I’ve used this quotation from Wall Street in one of my other posts a while back, but it definitely applies again: “The most valuable commodity I know is information.” As any successful businessperson will tell you, having the correct information is imperative. However, knowing what information to focus on to gauge successes, and what to ignore, is not always easy to do. Studying the correct performance indicators will help e-commerce businesses move in the right direction for their sales and marketing goals.
A performance indicator is basically a piece of data used to measure progress against a certain goal. For example, if a company had a goal of decreasing the cart abandonment percentage, a sudden jump in the overall percentage could be an indication of something broken in the checkout process like credit card authorization or the SSL.
Choosing the correct KPI’s begins with clearly defining the goals of a business and understanding which areas of the business directly affect those goals. While there are several indicators for measuring the progress, it is crucial to narrow it down to a few of the most relevant pieces of information to determine whether or not a business is progressing positively.
After speaking with some of my colleagues at MyCommerce, we came up with 22 important KPI’s that e-commerce merchants should monitor:
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1. Total site traffic
2. New visitors vs. returning visitors
3. Page views
4. Time on site
5. Referral sources
6. Location of traffic
7. Total subscribers to any newsletters or blogs
8. Total followers on social media sites
9. Total interactions on social media sites, retweets, likes, “talking about this”
10. Advertising click-through rates: emails, pay-per-click and others
11. Trial downloads
1. Sales goals for day, month, quarter and year
2. Average order value
3. Total orders per day, week and month
4. Trial download conversions
5. Conversion rate
6. Cart abandonment rate
7. Checkout abandonment rate
8. Gross margin
9. Chargebacks and return rate
10. New customers vs. returning customers
11. Customer service cases
Once these KPI’s have been agreed upon, they should be monitored on a daily basis, and considered for any business decision. Failing to do this could miss critical problems, or steer a business in the wrong direction.