Ecommerce: which KPIs? What are they for?
Key performance indicators are essential for measuring the efficiency of your online store, but even more so for measuring the profitability and sustainability of your business. The results of these indicators can be used to fine-tune your offer, improve your business model or optimize your customer portfolio. But what are these KPIs? What are the most significant performance indicators? How can I track them? So many questions that we will look at together...
With more than 112 billion euros in 2020, European ecommerce is experiencing record growth, +8.5% according to FEVAD, despite the decline in services (-10%), dominated by travel-tourism players down 47% from 2019. Product sales alone boosted growth (+32%), with 17,400 additional sites. Interestingly, ecommerce now represents 13.4% of retail (vs. 9.8% in 2019). More than encouraging indicators that demonstrate the dynamism of online commerce, but also a very competitive market. This is why you need to analyze the data of your ecommerce site to remain competitive...
Why track KPIs?
An ecommerce site generates a lot of data, but not all of it is essential to the success of your store. It all depends on your market, your chosen segment, your location, the size of your company and your objectives. However, some indicators remain essential and allow you to measure the attractiveness of your site and the commercial offer, the relevance and viability of your business model and finally to follow your progress.
There are two main types of indicators: marketing performance indicators and sales performance indicators.
Key performance indicators related to marketing
The first performance indicators involve the operation of your store and its visibility. If you want people to buy from your site, they need to be able to find it! You can use specific measurement tools such as Google Analytics to access this data.
- Traffic and, in particular, the number of unique visitors. This data allows you to identify the number of potential customers and to have an overview of the customer journey by analyzing the traffic on your strategic pages.
- How long visitors stay on your site. This indicator is important to measure the time your customers spend on a given page. To improve this indicator, you can offer your customers buying guides or tips adapted to your catalog.
- The number of page views and the bounce rate are two criteria that enable you to assess the performance of your site's design. If your customer has to click too many times to find a product, the risk of them leaving your site before purchasing is much higher. You should also keep an eye on the bounce rate. If it happens before a conversion (purchase, registration, download...), perhaps your page is not clear enough.
- Your customer/prospect file. Unless your offer is unique with a very low renewal rate, building a customer file is a strategic necessity. It is important to keep track of the number of visitors who register on your site.
Good to know:
To improve the performance of your site, you can use an AB testing tool to check the relevance of your pages and analyze your customers' behavior
Key performance indicators related to sales
In addition to sales, some KPIs are essential to measure the performance of your business model, namely:
- The conversion rate = number of actions / number of visitors to your site x 100. This indicator measures the efficiency of your site, i.e. the number of actions (depending on your offer: sales, registrations, requests for quotes, account creations, etc.) compared to the number of visitors over a given period. This rate can be very different from one sector to another, or even from one segment to another. According to a Databox study, half of the surveyed merchants estimate this to be between 1 and 4% and the other half between 26 and 50%... The important thing is to compare your own rate, from one period to another, from one campaign to another, and to draw useful lessons for your progress.
- The average shopping cart (or AOV - Average Order Value) = total turnover/number of sales (or orders). This indicator, which indicates the average amount of a purchase on your site, allows you to analyze the performance of cross-selling and up-selling. To ensure a high average shopping basket, you need to focus on the user journey and push attractive offers.
- The Dropout rate: 60% of shopping carts are abandoned because of hidden delivery costs that are ultimately deemed too high. To avoid this, it is important to inform customers about the delivery conditions (time and costs), the return and refund modalities very early on in the purchasing process. Shoppers may also be discouraged if their preferred payment method is not available. If your rate is too high, consider testing your site, make sure there are no technical problems... especially on mobile devices.
- The life time value of a client (or LTV - Life Time Value) = Average order value x Number of sales x Average relationship duration
This indicator allows you to estimate the revenue that a customer can generate and therefore calculate the most relevant acquisition cost, or even decide between attracting and retaining customers. The lifetime value of a customer also allows you to develop your business.
- The Customer retention rate = End customers - New customers / Initial customers x 100
Loyalty is important not only in terms of sales (repeat business), but also because loyal customers take an active interest in your company and are more likely to recommend it. It is important to analyze the activation levers of acquired customers, but also what pushes them to leave in order to implement corrective actions.
- The ROI - Return on investment = (gain or loss of investment - cost of investment) / cost of investment. This indicator allows you to evaluate the effectiveness of an investment. It is a major criterion that allows you to measure the effectiveness of a campaign, but also the economic relevance of your online store.
What's new in terms of KPIs?
- With an increasingly competitive market, the time has come to focus on customer loyalty, how to improve the customer journey, what services to offer, how often to talk to them... these are all questions that KPIs can answer: purchase frequency, time between purchases, email open/click/conversion rate, customer satisfaction score.
- The First Contact Resolution Rate (FCR) = Number of requests resolved at first contact / Total number of requests
This very popular indicator allows you to assess the efficiency of your customer service by measuring the proportion of support requests that are solved upon first contact, without requiring the customer to contact you again. A key criterion since, according to the Harvard Business Review, reducing customer effort is the factor with the greatest impact on loyalty.
- The Quality Score is part of an anti-waste approach. This indicator allows you to evaluate the quality of an Adwords commercial link campaign in order to invest in the most profitable locations.
- The KPI of digital audio. Digital audio advertising is one of the strong trends of 2021, widely used during lockdown, which will lead to the emergence of new quantitative measurement tools such as listen-through-rate, but also more qualitative ones to evaluate, for example, the digital audio footprint of a brand.
Why track key performance indicators?
KPIs allow you to evaluate your company, as well as the relevance and sustainability of your business model. However, you must define the most interesting indicators for managing your site, according to your market, segment, clientele, and especially your objectives. Too much data can be bad for business. The key is to use these indicators correctly, to read them regularly and to share them with your teams in order to react quickly in case of a problem and to follow a launch or a new product efficiently.
For an overview of your ecommerce KPIs
The PrestaShop Metrics solution, focused on a reliable and intuitive data management dashboard, was launched several months ago and is now used by thousands of merchants to make informed decisions and improve their results.
Today PrestaShop is pleased to present PrestaShop Metrics Advanced, the analytics solution that allows those who wish to go even further in the daily control of their ecommerce performance, thanks to a set of new advanced features.
Among these features, accessible via a brand new interface organized in tabs for increased ease of use, we can see:
- Real-time data updates,
- Up to 14 months of your data history,
- More in-depth information about your financial activity and sources of acquisition to improve the knowledge of your customers.
Decide which PrestaShop Metrics plan is right for you and get a complete view of your business that is easy to read and interpret.