5 Must-Have KPIs for Your E-commerce Business Spreadsheet
Running an e-commerce business can be challenging, especially when it comes to tracking and measuring performance. This is where key performance indicators (KPIs) come into play. E-commerce businesses need to monitor and analyze their KPIs regularly to stay ahead of the competition. In this article, we’ll discuss the top five KPIs that every e-commerce business should be tracking.
1. Conversion Rate
Conversion rate refers to the percentage of visitors who make a purchase on your website. This KPI is an indication of how effective your website is in turning visitors into customers. A low conversion rate could indicate issues with your website’s design, user experience, or product offerings. To calculate your conversion rate, divide the number of purchases by the total number of visitors and multiply the result by 100. Keeping a close eye on your conversion rate can help you optimize your website and increase revenue.
2. Average Order Value (AOV)
The average order value (AOV) measures the average amount spent per transaction on your website. By increasing your AOV, you can boost your revenue without needing to attract more customers. To calculate your AOV, divide total revenue by the number of orders. Increasing your AOV requires tactics such as upselling, bundling products, or offering free shipping for orders above a certain value.
3. Customer Acquisition Cost (CAC)
Customer acquisition cost (CAC) measures how much it costs to acquire a new customer. This includes the cost of advertising, marketing, and sales efforts. To calculate your CAC, divide your total acquisition costs by the number of new customers. Keeping your CAC low is essential to running a profitable e-commerce business. Tactics such as optimizing your ad spend and increasing customer retention can help reduce your CAC.
4. Cart Abandonment Rate
Cart abandonment rate measures the percentage of visitors who add products to their cart but leave the website without completing the purchase. A high cart abandonment rate could indicate issues with your website’s checkout process, shipping costs, or pricing. To calculate your cart abandonment rate, divide the number of completed purchases by the total number of carts created and subtract the result from 1. Reducing your cart abandonment rate requires optimizing your checkout process, simplifying pricing, and offering free shipping.
5. Return on Ad Spend (ROAS)
Return on ad spend (ROAS) measures the efficiency of your advertising campaigns. It compares the revenue generated from a given ad spend to the cost of that advertising. To calculate your ROI, divide your revenue from advertising by your ad spend. A higher ROI indicates that your advertising campaigns are more effective. Tactics such as retargeting ads, filtering irrelevant audiences, and optimizing ad copy can help increase your ROAS.
Conclusion
Keeping track of these five KPIs is essential to the success of any e-commerce business. By regularly monitoring and analyzing these metrics, you can optimize your website, boost revenue, and stay ahead of the competition. Remember to use these KPIs as a starting point and tailor them to your specific business needs. With effective KPI tracking, you can take your e-commerce business to the next level.
