Performance should influence business decisions, and performance indicators should drive operations.
What is a performance indicator?
A performance indicator is a measurable metric or data point used to evaluate performance against a specific goal. For example, some online retailers may have a goal of increasing website traffic by 50% in the next year.
For this goal, a performance indicator could be the number of unique visitors the site receives daily or the sources of traffic sending visitors (paid advertising, search engine optimization, branding or display ads, YouTube videos, etc.). For some businesses, customer lifetime value is the most important metric to track.
For others, customer satisfaction or customer acquisition cost is the primary focus for business growth. While most companies will have many performance indicators to focus on, you don’t want to spread yourself too thin. Just like setting personal goals, having two to three areas of focus is key.
What is a key performance indicator?
For most goals, there may be several performance indicators – often too many – so people often narrow it down to two or three impactful data points, known as key performance indicators. Key performance indicators are those metrics that accurately and succinctly show whether or not a company is making progress toward its goal.
? Tip: Use built-in Shopify reports and analytics to make better and faster decisions. Choose from over 60 pre-made dashboards and reports or customize your dashboard to discover trends, seize opportunities, and enhance your decision-making process.
Why are key performance indicators important?
Key performance indicators are just as important as strategy and goal setting. Without key performance indicators, it becomes difficult to assess progress over time. You’d be making decisions based on gut feeling, personal preference, belief, or hypotheses that are not grounded in fact. Key performance indicators give you more information about your business and customers so you can make informed, strategic decisions.
But key performance indicators are not valuable in and of themselves. The real value lies in overseeing the data and analytics related to the key performance indicators. You will be able to devise more accurate strategies for increasing online sales, as well as understanding potential problems within your business.
Additionally, data related to key performance indicators can be shared with your larger team. This can be used to educate your employees and collaborate on solving critical issues.
Types of key performance indicators
There are many types of key performance indicators. They can be quantitative or qualitative, predictive for the future or reflective of the past. Key performance indicators also touch on many business operations. In terms of e-commerce, key performance indicators generally fall into one of the following five categories: sales, marketing, customer service, manufacturing, project management.
70 Examples of Key Performance Indicators for E-commerce
Note: The performance indicators listed below are by no means an exhaustive list. There are countless key performance indicators to consider for your e-commerce business.
What are sales key performance indicators?
Sales key performance indicators are metrics that inform you about how your business is performing in terms of conversions and revenue. You can look at sales key performance indicators related to a specific channel, time period, team, employee, etc., to make business decisions.
? Tip: Go to the analytics dashboard in Shopify admin to view these sales key performance indicators and track progress toward your goals.
Examples
The important key performance indicators and sales key performance indicators include:
- Sales: Online retailers can monitor total sales by the hour, day, week, month, quarter, or year.
- Average Order Size: The average order size tells you how much a customer typically spends in a single order.
- Gross Profit: Calculate this indicator by subtracting the total cost of goods sold from total sales.
- Average Margin: The average margin or average profit margin is the percentage that represents your profit margin over a given period.
- Average Order Value (AOV): The average value of orders from your customers.
- Number of Transactions: This is the total number of transactions. Use this indicator in conjunction with average order size or total site visitors for deeper insights.
- Conversion Rate: The conversion rate, also as a percentage, is the rate at which users convert on your e-commerce site (or make a purchase). This is calculated by dividing the total number of visitors (to a site, page, category, or group of pages) by the total number of conversions.
- Shopping Cart Abandonment Rate: The shopping cart abandonment rate tells you about the number of users who add products to their cart but do not check out. The lower this number, the better. If the shopping cart abandonment rate is high, there may be too much friction in the checkout process.
- New Customer Orders vs. Returning Customer Orders: This indicator shows a comparison between new customers and repeat customers. Many business owners focus solely on acquiring customers, but retaining customers can also drive loyalty, word-of-mouth marketing, and higher order values.
- Cost of Goods Sold: The cost of goods sold tells you how much you spend to sell one product. This includes manufacturing, employee wages, and operating costs.
- Total Addressable Market vs. Seller’s Market Share: Tracking this indicator will tell you how your business is growing compared to others in your industry.
- Product Affinity: This indicator tells you which products are purchased together. This can impact cross-promotion strategies.
