So what exactly are KPIs and which ones are critical to your eCommerce business?<\/p>\n
Don\u2019t worry, we got you covered!<\/p>\n
Table of Contents<\/h2>\n\n- What are eCommerce KPIs?<\/a><\/li>\n
- Why are KPIs Important?<\/li>\n
- The eCommerce KPIs that Matter<\/a><\/li>\n
- Sales KPIs<\/a><\/li>\n
- Marketing KPIs<\/a><\/li>\n
- Shipping and Logistics KPI<\/a><\/li>\n
- How NextSmartShip Helps You Track KPIs<\/a><\/li>\n<\/ul>\n
![\"Important](\"https:\/\/www.nextsmartship.com\/wp-content\/uploads\/2021\/08\/KPIs-1024x512.jpg\")
<\/p>\n
\nA key performance indicator<\/a> is a metric that helps you identify the most important aspects of your business in a way that helps you determine if you\u2019re achieving your principal objectives.<\/p>\nThey tell you where you are and the actions you need to take to achieve your goals. They help business owners make more informed decisions about conversions, marketing, revenue, operations as well as customer satisfaction.<\/p>\n
Why are KPIs Important?<\/h2>\n
KPIs are crucial to eCommerce business owners because they:<\/p>\n
Help analyze growth<\/strong><\/h3>\nKPIs provides an overall performance of your online store. Getting this bird\u2019s eye view helps you analyze your growth rate so you can make adjustments. For instance, you\u2019ll be able to keep track of your best selling months and reorder more inventory.<\/p>\n
Provide insights based on data<\/strong><\/h3>\nData helps you gain insights of your entire business operations. This allows you to make better decisions that are informed by real-time data. This way, you\u2019ll be able to visualize your next steps for growth more effectively.<\/p>\n
Steer you in the right direction<\/strong><\/h3>\nKPIs offer a better understanding of what needs to be improved and what\u2019s actually working for your business. This eliminates the need to rely on personal preferences or gut reactions to making business decisions. You\u2019ll be able to take an objective look at your business and see if you\u2019re headed in the wrong direction and need to change course.<\/p>\n
The eCommerce KPIs that Matter<\/h2>\n
Now let\u2019s look at the most widely used KPIs that e Commerce businesses use to assess their performance. It\u2019s also worth noting that the KPIs on this list are not exhaustive because there\u2019s an infinite number of indicators to be used depending on your business goals.<\/p>\n
Sales KPIs<\/h2>\n
Sales KPIs show how your business is doing when it comes to conversions and revenue. Here are a few examples:<\/p>\n
Average order value<\/strong><\/h3>\nThe average order value (AOV) is used to track the average dollar spent when a customer places an order on your site or app. It helps to evaluate your store\u2019s pricing strategy and also to understand your customer\u2019s buying habits.<\/p>\n
To calculate AOV, use this formula:<\/p>\n
AOV = Revenue\/ Number of orders<\/p>\n
Conversion rate<\/strong><\/h3>\nThis is the percentage of users on your site who turn from site browsers into actual buyers. To calculate your conversion rate, here\u2019s the formula:<\/p>\n
Conversion rate= ( Conversions\/Total number of visitors) X 100%<\/p>\n
Customer lifetime value<\/strong><\/h3>\nThe customer lifetime value (CLV) shows you how much a customer spent with your business over time. This helps you identify ways to focus on building customer loyalty and attract repeat sales through upselling or subscriptions to drive growth. To calculate CLV:<\/p>\n
Customer Lifetime Value = Average Value of Sale X Number of Transactions X Retention Time Period<\/p>\n
Cost of goods sold<\/strong><\/h3>\nCost of goods sold (COGS) shows you just how much you spend to sell a product. This cost includes the cost of raw materials as well as the labor used to create it. To get your COGS, use this formula:<\/p>\n
COGS= Starting inventory + Purchases during the given period \u2013 Ending inventory<\/p>\n
Marketing KPIs<\/h2>\n
Marketing KPIs helps you understand the products that are selling, why they are being bought and the demographic of buyers. These KPIs inform the product development stage and have an impact on the sales KPIs. They include:<\/p>\n
Site traffic<\/strong><\/h3>\n
<\/p>\n
\nA key performance indicator<\/a> is a metric that helps you identify the most important aspects of your business in a way that helps you determine if you\u2019re achieving your principal objectives.<\/p>\nThey tell you where you are and the actions you need to take to achieve your goals. They help business owners make more informed decisions about conversions, marketing, revenue, operations as well as customer satisfaction.<\/p>\n
Why are KPIs Important?<\/h2>\n
KPIs are crucial to eCommerce business owners because they:<\/p>\n
Help analyze growth<\/strong><\/h3>\nKPIs provides an overall performance of your online store. Getting this bird\u2019s eye view helps you analyze your growth rate so you can make adjustments. For instance, you\u2019ll be able to keep track of your best selling months and reorder more inventory.<\/p>\n
Provide insights based on data<\/strong><\/h3>\nData helps you gain insights of your entire business operations. This allows you to make better decisions that are informed by real-time data. This way, you\u2019ll be able to visualize your next steps for growth more effectively.<\/p>\n
Steer you in the right direction<\/strong><\/h3>\nKPIs offer a better understanding of what needs to be improved and what\u2019s actually working for your business. This eliminates the need to rely on personal preferences or gut reactions to making business decisions. You\u2019ll be able to take an objective look at your business and see if you\u2019re headed in the wrong direction and need to change course.<\/p>\n
