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You’re reading this, so there’s a good chance you’ve been trying to improve your online business. On this journey, we all come across the concept of eCommerce KPIs and then wonder what they are and how they can help.

As you may know, KPI is an acronym for key performance indicator. As the name suggests, each KPI measures one aspect of achievement. With a measure, you can quantify progress toward your business objectives.

KPIs will help you expand your business’s reach and increase sales conversions, but you need more info to start. This guide explores KPIs, reveals which KPIs your online store needs and explains how to implement them best. Are you excited?

The basics of KPIs

To understand KPIs, first understand performance indicators (PIs). They are general measurements of your business’s successes and shortcomings, like your monthly order count or how often a refund is requested.

Performance indicators are generalized; there are hundreds of options for each industry. You’ll pick a few that help you and your team accomplish your goals. These are your key performance indicators — “key” as in crucial, the metrics that matter to you.

Your use of performance indicators should depend on your business goals and needs — those of a steel mill business differ from those relevant to an online course provider. 

Ideally, when you’re creating your business plan, you would consider your business goals and the KPIs best suited to track them.

Finally, set KPIs according to different business levels; overall organizational KPIs should differ from those of the human resources team, which should differ from the sales team’s.

Introduction to eCommerce KPIs

Like any other industry, eCommerce has a wide range of performance indicators, and this guide will cover some important ones. First, note that each KPI is either qualitative or quantitative.

Qualitative KPIs focus on the opinions, attitudes and characteristics of viewers, customers and employees. This data is subjective and typically measured through surveys. 

An excellent example of qualitative eCommerce KPIs is customer satisfaction. A scale of one to 10 can measure happiness, but a seven will mean something slightly different to each person.

In contrast, website traffic is an example of quantitative eCommerce KPIs. If your analytics report says you had 42,085 homepage visits this month, that’s not based on opinions.

Either way, setting a fixed KPI goal lets you evaluate your store’s performance over time, relative to competitors and in response to strategic changes.

Reasons eCommerce KPIs are important

Reasons eCommerce KPIs are important.

KPIs facilitate business growth on all fronts. But especially for an online store, there are specific reasons to set eCommerce KPIs.

KPIs help you adjust your strategy

Most businesses have a strategy, but no strategy is perfect; tweaking it along the way will help you achieve your goals more effectively. 

Say your business goal is to sign 50 new clients daily, but you’re not there yet; you can set KPIs to track and improve your lead generation and customer relationship management, then monitor whether your performance improves after changes.

KPIs keep your teams aligned

KPIs keep your staff organized and moving in the same direction. This is possible when everyone understands the goals, sees your current progress and knows what works to improve performance.

KPIs keep you and your team accountable

Whether you work alone or with a team, accountability is vital to achieving your goals. Everyone’s more effective while tracking their progress and showing results for their work.

A great example is setting KPIs to increase daily website traffic to 1,000 visitors per month. If the month elapses and you only managed 600, analyze and identify how you could be more effective. From there, devise a sustainable plan to implement improvements.

KPIs help monitor your business’s health

Since you choose the KPIs that matter to you, make sure you select some that reflect the overall health of your business. That way, if something isn’t working with your operations, marketing, monetization or otherwise, you’ll see it reflected in your analytics report. 

With this setup, you can promptly address problems instead of only noticing when symptoms pop up.

How to track KPIs

To track KPIs, install an analytics tool like Google Analytics. Once linked, it will automatically collect data on your website. Consider your business’s growth level, industry and unique needs, then select a few relevant metrics to analyze. Use your analytics tool’s visualizations and dashboards to interpret your performance.

How to track key performance indicators.

Analyze your level of growth

Each level of your eCommerce website’s growth comes with unique demands. The attention you give specific KPIs will shift as your eCommerce business strategy evolves. 

For instance, to build your business at first, you’ll do well to acquire a high number of customers at a low cost. Therefore, KPIs like cost per acquisition (CPA) will be critical. 

Although you’ll want to remain profitable, your core focus shouldn’t be on profit. So KPIs like average order value (AOV) shouldn’t be as high on your priority list as CPA, website traffic and bounce rate.

Pick the right KPIs for your business

To help you pick out the most important eCommerce KPIs, here’s a list of factors you should consider:

  • Is this aligned with the goals of my online store?
  • Will there be enough data for an accurate result? 
  • Can I take effective action based on the results?
  • Are the results relevant within a reasonable timeframe?