- Product Relationship: These are the products that are displayed in sequence. Use this indicator to implement effective cross-selling tactics.
- Inventory Levels: This indicator can tell you the quantity of inventory available, how consistent the product is in stock, the speed of product sales, and more.
- Competitive Pricing: It is important to assess your success and growth compared to yourself and your competitors. Monitor your competitors’ pricing strategies and compare them to your own.
- Customer Lifetime Value (CLV): CLV tells you how much value a customer brings to your business over the duration of their relationship with your brand. You want to increase this number over time by enhancing relationships and focusing on customer loyalty.
- Revenue Per Visitor (RPV): RPV gives you the average amount a person spends during a single visit to your site. If this indicator is low, you may want to review site analytics to see how you can increase online sales.
- Churn Rate: For an online seller, the churn rate tells you how quickly customers move away from your brand or do not renew their subscription with your brand.
- Customer Acquisition Cost (CAC): CAC tells you how much your company spends on acquiring a new customer. This is measured by looking at your marketing spend and how it is distributed per individual customer.
What are marketing key performance indicators?
Marketing key performance indicators tell you how successful you are concerning your marketing and advertising goals. These indicators also impact your sales key performance indicators.
If you are running an online store, you can use marketing key performance indicators to understand which products are selling, who is buying them, how they are buying them, and why they are buying them. This can help you market more strategically in the future, write better product descriptions, and develop products.
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Tip: Go to the Analytics dashboard in Shopify Admin to track your marketing key performance indicators and ensure you are meeting your goals.
Examples of marketing key performance indicators include:
- Website Traffic: Website traffic refers to the total number of visits to your e-commerce site. Increased traffic means more users are reaching your store.
- New Visitors vs. Returning Visitors: New visitors are those who are visiting your site for the first time. Returning visitors are those who have visited your site before. While looking at this metric alone may not reveal much, it can help online retailers assess the success of digital marketing campaigns. If you are retargeting with an ad, for example, you should see an increase in returning visitors.
- Time Spent on Site: This metric tells you how much time visitors are spending on your site. Generally, more time spent suggests that they are engaging more deeply with your brand. Typically, you will want to see more time spent on blog content and landing pages, and less time spent on the checkout process.
- Bounce Rate: Bounce rate informs you how many users leave your site after viewing just one page. If this number is high, you’ll want to investigate why visitors are leaving your site instead of exploring it.
- Pages per Visit: Pages per visit indicates the average number of pages a user views on your site during each visit. Again, more pages usually means more engagement. However, if users are taking too long to find the products they’re looking for, you may want to reconsider your site design.
- Average Session Duration: This is the average time a person spends on your site during one visit.
- Traffic Source: The traffic source metric tells you where your visitors are coming from or how they found your site. This information provides insights into which channels are driving the most traffic, such as organic search, paid ads, or social media.
- Mobile Traffic: Monitor the total number of users accessing your store from mobile devices, and ensure your site is optimized for mobile.
- Monitoring Times of Day: Looking at the times your site receives visits can tell you peak traffic times.
- Newsletter Subscribers: The number of newsletter subscribers indicates how many users have signed up for your email list. Having more subscribers allows you to reach more consumers. However, you’ll also want to look at relevant data, such as the demographics of your newsletter subscribers, to ensure you are reaching your target audience.
- Text Subscribers: E-commerce brands can reach consumers through text message marketing. Text subscribers refer to the number of customers on your contact list.
- Subscriber Growth Rate: This metric tells you how quickly your subscriber list is growing. This can provide you with good insights about this channel.
- Email Open Rate: This metric tells you the percentage of subscribers who open your email. If you have a low open rate, you may want to experiment with new subject lines or try cleaning your list of inactive or irrelevant subscribers.
- Email Click-Through Rate (CTR): While the open rate tells you the percentage of subscribers who open the email, the click-through rate tells you the percentage of those who actually clicked on a link after opening it. This metric is more important than the open rate because without clicks, you won’t generate any traffic to your site.
- Unsubscribe Rate:
- Subscriptions: You can look at the total number and churn rate of your email list.
- Initiated live chat sessions: If you have a live chat feature on your e-commerce store using a tool like Shopify Inbox, the number of initiated chat sessions tells you how many users interacted with the tool to talk to a virtual assistant.
