sales.

    If you’re selling a product for $4,000, it’s not a bad idea to spend $100 to get a new customer. But if you are selling a $100 backpack, your CAC should be lower.

    This is not the only reason why you should know your business’s CAC.

    Customer acquisition cost is mostly calculated because you need to make a budget. You can set your budget based on the CAC and the number of customers you plan to bring on in the next quarter.

    When you can reduce your CAC in a strategic way, you can bring on more leads with the same budget. Your profit margins go up, which is good for your income.

    So, it’s important to remember that if your sales go up and your CAC goes up too, you may end up with less profit instead of more profit because your CAC is out of balance.

    CAC = Money spent on getting new customers divided by the total number of new customers.

    Rate of Conversion

    Almost every business uses conversion rate as a KPI for ecommerce. This lets you know how many customers you were able to get through a certain method. For example, the number of people who bought something after looking at the call-to-action or landing page.

    This metric is correct.

    So, the best way to describe conversion rate is to say that it is the percentage of people who do something on your ecommerce store. This can be done by getting on a mailing list, buying something, or reading an article. Depending on your goal, the word “conversion” can mean different things.

    What does this do?

    Let’s say you have a landing page for services in software development. This page gets a decent amount of traffic, but less of it turns into a sale. We can tell that there’s something wrong with the way we deliver information. If we look deeper into the case, we might find problems like too much content, bad design, a website that doesn’t work, etc.

    Businesses like to see conversion rates between 2% and 4%. This means that for every 100 visitors, only two or three of them will become customers.

    Conversion rate = (total number of conversions/total number of leads) x 100

    Average Order Value

    The average order value is a key performance indicator (KPI) for ecommerce that tells you how much each customer spends on average in your store.

    Finding the AOV is important because doing so helps you make more money. Having a higher AOV is a sign of growth.

    AOV = Total business sales divided by the number of orders

    Customer Lifetime Value

    As the name suggests, the customer lifetime value is a number that lets you know how much money you’ve made from a customer over the course of their relationship with the brand. It can be hard to figure out what a customer is worth to your business. But it must be done. First of all, it helps you get and keep brand ambassadors. Second, you can find tricks for keeping customers to increase your CLV.

    CLV = (Average number of purchases) x (Average order value) x (Average number of days held)

    Having a higher CLV helps you improve a lot of other ecommerce KPIs.

    For instance, a higher CLV means that you have a high retention rate, which means you can keep these customers instead of having to find a lot of new ones. Getting a new customer costs more than keeping an old one.

    Rate of Correct Orders

    The order accuracy rate is another important ecommerce KPI that lets us know how many orders we are packing and shipping correctly without any problems. In these phases, mistakes can include packing the wrong item, sending the wrong amount, sending a damaged product, delaying the delivery, etc.

    Knowing the order accuracy rate lets you know how well you’re fulfilling orders, offer services without mistakes, make sure deliveries are accurate, and improve the customer experience. In the long run, these efforts help us keep more customers.

    Order accuracy rate = (Total orders correctly filled/Total orders filled) x 100

    Return Rate

    The last metric on the list is the return rate, which is how often customers send back the products you sell. This metric is important to keep an eye on because it tells you how happy your users are with the product.

    You can find out how happy the customer is, why they came back, and what you can do to fix the problem.

    If, like many small businesses, you don’t accept returns, you won’t be able to figure out what this ecommerce KPI means. You can try to get feedback from customers, but that might not be as accurate.

    Return rate = (Total returns/Total orders) * 100


    Ecommerce stores have to worry about a lot of things, like the quality of their products, how they are delivered, how their customers feel, and so on. If you don’t measure ecommerce KPIs, you miss out on the chance to solve problems and make more money. Check out the 7 most important ecommerce KPIs we talked about above to learn why customers are happy and sales are growing.

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