KPI meters in the online store

KPI meters in the online store

KPI (Key Performance Indicator) stands for performance measure. KPIs are important tools used to measure and monitor the achievement of company goals and organizational performance. The meters can be used widely in different business areas, such as digital marketing, sales and personnel management.

What are KPIs?

KPI indicators are very familiar tools, especially in the operations of larger organizations. Regardless of the size of the company, however, KPIs play a particularly important role in e-commerce, as they tell whether the e-commerce is profitable or not.

With the help of online store KPIs, it is possible to effectively evaluate the realization of the company's goals online and to make the necessary changes so that the goals can be achieved. It is therefore important for online retailers and entrepreneurs to identify and choose the KPI indicators that tell how the actual performance of the online store and the achievement of goals can be improved.

How do e-commerce KPIs differ from business KPIs?

Examples of business KPIs include revenue growth, the number of leads and sales, customer satisfaction and productivity growth. E-commerce KPIs differ from these metrics in that, of course, they focus on e-commerce operations and company performance online.

With the help of online store KPI meters, valuable and up-to-date information can be obtained from the online store, which can be used to improve the store's performance and ranking in search engines, for example. Important KPIs that measure the effectiveness of e-commerce are the number of visitors, conversion and shopping cart abandonment rate.

By following, among other things, these metrics with the help of Google Analytics, you can better understand how your customers behave online and how their experience in your online store can be improved and the store's productivity can be increased.

The most important KPI indicators in the online store

KPI indicators are tools that can be followed to improve the productivity of an online store even to a considerable extent. The most common and well-known online store KPI measures include the number of visitors and conversion rate, as well as e.g. customer acquisition costs, cart abandonment rate and customer lifetime value.

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Number of visitors and conversion rate

About online store KPI metrics the number of visitors, as the name suggests, measures how many people visit the online store. The conversion rate, on the other hand, tells how many out of a hundred visitors end up making a purchase. The success of the entire online store is summed up in the readings of these metrics, because without visitors and conversions, no sales are generated.

The number of visitors always varies somewhat seasonally, but you can start to increase e-commerce traffic with the help of search engine optimization and search engine and social media advertising. However, simply increasing traffic will not improve sales if the online store is not user-friendly. That's why it's good to look at these KPIs together.

The conversion rate , i.e. sales, is improved with the help of conversion optimization. Depending on the online store, this can mean different measures - everything from improving the speed of the online store to renewing the content, appearance and technical solutions.

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Customer acquisition cost

The customer acquisition cost tells how much it costs the company to acquire a new customer. This is an important KPI measure, because even small changes in customer acquisition costs can increase the result of online shopping by large amounts.

You can think, for example, of a situation where your online store is dependent on expensive ads to get any visitors at all. In this case, it is worth reducing the costs of customer acquisition, for example, by improving the organic (non-paid) visibility of the online store in search engines, so that customers can find the place through the search results even when the ads are not running.

Confirmed customer feedback in the online store increases trust, which in turn can strengthen and speed up the purchase decision after the visitors have been brought to the site. Attracting a potential customer to an e-mail list, for example in the form of a discount, i.e. e-mail marketing, is an inexpensive way to acquire customers.

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Cart abandonment rate

The shopping cart abandonment rate tells how many customers abandon their shopping cart and leave without making a purchase. The KPI meter is important, as it gives the online store the opportunity to improve the shopping cart user experience, engage customers and improve the result.

Typically, a potential customer goes through several online stores before making a purchase decision, in which case it is impossible to complete each product and purchase transaction added to a different shopping cart.

However, the unusually high shopping cart abandonment rate is often due to the poor user experience of the online store (long loading time, small buttons, self-emptying shopping cart, mandatory registration, etc.), inappropriate payment method or surprising delivery costs, in which case the percentage can be reduced by optimizing the online store.

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Customer lifetime value

The customer's lifetime value tells how much the customer generates for the company over time. The KPI meter therefore provides information on how often the customer returns to the online store and makes repeat purchases.

Increasing the customer's lifetime value is very important in terms of the productivity of the online store, and in an ideal situation, customers are satisfied and loyal to the online store, which in turn lowers customer acquisition costs.

Improving the user-friendliness of the online store, offering fast deliveries and investing in customer service improves the customer's experience in the online store, which increases the likelihood that the customer will return to the store and buy again.

Customers can be attracted back to the online store also with e-mail automation; with the help of personalized messages and various offers, which at the same time help to increase conversions, but that alone does not increase the customer's lifetime value. The entire online shopping experience should be seamless.

Growing your online store using KPI metrics

Increasing the result of online shopping requires close monitoring of KPI metrics and making the necessary changes. For example, search engine optimization can improve the number of visitors, and optimizing the online store for conversions and marketing automation can reduce customer acquisition costs.

The readings of online store KPI indicators can also be improved by, among other things, working on the company's brand image, investing in delivery speed and customer service, and targeting marketing to the right audience.

Which KPI indicators should be implemented?

In addition to the KPI measures mentioned above, there are numerous other measures that can be used to monitor the income of an online store. However, it's not a good idea to mix things up with too many tools, and we recommend choosing only a handful of the most important e-commerce performance metrics (like, for example, these metrics we've mentioned) that you're going to develop in the short and longer term.

The mere existence and monitoring of KPI metrics is not enough to improve the productivity of the online store, but it is more important to react to the results of the measurement and make an action plan to improve them . The development of KPI measures should therefore be regular and continuous. Changing them also becomes relevant when the set goals are achieved and/or they change along the way.

Do you need help in developing KPI metrics and increasing online store sales? We can help you.