KPIs for your ecommerce business

Setting goals and measuring how your business is doing is not just an activity that is done when you have time or when your bank manager asks. Measuring and monitoring your business performance using Key Performance Indicators (KPIs) is a key tool in the successful management of your business, enabling you to track how you are doing and whether your money and effort is being invested in the right way.

What is a KPI?

Key Performance Indicators (KPIs) are type of performance metric that is used specifically to quantify how effectively your business is achieving its strategic goals, the outcome of which can be impacted by actions of the business.

For example, an online business may have a set of goals that are critical to its overall success :

  • Increase the number of new visits to the website, month on month
  • Repeat customer sales are at least 30% of total sales volume
  • Increased overall customer satisfaction score

For each of these goals, there may be a single KPI or a number of different KPIs that are combined together to track performance.

Measuring the ‘number of new visits to the website’ may be measured using a single element of web analytics tool, such as Google Analytics.

However, measuring customer satisfaction may require a number of different KPI measures brought together to build an overall picture, e.g.

  • Number of contacts (calls/emails) to customer services per order  < 0.5 contacts
  • Maintain same day order despatch rate >99.5%
  • Amazon Seller Rating
  • eBay seller rating

One of the main characteristics is that KPIs are ‘actionable’; that if the KPI score is unsatisfactory that there are remedial steps to be taken to rectify and improve.

What can be measured with KPIs?

KPIs can be set for a variety of things, including measuring financial performance, customer relationships, operational performance and success of the product/offer mix should be

Performance can be measured for all aspects of an online business, including:

  • Marketing performance
  • Visitor traffic and behaviour
  • Product ranging
  • Promotional activity
  • Sales and customer retention
  • Order fulfilment
  • Stock management
  • Delivery management
  • Customer services
  • Profitability

How do I set and use KPIs?

KPIs are specific and unique to each business, and are tied uniquely to the goals of the business.  The free simple steps are:

  1. Specify your main business goal(s):  e.g. Increase sales to reach x per annum
  2. Identify what measures can be used to ascertain how well you are doing in working towards the goal. These measures must be quantifiable and they must be actionable, e.g.
    • Increase average order value
    • Increase number of sales to new customers
    • Increase number of sales to repeat customers
    • Reduce number of abandoned checkouts
  3. Determine what the target value is for each KPI: this is again relevant to your business and what is practical and achievable. For example, you might be able to double sales to repeat customers by offering them a very attractive discount…however it may have the side-effect of reducing profitability.
  4. Communicate to your business: Make sure that everyone in your business is aware of the goals and how it is being measured.  This will help everyone in the team to focus and strive towards the business goals.
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About 

Hi, I am the Founder and Editor-In-Chief of eCommPoint.com.
I launched eCommPoint.com to share the fruits of my experience designing order management, fulfilment, home delivery and customer service systems and processes for ecommerce retailers.

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