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10+ E-commerce KPIs that Your Business Needs to Track Immediately

23.06.2017, 2m


Your business is live and your analytics are set up perfectly. Now, as a decision maker, you are bombarded with hundreds of metrics by your team to explain the performance of your business. However, an overload of metrics could cause an “analysis paralysis” that causes more confusion for you as a decision maker.

We have narrowed down these metrics for e-commerce businesses that provide real insights that show you the real state of your business and help you make quick decisions.

Brand Awareness Metrics

1. Direct Traffic: Number of users directly typing your website in their browsers. You can see this number in your Google Analytics channel report. Keep track of growth in direct traffic to give you a sense of popularity of your website. More direct traffic means better brand awareness.

2. Brand Searches on Google: Using the keyword planner tool to see the growth in your organic brand searches over time. Although the numbers that Google provides will not be the exact search numbers, it would be interesting for your brand to keep track of brand searches to benchmark against your competition in the market.

Conversion metrics

3. Conversion rate (%) = number of visitors executing a defined action / number of all websites visitors (*100)

4. Sales conversion rate (%) = number of sales / total visitors (*100)

5. Lead conversion rate (%) = number of leads (for example newsletter subscriptions) / total visitors (*100)

Retention metrics

6. Repeat Purchase Rate (%) = (Total customers with >1 purchase) / (Total purchasers) (*100)

7. Average Purchase Frequency = (Total number of customers) / (total number of purchases)

Customer Quality Metrics

8. Average Order Value: Average amount spent per checkout

AOV = (Total value of products ordered) / (Total Orders)

AOV can be used to calculate the Lifetime Value (LTV) of your customer. This will help you easily predict how much you can expect to earn from every new customer.

9. Lifetime Value (LTV) of your customer: The total amount spent on your website by a customer for a pre-defined period  

LTV = (AOV) * (Frequency of Purchase) * (Total active purchase years)

In this formula, the Total active purchase years are the number of years you expect to keep getting repetitive business from your customer.

For example, a standard e-commerce company could calculate a LTV based on 3 years of continuous activity of a customer. A company that sells specialised drills, could estimate that the customer will need new drill bits every 2 years and hence could choose to calculate the LTV based on  the number of purchases made by a customer over a span of 10 years.

As a business owner, you can decide on what the best time span is to calculate your LTV.

LTV can be very useful while you are deciding to invest in marketing activities for your e-commerce business. By knowing the LTV of a customer, the total traffic and your conversion rate, you could very easily calculate how much advertising budget you can spend on every new customer.

Website Quality Metrics

10. Business Review Ratings: The power of customer feedback is immense. Keep close track of how happy your customers are by keeping track of your ratings by using a good review collection company.

For example, when using Trusted Shops' review collector, the brand's customers are automatically asked to give their business a rating (out of 5 stars) for every purchase experience they have.

Having an automated system to gather feedback can help you keep track of how happy your customers are. Unhappy customers can give you a chance to improve your business and help them have a better customer experience.

As a business, you also have an option (or opportunity!) of using your customer ratings to showcase your stars on Google organic search results, Google Ads, and Google Shopping. Studies have shown that displaying your star-ratings in Google search results can dramatically affect your click-through rates. 


RELATED READING: Download our whitepaper on improving your checkout process for higher conversions!

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