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January 24, 2025
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7
min read
KPI stands for key performance indicator. As that name would suggest, KPIs are the key metrics used to measure success. In this case, we’re discussing eCommerce success.
KPIs are like the thermometers of eCommerce. Any metric you may use to measure or assess the performance of your eCommerce site can be a KPI. There are dozens of KPIs that any eCommerce business can use across various marketing channels.
KPIs are one of several tools developers can use in their quest to gather as much information as possible about their users. KPIs matter because of the diversity in the information they can provide. They can help in various industries and situations, from fine-tuning your digital marketing strategy and social media engagement rate to streamlining your sales funnel and enhancing your checkout process for higher customer satisfaction.
KPIs are a flexible set of tools that can help you access nearly any kind of data you need. When you know which KPIs to look at, you can parse the data points into the information you need to make an informed development plan to grow your online business.
Google Analytics is an easy-to-use tool for tracking eCommerce website performance benchmarks. Even if your team is new to conversion rate optimization (CRO) or just not the most tech-savvy, Google Analytics can help you gather your KPI data as accurately as possible.
Google Analytics lets you collect data without writing a single line of code into your site’s backend. They have a tag manager feature to help you tailor your KPI data to your online store’s needs to give you a clearer picture of market-relevant data points.
You can measure a long list of KPIs, including number of visitors, how those visitors found you, the time they spent on your site, and what actions they took on your site. You can use this tool to monitor your KPIs and even analyze them. The data Google Analytics can collect for you is just the start of where you can find your KPIs.
While there are dozens of potential KPIs to track, these are our 10 essential picks for eCommerce success.
Conversion rate describes the rate at which people go from “I’m here” to “I’ve bought something.” Your number of conversions is essentially the number of users that have crossed the line from visitor to paying customer.
Conversion rate optimization (CRO) is simply making that rate the best it can be to help your company maximize profits.
Your sales conversion rate can be calculated simply: Conversion rate = Total Visitors/Number of Conversions x100.
To perform this function, you need to have a clear and correct data point for both your total visitor count and your number of conversions, meaning your total number of eCommerce sales/total number of orders.
This is the number one most important metric because your ultimate goal as an eCommerce site should be getting as many paying customers as possible. This metric will tell you the rate of your success at making a sale when you’ve already got them in the door. This isn’t about marketing, this is the finish line of the sale.
When Prismfly helps eCommerce stores improve their CRO, those businesses often see an uptick in average order value (AOV), as well.
Sometimes abbreviated as CLV, Customer lifetime value is the total amount of money an average customer is expected to spend with your business for all time. CLV can be calculated this way:
(Annual Profit x Average Customer Life Span) / Cost of Customer Acquired.
Average customer life span refers to the average period of time that a user will utilize your eCommerce platform, not the number of years that an average customer is alive.
Did you know that a slow-loading website can negatively impact your Google ranking?
Load speeds are just one of several SEO metrics to be concerned about, but they’re a good place to start for your product and landing pages. You can boost your load speeds easily by compressing images and code or activating browser caching.
There are a few ways to measure load speeds. Google uses an aggregate of the different load speeds to calculate your ranking.
Significant measures of load speed include time to first byte, full page load speed, and first contextual paint:
Other SEO metrics to keep an eye on include keyword rankings, organic sessions, and organic visibility.
A good bounce rate is a low bounce rate. Bounce rate refers to the number of visitors or potential customers that leave your site after viewing only one page. You can calculate the bounce rate with a simple formula: Total Number of One-page Visits / Total Number of Entries to your Website.
Naturally, you’ll want to check which pages are contributing to your bounce rate. Is your homepage causing more bounces than your product pages? If you can isolate the most repelling pages, you’ll isolate the source of your bounce rate problem.
Your total number of visitors will give you a sense of the reach your website has. Keep in mind that this metric tracks external and internal website visitors, as well as anyone working on your website.
