Key performance indicator (KPI) is probably a term that you encountered more than once in your professional life. But when asked, people often get lost in their definition of what a KPI is.
So let’s start with that, shall we?
Let’s put it simply, an indicator is a measurable tool that helps us understand how our actions are progressing towards our goals. Indicators or metrics help us make sense of our data by turning it into information.
KPIs are the top indicators that you will take into consideration to evaluate the success of your marketing campaigns and make a decision.
There are several types of KPIs:
We can also categorize key performance indicators on the management level:
Now that you have a clearer definition of what an indicator and a KPI are, let’s dive into the real topic of this article: Indicators you need to track to get the full picture of your ecommerce website performance.
We will cover every step of your marketing funnel, from the acquisition to retention of your customers.
This is the very first indicator to implement when building your reporting. Without traffic on your website, you can’t move on to the next steps of your prospects’ behavior analysis.
You need to know where your prospects are coming from. This helps with evaluating the performance of your different strategies. For instance, if the majority of your traffic is coming from organic search, that means that your SEO and content marketing strategies are working! Keep it up!
Traffic by device
This indicator will give you more information on your prospects’ online habits. Are they browsing your website using their mobile device or using a desktop?
According to Statista, the share of mobile phone website traffic worldwide reached 52% in 2019. That being said, you absolutely need to make sure your website is fully responsive and works perfectly on all small devices.
Website average position
This indicator will give your average position in Google’s SERP (Search Engine Results Page) - or any other search engine.
With this KPI, you can measure your website’s average position or filter it by products to see if they are visible enough compared to your competitors’ products.
If you’ve been in the world of online marketing for more than a month, you know how important the bounce rate is. This metric tells you the percentage of visitors who exited your website after seeing only one page, so the lowest your bounce rate is, the better. The industry average is somewhere around 20 and 45%.
This metric shows you how many people subscribed to your newsletter after consuming your website content. This is an important indicator to monitor because it not only tells you if your contact list is growing, but it also shows if your content is interesting enough for people to stay in touch with you.
Growing your emailing list is critical since it will give you more opportunities to increase the volume of your sales and your customer lifetime value.
There are many opportunities for your visitors to subscribe to your newsletter: On your blog, when placing an order, on a popup with a discount offer, etc.
Since your marketing efforts are all about making people purchasing your products, you need to know which channel and source is performing the best. What encourages customers to make purchases?
Conversion rate by device
We mentioned the growing trend of the mobile traffic on websites around the world, but you also need to track your conversions on all devices.
You will probably notice that 52% of your traffic is mobile-based, but 80% of your conversions are actually happening on desktop. That means that you need to improve your checkout process on mobile to improve your conversion rate on mobile devices.
Revenue by source
This indicator is actually looking at the financial performance of your acquisition sources.
It’s important to compare the traffic, conversion rate and revenue by source in order to understand which channel is actually generating revenue.
New customer orders vs returning customers orders
This metric shows a comparison between new and recurring customers. Many business owners focus only on customer acquisition, but customer retention can also drive loyalty, word of mouth marketing, and higher-order values.
Customer lifetime value (CLV)
The CLV tells you how much a customer is worth to your business over the course of their relationship with your brand. You want to increase this number over time through strengthening relationships and focusing on customer loyalty.
Net promoter score (NPS)
There are a few KPIs that can help you measure your customers’ satisfaction, but the most common KPI is the NPS. This indicator tells a lot about the customer experience and service your teams are providing.
You will be able to see the proportion of customers that are actively recommending your products and brand to their peers, those who like your products but don’t talk about it -also known as the silent customers- and those who had a bad experience about your product or with your customer service and will share that experience on social media.
Now that you have your whole set of KPIs in your hand, you need a tool to display how your website is doing. Dashboards are the best way to visualize and dig into your website and marketing data.
Dashboards are also a great way to organize your KPIs.
Having a great set of KPIs and an interactive dashboard is not enough for efficient marketing analytics. There’s a third component to your reporting that will allow you to better manage your business: Automation.
There’s absolutely no point in setting up KPIs in beautiful dashboards if you’re wasting time updating them manually every week. Besides, manual entry and manual data processing on tools like Excel is error-prone and can lead you to making bad decisions.
You need to always rely on the latest data and only automation can bring you fresh data. Make sure to choose a dashboard solution that allows you to connect to all of your business applications and can update your data automatically.
Setting indicators and KPIs to measure the success of your marketing initiatives will help you save money, know when you need to double down your efforts on certain channels, or stop investments.
You should look up for business intelligence tools with connectors to all your applications, automation features to update your KPIs, interactive visualization features to build your dashboard, and collaboration features to share these dashboards with your team.
It’s time to start implementing and tracking your KPI to make your marketing strategy successful!