How can you be sure that the strategies your company is implementing are effective? Metrics, that’s how. Key performance indicators, or KPIs, are extremely important in order to evaluate your company’s progress of strategic business goals. Every business has its own unique goals; but for ecommerce businesses, these 10 KPIs are essential for tracking success and better understanding areas of improvement.
That being said, metrics should drive action – here are 10 critical KPIs that your ecommerce business should keep a watchful eye on and what actions you should take after evaluation:
1. Website Traffic
To state the obvious, the more website traffic your site has, the more opportunities you have to tally new customers. More traffic doesn’t necessarily point to a spike in sales; however, it is a key metric to follow to make sure your marketing efforts are bringing users to your site. Google Analytics is a useful tool in providing an overview of your website’s traffic, and it’s free to use.
Total traffic depends on the size of your business, but you’ll want to see seasonal peaks during your industry’s busy season and, in general, month over month traffic growth.
2. Referral Traffic
The amount of traffic that your site is receiving isn’t all that’s valuable, how exactly visitors are finding your site is also imperative to understand your site performance. Referral traffic comes from backlinks, and with this data, you can determine which sources are directing people to your website. This also directly relates back to your SEO efforts – for example, if your site’s referral traffic is minimal, you may want to rethink your content strategy to better create content others will want to share.
3. Time on Site
The average time on site and session duration can explain a lot to marketers. It’s an important metric when measuring your site’s total engagements and can be indicative of users’ interest. Google Analytics can track how much time people spend on your website during an entire session, or how much time they spend on each individual page.
In terms of your ecommerce site, this metric can be extremely telling. For example, if you post a blog that is approximately a 10-minute read, and your visitors’ average time on that page is one minute, you can be sure you aren’t engaging your readers the way you may have hoped.
4. Pageviews per visit
A pageview is a visit to a page on your website, and a visit always contains one or more page views unless the user bounces. A high pages-per-visit rate indicates that the visitors on your site have good reasons to stay with it, and is a huge indicator of engagement. Littledata surveyed 3,623 sites in February 2019 and found the average pages per session was 3.0.
You can further qualify this KPI by taking a look at User Behavior Flow or Reverse Goal Funnel on Google Analytics. These reports will show you the common path users take from the most common landing pages, or the common path they take to make a conversion/purchase.
5. Bounce Rate
Pageviews per visit directly impact this metric. Bounce rate is a measure of visit quality, and a high bounce rate can mean that your landing pages aren’t relevant to your viewers. It is one of the most important metrics to understand how well your site is performing and if the right shoppers are coming to your website. The goal is to keep this KPI below 30%.
Always check the bounce rates of the landing page that you’re using for your paid ads, because if the bounce rate is very high (over 50%), the ads are not targeting the right users.
6. Email Click-through Rate (CTR)
Email clickthrough rate is the most important email marketing metric; and as an ecommerce store, you should have a strong email campaign to track cart abandonment, capture product reviews, engage for repurchase, and send out promotions. According to Econsultancy’s 2019 Email Marketing Industry Census, only 73% of marketers track click-through rates as a way to measure the success of their email marketing campaigns, but this KPI should be tracked 100% of the time. Monitoring this metric can help you optimize your entire email strategy, as well as note successful efforts to bring over to future paid advertising campaigns.
7. Clicks & Scroll Depth
It’s crucial to monitor where exactly website visitors are clicking and scrolling in order to determine what’s most important to users. A great way to do this is by installing heatmaps on campaign landing pages. Heatmaps show where users are interacting with an individual page, so we take this information to optimize web design to ultimately get more conversions. Heatmaps make it simpler to visualize information through ‘hot’ and ‘cold’ components of a website.
8. Paid Traffic Volume
Paid advertising can boost overall traffic to your website and increase brand recognition. It’s easy to use and can also help to control advertising costs. Nonetheless, it’s important to keep tabs on how much traffic from PPC your company is actually reeling in. This metric can give you insight into how much more, or less, your company should be spending on these efforts. Some paid campaigns are meant to bring in traffic (pay-per-click), while others are for awareness (pay-per-impressions or cost-per-million), so make sure you’re tracking users with a campaign-specific URL.
9. Conversion Rate
Conversion rate is an extremely significant KPI for all industries, and especially in ecommerce where your main business goals are purchases and revenue. To put it simply, your company’s conversion rate is the percentage of visitors to your website that complete a desired goal (conversion). A high conversion rate is suggestive of an effective marketing strategy and/or web design.
Looking at benchmarks for ecommerce conversion rates can also give us marketers some insight. According to research from Episerver retail clients, the average benchmark for email conversion rates are 2.3%, SEO organic searches rank 2.8%, and paid campaigns rank 2.9%. The trend here is that conversion rates are typically higher in places where consumers have greater intent.
10. Cost per Acquisition (CPA)
Cost Per Acquisition is used to precisely gauge the revenue impact of your company’s marketing campaigns. Your CPA will give you an idea of how much money your customers are costing you. As a result, you can determine whether your approach needs to be adjusted. This metric can be found in your advertising platform, as well as in your enhanced ecommerce report in Google Analytics.
There’s no denying it, in order to make smart business decisions, you have to know the numbers. By evaluating the above KPI’s you can gain insights on how well your business activities are performing and improve your company’s bottom line.