If you ask any ecommerce business, they’ll stress the importance of understanding your metrics and KPIs (key performance indicators).
But, what does that even mean? And what metrics should you be tracking if you want to achieve a positive ROI on your marketing campaigns and sustainable growth for your business?
The main purpose of KPIs is to provide you with deep insights into how your marketing campaigns are performing. However, without measurable goals in place, they won’t provide you with any value. They also allow you to create benchmarks, so you can adjust your campaigns according to the data and metrics you collect.
Read on to learn more about the most important metrics and KPIs you should be tracking if you want your marketing campaigns to be successful.
What’s the Difference Between a Metric & KPI?
Let’s start with the basics by defining what a metric and KPI really are.
Metrics are objective measurements of business processes, while KPIs measure the performance of those processes.
KPIs are specific metrics that are deemed important to your current goals and reflect the success of specific initiatives or campaigns. According to Shopify, KPIs should be broken down into four distinct categories: bottom line impact, measurability, timeliness, and actionability.
For example, an email campaign’s email click-through rate is a metric. However, if a business is focusing on email marketing to grow, a goal must be defined, and then it becomes a KPI. A target email click-through of 4% is a KPI that can measure the success or failures of the campaign.
KPIs should be carefully chosen to reflect current business goals and they need quantifiable targets. They serve as a way to determine if a 2% email click-through rate is a success or a failure.
Key Ecommerce Metrics & KPIs to Track
Once KPIs are selected and targets are defined, you’re ready to start tracking metrics over a predetermined period to understand the success of specific strategies.
We’re going to discuss the chosen metrics by their role in each stage of the ecom funnel: discovery, consideration, conversion, retention, and advocacy. Large ecommerce businesses rely on this funnel to power their business, so it’s a good way to think about where each metric falls within the customer journey.
1. Engagement (Discovery)
Engagement describes how many of your subscribers or followers are interacting with your content. It’s an important metric that shows how interested people are in your business and ranges from social media activity to email marketing statistics.
The more engaged people are, the more people are beginning their journey into your ecommerce funnel.
How should you measure engagement? It varies depending on business goals, but it always involves direct actions that someone has taken to interact with any aspect of your online presence. Likes, shares, retweets, and email open rates all indicate that a potential customer is learning more about your brand.
2. Cost Per Acquisition (Consideration)
How much are you paying to acquire your customers? Without knowing your cost per acquisition (CPA), you won’t be able to understand if the money being poured into your marketing efforts is worth it.
CPA is heavily related to average order value (AOV), which we’ll discuss next. The two metrics combine to describe the success or failure of current campaigns. If your CPA is $50 and the AOV is $120, then that’s a strong sign of success. If the numbers are reversed, you need to revisit your advertising budget.
You can improve CPA by further segmenting existing campaigns to target customers that are more likely to respond to those campaigns’ call-to-actions and crafting unique landing pages for those campaigns.
3. Average Order Value (Conversion)
Average order value reflects the average dollar value that your customers are paying when they checkout. This metric should be tracked over a long period of time so you can examine how marketing campaigns and site optimization is impacting your business.
You can increase AOV by selling add-ons during the checkout process, implementing a loyalty program, or fine tuning-your pricing structure. Measuring this metric over time helps paint a picture of how successful each of those initiatives is.
4. Customer Lifetime Value (Retention)
Customer lifetime value (CLV) describes the percentage of customers that have been maintained over a predetermined period. A higher percentage indicates more customers are returning to your store or being retained.
Retaining current customers is much cheaper than relying on a steady flow of new customers. Your CPA metric will highlight that cost and further emphasize why retention is important.
Social media marketing and email marketing both help remind customers that they love your products and bring them back to your store. How effectively are you keeping your customers coming back? Customer service and product quality play an important role in CLV.
5. Program Participation Rate (Advocacy)
Loyalty programs and responding to review requests are both considered advocacy programs that reflect a customer’s commitment to your business. Loyalty programs are an increasingly prominent way to make your customers die-hard fans by rewarding them to keep coming back.
A loyal customer is more likely to advocate for your business, either online or with word-of-mouth recommendations. This metric is described as a percentage of how many customers are participating in your program. The higher the number, the more advocates you have.
Start Measuring the Right KPIs With a Proven Ecommerce Partner
Accurately measuring and analyzing your chosen metrics can be difficult, while understanding what parts of your campaigns should change to improve those metrics can seem impossible.
Our ecommerce marketing services focus on continually refining each campaign based on how it relates to your chosen KPIs. If a campaign isn’t generating the results you need, we’ll refine it or replace it by analyzing the data it generated.
Are you looking to turn your data into powerful insights that drive conversions? Speak to one of our marketing managers and data analytics specialists today to discover how we can help you determine the best KPIs for your business goals and start creating campaigns that catalyze meaningful growth.