Use data visualization tools

Collecting data is great. The overarching goal is to derive valuable insights later. Since data is stored in spreadsheets and other relational database formats, pick an analytics tool that will process and organize the numbers in a simple and visually appealing way. 

The graphical representations will enable you to identify trends and patterns that would otherwise be difficult to see within raw data. 

Compare and learn from other organizations

Tons of online businesses found success before you and have maintained it for a longer time. Some business owners will share their KPI journey depending on how you ask. You can also find many case studies online. 

Besides their choice of KPIs, take note of their tools, priorities and approach to improvement. Before long, you’ll have a refined perspective and increasingly understand online marketing campaigns.

Regularly review data with your team

Adjustments can only be made after you identify gaps and challenges that impede growth. Therefore, regularly collect and review data with your team.

Besides helping you adjust, you’ll know when you’ve achieved milestones to celebrate. Achievements boost your morale and motivate your team to be more productive.

Top 10 KPIs for eCommerce

  • Website traffic.
  • Traffic source.
  • Bounce rate.
  • Conversion rate (CR).
  • Cart abandonment rate (CAR).
  • Customer satisfaction (CSAT).
  • Average order value (AOV).
  • Refund rate (RR).
  • Cost per acquisition (CPA).
  • Return on ad spend (ROAS).
Top 10 KPIs for eCommerce businesses.

Let’s further explore these trusted KPIs that online store owners should track.

Website traffic

Website traffic is simply the number of visitors to your website. However, it can take the form of total unique visitors — meaning each person gets counted once within a given time period, even if they visit your website daily — or you can go based on total views.

Here are some methods to track this widely popular eCommerce KPI:

Google Analytics is the most reliable method of calculating site traffic. It’s completely free to integrate with your eCommerce site. Plus, you can customize Google Analytics for tailor-made visuals and reporting that fits your business goals like a glove.

If your online store runs on WordPress, use a plugin like MonsterInsights.

In a pinch, try website traffic estimation tools like Ahrefs and Similarweb. These tools estimate traffic by looking up the keywords a website ranks for and calculating the number of clicks each gets. Hence, they’re not as accurate as the other methods.

Traffic source

To boost your low-traffic pages and optimize your marketing strategy effectively, know where your website visitors are coming from. Then, adjust your digital marketing efforts to prioritize the sources that send the most people to your website.

Tools that calculate website traffic also track traffic sources. Below is a list of common sources:

  • Social media platforms like Facebook and Instagram.
  • Email marketing you send to loyal customers and potential buyers.
  • Organic search, meaning people who used a search engine to find your website. This is largely powered by your search engine optimization (SEO) fundamentals.
  • Direct, meaning people who came directly to your website without using any channel — perhaps they bookmarked it or used their browser’s address bar.
  • Referral, which comes from other websites sharing links to your website.
  • Paid search, gained from purchasing ads through platforms like Google Ads.

Bounce rate

A bounce is counted when someone lands on your website, views that page and leaves without checking anything else. It’s expressed as a percentage of the total number of visitors to your website within a given time period.

According to Hotjar, a reasonable bounce rate for an online retail business falls between 20% to 45%. Anything above this is a cause for concern.

Common issues that can cause a high bounce rate include: 

  • Pages that load slowly.
  • Pages that lack mobile optimization.
  • Misleading product descriptions or landing page info.
  • Low-quality content.

To improve your bounce rate, take steps to solve the above hurdles.

Here’s how you calculate your bounce rate:

Formula for calculating the bounce rate of an eCommerce website.

Conversion rate (CR)

A conversion is counted when a user takes an action you’ve set as desirable. It could be purchasing a product, signing up for your newsletter or downloading your e-book. 

Your conversion rate is calculated by dividing your total conversions by the total number of visitors to your website, as shown below:

Formula for calculating the conversion rate of an eCommerce website.

According to Statista, the average global conversion rate on all verticals was 1.9% in Q3 of 2023. When you want to increase your conversion rate, try A/B testing and setting up a sales funnel.

Cart abandonment rate (CAR)

Shopping cart abandonment rate is an eCommerce KPI that measures how many of your website users are adding items to their carts but not checking out (completing the purchase). 

