10 KPIs for E-commerce success 

E-commerce KPIs are like the dashboard of your car. They indicate how well you are on your way to your final destination. Monitoring the right KPIs for your e-commerce business helps you track progress toward objectives such as more revenue, increasing customer lifetime value, or increasing your shopping cart value.

Which e-commerce KPIs are important?

Defining and monitoring the right KPIs will enable you to make better decisions faster to increase conversion rates, online revenue, or retention. There are hundreds of KPIs or metrics you can define and monitor for this, but not every KPI is necessarily relevant to you.

When determining e-commerce KPIs that fit within your marketing strategy and business, look at the following:

• Business goals: Choose KPIs that immediately demonstrate impact on your overall business objectives. For example, there is a difference between monitoring ROAS vs POAS.
• Measurability: KPIs must be easy to measure for you and your team – duh. No one benefits from a vague KPI that causes more confusion than focus.
• The growth phase of your organization: Starting e-commerce companies likely have different objectives – and therefore KPIs – than companies that have been operational for years.

With that in mind, it can still be difficult to know exactly where to start….

But don"t worry. From conversion rate to customer lifetime value and Net Promoter Score. These are the top 10 e-commerce KPIs according to boostU.

Top 10 E-commerce KPIs for growth

#1: Conversion rate

The e-commerce conversion rate is one of the most important KPIs, as it impacts all other KPIs and metrics of a webshop. If your webshop is not converting, there is little point in worrying about other metrics such as shopping cart value.

Your webshop"s conversion rate is THE KPI that impacts almost all other key metrics of your webshop. When you can increase your conversion rate, you normally also see improvements in other statistics of your webshop such as revenue, transactions, etc.

#2: ROAS or POAS

Depending on your objective as an e-commerce company, ROAS and POAS are also two important metrics to keep an eye on.

ROAS or Revenue on Ad Spend looks at the revenue you generate compared to the advertising costs you incur to realize new sales. In other words; how many euros of revenue do you get from the advertising budget?

ROAS = Revenue / Ad Spend

But if profitability is really important for your organization, then POAS is actually a better KPI. There are many other costs besides media spend that impact the "profitability" of your marketing efforts. Think of:

• shipping cost
• payment provider fees
• storage costs
• etc.

These are additional costs that need to be factored in to map the profitability of your marketing efforts. When growing in profitability is more important than growing in revenue, POAS or Profit on Ad Spend is a better KPI.

#3: Customer Lifetime Value

Customer Lifetime Value indicates how much a customer generates on average during their period as a customer. The chance that someone makes multiple purchases is high, so it is worthwhile to discover how much revenue a customer generates on average for your company.

CLTV is a KPI that also reflects many other key metrics including conversion rate, average order value, and customer return rate. The ability to increase the lifetime value of a customer can have a huge impact on your e-commerce business in the long term.

In addition, calculating customer lifetime value helps you choose which channels you can invest in to acquire new customers and at what cost you are willing to do so. And that brings us to the next KPI…

#4: Customer Acquisition Cost

The customer acquisition cost or CAC is the total cost of sales and marketing needed to attract a new customer over a certain period.

That total cost includes all ad spend, salaries, bonuses, external fees, etc.

Knowing how much money it costs to attract a new customer is important, as you want to be able to do so in a profitable way. If it costs you €100 to attract a customer who buys a €50 product, the ratio is not right.

So on to the next KPI…

#5: CLV – CAC ratio

With the CLV:CAC ratio, you place Customer Lifetime Value alongside Customer Acquisition Cost and have a good indicator to compare the potential value of a customer against the cost of attracting them – and thus view the profitability behind marketing and sales.

The CLV:CAC ratio is a strong KPI to find a balance in your investments for marketing and sales. Ideally, this ratio is around 3:1 – which means the value of a customer should be 3 times higher than the cost of making someone a customer.

#6: Average Order Value

Average order value is simply the average amount a customer spends per purchase. It is a good indication to look at how efficient you are at upselling and cross-selling products on your webshop.

The higher the Avg. Order Value, the more revenue you make on average per customer, the better. Easy.

#7: Cart abandonment rate

This metric goes hand in hand with your conversion rate. Cart abandonment rate indicates how many people drop out in the purchase process on your webshop, and is therefore a good indication to check whether your checkout and payment process are well set up or not.

Too much distraction, unclear information, or high additional costs cause people to drop out of the process and make their purchase elsewhere.

#8: Customer Return Rate

The customer return rate shows what ratio of existing customers return for repeat purchases. Reactivating existing customers is always cheaper than attracting new customers.

Stimulating repeat purchases is therefore a great way to increase CLTV.

#9: Customer Churn Rate

The churn rate indicates how many of your existing customers you lose. A bad experience with your webshop, delivery, or products can cause customers not to return. Churn is an important KPI to monitor, as you don"t want to endlessly put effort into acquiring new customers if they never come back.

#10: NPS

To increase the return rate and decrease the churn rate, measuring customer satisfaction is one last important KPI. The most commonly used is Net Promoter Score or NPS, which indicates how likely someone is to recommend your webshop or products to friends on a scale of 1 – 10.

Getting started with KPIs

You know your business objectives. Now it comes down to choosing a KPI that best reflects progress toward realizing these objectives. If you want to purely grow in revenue, then your revenue growth is the most important KPI. If it is more important to sell more to the same or existing customers, then average shopping order value might be more relevant.

Know your goal, and the right KPI will show you the way…