The eCommerce KPIs that Matter<\/h2>\n
Now let\u2019s look at the most widely used KPIs that e Commerce businesses use to assess their performance. It\u2019s also worth noting that the KPIs on this list are not exhaustive because there\u2019s an infinite number of indicators to be used depending on your business goals.<\/p>\n
Sales KPIs<\/h2>\n
Sales KPIs show how your business is doing when it comes to conversions and revenue. Here are a few examples:<\/p>\n
Average order value<\/strong><\/h3>\nThe average order value (AOV) is used to track the average dollar spent when a customer places an order on your site or app. It helps to evaluate your store\u2019s pricing strategy and also to understand your customer\u2019s buying habits.<\/p>\n
To calculate AOV, use this formula:<\/p>\n
AOV = Revenue\/ Number of orders<\/p>\n
Conversion rate<\/strong><\/h3>\nThis is the percentage of users on your site who turn from site browsers into actual buyers. To calculate your conversion rate, here\u2019s the formula:<\/p>\n
Conversion rate= ( Conversions\/Total number of visitors) X 100%<\/p>\n
Customer lifetime value<\/strong><\/h3>\nThe customer lifetime value (CLV) shows you how much a customer spent with your business over time. This helps you identify ways to focus on building customer loyalty and attract repeat sales through upselling or subscriptions to drive growth. To calculate CLV:<\/p>\n
Customer Lifetime Value = Average Value of Sale X Number of Transactions X Retention Time Period<\/p>\n
Cost of goods sold<\/strong><\/h3>\nCost of goods sold (COGS) shows you just how much you spend to sell a product. This cost includes the cost of raw materials as well as the labor used to create it. To get your COGS, use this formula:<\/p>\n
COGS= Starting inventory + Purchases during the given period \u2013 Ending inventory<\/p>\n
Marketing KPIs<\/h2>\n
Marketing KPIs helps you understand the products that are selling, why they are being bought and the demographic of buyers. These KPIs inform the product development stage and have an impact on the sales KPIs. They include:<\/p>\n
Site traffic<\/strong><\/h3>\n
A key performance indicator<\/a> is a metric that helps you identify the most important aspects of your business in a way that helps you determine if you\u2019re achieving your principal objectives.<\/p>\n They tell you where you are and the actions you need to take to achieve your goals. They help business owners make more informed decisions about conversions, marketing, revenue, operations as well as customer satisfaction.<\/p>\n KPIs are crucial to eCommerce business owners because they:<\/p>\n KPIs provides an overall performance of your online store. Getting this bird\u2019s eye view helps you analyze your growth rate so you can make adjustments. For instance, you\u2019ll be able to keep track of your best selling months and reorder more inventory.<\/p>\n Data helps you gain insights of your entire business operations. This allows you to make better decisions that are informed by real-time data. This way, you\u2019ll be able to visualize your next steps for growth more effectively.<\/p>\n KPIs offer a better understanding of what needs to be improved and what\u2019s actually working for your business. This eliminates the need to rely on personal preferences or gut reactions to making business decisions. You\u2019ll be able to take an objective look at your business and see if you\u2019re headed in the wrong direction and need to change course.<\/p>\n Now let\u2019s look at the most widely used KPIs that e Commerce businesses use to assess their performance. It\u2019s also worth noting that the KPIs on this list are not exhaustive because there\u2019s an infinite number of indicators to be used depending on your business goals.<\/p>\n Sales KPIs show how your business is doing when it comes to conversions and revenue. Here are a few examples:<\/p>\n The average order value (AOV) is used to track the average dollar spent when a customer places an order on your site or app. It helps to evaluate your store\u2019s pricing strategy and also to understand your customer\u2019s buying habits.<\/p>\n To calculate AOV, use this formula:<\/p>\n AOV = Revenue\/ Number of orders<\/p>\n This is the percentage of users on your site who turn from site browsers into actual buyers. To calculate your conversion rate, here\u2019s the formula:<\/p>\n Conversion rate= ( Conversions\/Total number of visitors) X 100%<\/p>\n The customer lifetime value (CLV) shows you how much a customer spent with your business over time. This helps you identify ways to focus on building customer loyalty and attract repeat sales through upselling or subscriptions to drive growth. To calculate CLV:<\/p>\n Customer Lifetime Value = Average Value of Sale X Number of Transactions X Retention Time Period<\/p>\n Cost of goods sold (COGS) shows you just how much you spend to sell a product. This cost includes the cost of raw materials as well as the labor used to create it. To get your COGS, use this formula:<\/p>\n COGS= Starting inventory + Purchases during the given period \u2013 Ending inventory<\/p>\n Marketing KPIs helps you understand the products that are selling, why they are being bought and the demographic of buyers. These KPIs inform the product development stage and have an impact on the sales KPIs. They include:<\/p>\nWhy are KPIs Important?<\/h2>\n
Help analyze growth<\/strong><\/h3>\n
Provide insights based on data<\/strong><\/h3>\n
Steer you in the right direction<\/strong><\/h3>\n
The eCommerce KPIs that Matter<\/h2>\n
Sales KPIs<\/h2>\n
Average order value<\/strong><\/h3>\n
Conversion rate<\/strong><\/h3>\n
Customer lifetime value<\/strong><\/h3>\n
Cost of goods sold<\/strong><\/h3>\n
Marketing KPIs<\/h2>\n
Site traffic<\/strong><\/h3>\n