Your cart abandonment rate can be lowered by reducing friction in the checkout process. That entails some or all of the following steps:

  • Offering guest checkout so customers don’t have to sign up to purchase.
  • When building your checkout page, prioritize a speedy order process.
  • Show customers their total savings. 
  • Avoid introducing additional charges on the final page.
  • Offer customers free shipping.
  • Simplify your website’s navigation.
  • Make it effortless to switch between the cart and the rest of the store.
  • Provide clear refund and return policies.

The formula for calculating CAR is:

Formula for calculating the cart abandonment rate of an eCommerce website.

Customer satisfaction (CSAT) score

Customer satisfaction score is a KPI used to measure how happy your customers are with your products and services. 

Customer satisfaction scores are collected primarily through surveys with questions like “How satisfied were you with our checkout process?” Users answer with a score between zero and five or zero and 10.

CSAT can be expressed as the percentage of happy customers compared to neutral and negative ones, with 100% being the highest and most desirable. Or it can be expressed as the average of all responses you get.

To use an average to quantify the customer experience you offer, try the formula below:

Formula for calculating the customer satisfaction score of an eCommerce website.

Average order value (AOV)

Your average order value KPI gives you an estimate of how much money the average customer spends on your website. When you know the average amount you can expect to earn from a new customer, you can optimize your pricing and marketing efforts.

Increasing your average order value doesn’t need to cost more in ads. You can take steps to leverage upselling and cross-selling.

Calculate this useful eCommerce metric as shown below.

Formula for calculating the average order value of an eCommerce website.

Refund rate (RR)

Refund rate measures how many people refund your products, compared to how many people don’t. It can be a big indicator of underwhelming customer satisfaction.

RR is an important metric for quality assurance and should prompt you to improve the quality of your products and the robustness of your customer support.

Additionally, a change in refund rate can indicate fraud from customers who receive products but claim they didn’t. Another type of fraud is intending to use a product once and then return it, feigning dissatisfaction.

Calculate your refund rate like so:

Formula for calculating the refund rate of an eCommerce website.

To keep your refund rate as low as possible, investigate each refund incident until you have an actionable root cause for it.

Cost per acquisition (CPA)

Cost per acquisition, also known as customer acquisition cost (CAC), measures the amount of money spent on acquiring a single customer, on average. A successful acquisition is counted when a user takes a desired action, like purchasing.

It’s an important metric for the marketing team to determine the overall profitability of their advertising campaigns. 

Ideally, keep your cost per acquisition as low as possible. To achieve this:

  • Polish your ad copy to compel more viewers to take action.
  • Optimize your landing pages to enhance user experience and drive more customers deeper into your sales funnel.
  • Work on customer retention. Provide incentives to enhance customer loyalty, like discounts on repeat purchases.
  • Regularly conduct market research to understand your audience better.

Here’s how this impactful eCommerce KPI is calculated:

Formula for calculating cost per acquisition for an eCommerce website.

Return on ad spend (ROAS)

Return on ad spend is another marketing measure of the total revenue you generate per dollar spent on ads. This metric is calculated for a given period of time, regarding a single ad or an entire campaign.

As a benchmark, your ROAS should stay above 100% — the higher, the better — but there is some leeway depending on the objective of a campaign. 

Brand awareness campaigns, for instance, will have a lower return on ad spend since they don’t center on driving sales. In contrast, your return on ad spend should be high if you’re running a time-sensitive sale ad.

To calculate your return on ad spend, use this formula:

Formula for calculating return on ad spend for an eCommerce website.

Final thoughts: The best eCommerce KPI practices for your online store

KPIs will help you overcome business stagnation by directing your focus on critical aspects of your online business — things that quantifiably affect your bottom line.

Thus, eCommerce KPIs are essential whether you’re a seasoned entrepreneur or just starting your first eCommerce store
To get your foot in the door, start with WooCommerce hosting from Bluehost; you’ll get KPIs, analytics and reports conveniently integrated with your website builder.

  • Tiffani Anderson

    Tiffani is a Content and SEO Manager for the Bluehost brand. With over 10 years experience across all facets of content and brand marketing, she strives to combine concepts from brand marketing with engaging content through the lens of SEO.

    Education
    University of North Texas
    Previous Experience
    Content Marketing, SEO, Social Media
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