To get a better picture of actual users, exclude internal or contracted users by excluding their IP addresses. If you find that your total number of visitors is lower than expected, that likely points to an SEO issue.
When addressing a low visitor count, optimize your site for search engines and assess the strength of the keywords and phrases that should be driving your website traffic.
Separate from your total number of visitors, calculate your total number of unique users. A unique visitor is a first time visitor: It’s anyone who has never been to your site before or at least has not been before in a set amount of time.
A lot of unique visitors means that your site is reaching a wider audience and connecting with new people. Calculating unique visitors will also help calculate return customers since if a visitor is not unique, they’re returning.
Finally, keep track of your number of customers. This is distinct from the number of visitors, as customers refers only to the users that cross the threshold of actually making a purchase.
If you find a large disparity between your total number of users and your total number of customers, this could point to a number of issues. Still, likely culprits include a weak CTA and a desperate need of conversion rate optimization assistance.
Customer Acquisition Cost (CAC) will feel a bit familiar; we talked about this under Customer Lifetime Value. Let’s say you need to calculate the cost of acquiring a ton of customers rather than just a select one or a small group.
Calculating CAC is simple:
Cost Spent on Acquiring Customers (Marketing) / Number of New Customers Acquired
Return on investment (ROI) is perhaps the most common KPI, and for good reason. Calculating the ROI is simple: Just divide revenue by cost.
Once calculated, ROI’s results can be extremely effective. Having a poor ROI is perhaps the single biggest indicator of your business’s performance.
Customer loyalty is an extremely valuable thing. Repeat customers make repeat purchases. Customer retention rate refers to the percentage of customers (not just visitors, but paying customers) from a specific timeframe that return to the site at a later time and make a purchase.
This eCommerce metric is the one that will help you figure out if your customers are returning or not. If you find that your customers are not coming back, you may have a user experience issue on your hands.
To calculate your customer retention rate, subtract the number of new customers at the end of a period from the total number of customers during the period. That will get you the number of returning customers. Then divide the number of returning customers by the total number of customers at the beginning of the period, and multiply by 100.
In marketing, your click-through rate (CTR) is your most important KPI. Click-through rate describes the ratio of page views to clicks a link receives. These links may receive their views, also called impressions, through email campaigns or ads placed on social media through online marketing campaigns.
CTR also helps your business’s SEO by helping you evaluate if your search snippets are optimized to garner the maximum clicks and assess the strength of your call-to-action display.
You can calculate a click-through rate by simply dividing the number of views by the number of clicks. An email marketing link that was viewed 1000 times and clicked 40 times would have a CTR of 4%.
The formula for this one is nothing new: Gross profit minus expenses gets you your net revenue
KPIs are necessary for every eCommerce business that wants to succeed in a competitive marketplace. These 10 KPIs are the most basic, universally applicable KPIs that every business could benefit from.
Ultimately, you know your business better than anyone, so it’s up to you to determine if you need to employ all 10 of these KPIs, only some, or these 10 plus 20 more. Professional advice will dictate you select a maximum of ten: two primary and about 8 supporting.
Based on your business’s objectives, employ the KPIs that are relevant to you and skip the irrelevant ones to prevent overwhelming your team with frivolous data points. KPIs are there to help you and your team assess your success and, if used correctly, take that success to the next level.
Co-Founder & Managing Partner
Yusuf Shurbaji has over a decade of ecommerce growth experience. His past work includes building optimization departments & running experimentation inhouse and agency side for Dior, JCPenney, LVMH, American Precious Metals Exchange, Princess Polly, Built Brands, Ladder Sport, Maze Group, HelloFresh, Ledger, Blockchain.com, Kind Snacks, and other 9-figure brands. Yusuf is a Co-Founder of Prismfly, a conversion rate optimization agency focused on growing revenue and EBITDA for D2C ecommerce brands. Prismfly is the first CRO focused Shopify Plus certified agency and has seen triple digit growth the past 2 years.
