If COVID-19 left you out of work last year, you’re not alone. Tens of millions of people around the world lost their jobs or businesses, leaving them struggling to pay the bills. As such, many pivoted in their choice of careers, going online in search of new opportunities.
Starting an ecommerce store was the most organic choice for anyone coming from a commerce background. With a Wix online store, you can create a working website in no time, which facilitates everything from product display to payment to shipping options. There are many more functionalities, including the option to let your customers buy now and pay later so that cash flow does not prevent sales.
The work does not end once your website is working, however. Once you are in the ecommerce game, you are introduced to a whole new world of analytics and online optimization.
One of the analytics tools you need to know about is the key performance indicator (KPI). A KPI is a metric by which you measure just how well you’re doing and where you’re falling short.
You might well wonder why you need KPIs. Isn’t income the ultimate indicator of your performance? The reality is that KPIs show you exactly where you’re succeeding and failing, including which advertising campaigns are performing and which audiences aren’t responding.
While there are tons of KPIs for ecommerce websites, there are fundamental metrics you need to prioritise. Here are 6 of the most important KPIs for your ecommerce website.
1. Basic Sales KPIs
To start with, there are certain KPIs which are all built around the very basics of commerce. The most basic sales KPIs, which you can track on your ecommerce website, include the number of sales and how they differ on an hour-to-hour, day-to-day basis. You can ascertain exactly when you are most likely to sell certain products, although you will need to do a bit more sleuthing to determine exactly why that is the case.
Another basic sales KPI is the conversion rate. This is the percentage of visitors to your online store who actually buy a product. If the rate is low, you need to strategize as to how to close sales.
2. Cost of Goods Sold (COGS)
The cost of goods sold (COGS) is about more than your markup. It takes into account the expenses of running your online store, how much you spend on advertising per sale, and any other expenses you incur in order to create sales. If your COGS is too high, you need to find ways to convert leads more efficiently or increase your prices.
3. Product Affinity
Product affinity is a KPI that is relatively new in its current form. Product affinity shows you which items are most often bought together. It also shows you which items are viewed after other items. This not only gives you insight into what your customers want, but also gives you the ability to market those products directly to them. You can show them what other customers bought with the product they are viewing, increasing the likelihood that they will purchase extra items.
4. Site Traffic KPIs
Knowing how many people visit your site is important, but site traffic KPIs go a lot deeper. They show you metrics such as how many returning visitors vs how many new visitors you are attracting. They show you how long visitors stay on your site before leaving, and how many go on to view another page on your website. They also tell you the source of your traffic, along with what kind of device visitors are using. This all gives you the data you need to market more directly to potential customers.
5. Customer Service KPIs
Customer service KPIs are very important to your success in ecommerce. Poor customer service leads to bad reviews and customers who don’t return. Unresolved customer queries can be another reason you’re not converting sales. Many potential customers are simply waiting to confirm your returns policy or delivery process. When the important customer service metrics are not met, you lose return and new customers.
6. Return on Investment (ROI)
Return on investment (ROI) is an overarching KPI that measures how well your business is performing as a whole. On its own, ROI is not particularly useful. You need to have set goals on what kind of returns you are looking for over a certain period of time. Some businesses don’t need to see any positive ROI for years in order to be successful according to their own goals. Other businesses cannot survive if they don’t achieve a certain ROI fairly quickly, as their capital available is limited.
KPIs provide important data on exactly how well your ecommerce site is performing. In a post-COVID world, there is more data than ever when it comes to online shopping. Don’t let the analytics tools at your disposal go to waste.