- Social media followers and fans: Whether you’re on Facebook, Instagram, Twitter, Pinterest, or Snapchat (or a mix of some), the number of followers or fans you have is a useful indicator of customer loyalty and brand awareness. Many of these social networks also have tools that online businesses can use to learn more about their social media followers.
- Return on Advertising Spend (ROAS): If you are running ad campaigns, ROAS tells you how much revenue your operations earn for every dollar spent on advertising on a specific channel such as Google or Facebook.
- Blended ROAS: This metric blends the amount you spend on ads across all channels to give you a broader view of how effectively your advertising campaigns are generating revenue.
- Cost per Click (CPC): Also known as pay-per-click, this metric tells you how much you spend each time a potential customer clicks on your paid ads on Google, Facebook, or other channels.
- Social media engagement: Social media engagement tells you how active your followers and fans are in interacting with your brand on social media.
- Clicks: The total number of clicks a link receives. You can measure this metric almost anywhere: on your website, social media, email, display ads, pay-per-click ads, etc.
- Average Click-Through Rate (CTR): The average CTR tells you the percentage of users on a page (or asset) who click on a link.
- Average Position: This average metric tells you how well your search engine optimization (SEO) and paid search are performing. This metric shows your ranking on search engine result pages. Most online retailers aim to be first for their targeted keywords.
- Pay-Per-Click (PPC) Traffic: If you are running PPC campaigns, this tells you about the amount of traffic you are successfully bringing to your site.
- Blog traffic: You can find this metric by creating a filter view in your analytics tool. It’s also useful to compare blog traffic to the overall traffic of the site.
- Quantity and quality of product reviews: Product reviews are great for several reasons: they provide social proof, can help with SEO, and give you valuable feedback for your business. The quantity and content of product reviews are important indicators to track for your e-commerce business.
- Banner or display ad click-through rate: The click-through rate for banner and display ads tells you the percentage of viewers who clicked on the ad. This metric will give you insight into the performance of the ad copy, images, and offers.
- Partner performance rate: If you are involved in affiliate marketing, this metric will help you understand which channels are the most successful.
- Customer Satisfaction Score (CSAT): The CSAT metric is typically measured through customer responses to a very common survey question: “How satisfied were you with your experience?” This question is usually answered on a numerical scale. Customer satisfaction is crucial to track, as it can impact all aspects of your business.
- Net Promoter Score (NPS): The NPS metric provides insight into your relationships and customer loyalty by telling you how likely customers are to recommend your brand to someone in their network.
- Success Rate: Calculate the success rate by taking the total number of sales of a single product and dividing it by the number of customers who contacted your customer service team about that product.
- Number of Customer Service Emails: This is the number of support messages received by your support team.
- Number of Customer Service Calls: Instead of emails, this is how much your support team communicates over the phone.
- Number of Customer Service Chat Sessions: If you have live chat on your e-commerce site, you may have a number of customer service chat sessions.
- First Response Time: The first response time is the average time it takes for a customer to receive the first response to their inquiry. It should be low!
- Average Resolution Time: This is the duration it takes to resolve a customer support issue, starting from the point the customer contacted with the problem.
- Active Issues: The total number of active issues tells you how many inquiries are currently in progress.
- Backlogs: Backlogs occur when inquiries pile up in your system. This can result from a number of factors.
- Concern Categorization: In addition to the total number of customer support interactions, look at quantitative data about trends to see if you can be proactive and reduce customer support inquiries. It will categorize customer concerns that will help identify trends and your progress in problem-solving.
- Service Escalation Rate: The service escalation rate indicator tells you how many times a customer has requested a customer service representative to escalate them to a supervisor or another senior employee. You want to keep this number low.
What are the Key Performance Indicators for Customer Service?
Key Performance Indicators for Customer Service tell you how effective your customer service is and whether you are meeting expectations. You may wonder: what are the KPIs for our call center, or for the email support team, or for the social media support team, etc. Measuring and tracking these metrics will help ensure you are providing a positive customer experience.
They include
Key performance indicators for customer service:
Tracking and working to improve customer service-related key performance indicators can help you increase customer lifetime value as well as reduce customer acquisition costs.
What are performance indicators
Source: https://www.shopify.com/blog/7365564-32-key-performance-indicators-kpis-for-ecommerce
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