Top 6 KPIs to measure the success of your online business

Did you realize the next move of your business relies on metrics? Because it’s essential to track the store’s performance and identify the lever you need to nurture business growth. Here comes the KPIs of an e-commerce business, as revealed by the leading website design company, Esolz Technologies, to empower the business.

Use of metrics has been perennial since the time we were born. Right from evaluating our holistic behaviour to analyzing our performance in different subjects during high school days, we have always remained under the scrutiny and are familiar with the term metrics and KPIs. So how can we ignore them when it comes to starting an e-commerce business and analyzing its performance?

Of course, we can’t!

Identifying the key metrics and the KPIs is always beneficial in understanding the strengths and weaknesses of your e-commerce business and making the right decision. Since the level of competition in this digital world is boundless unless you analyze the latest trend and start practising in real-time to create a niche segment for your business, the path towards your goal can be perplexing.

What are the metrics of an e-commerce website?

Metrics of an e-commerce platform can be anything that is quantifiable and can help you in measuring the website performance, starting from - understanding the conversion rate to measure the bounce rate.

How is it different from KPIs?

In a broader term metric is the measuring process, whereas KPI is a subjective term, allowing you to set specific sets of a target for measuring the performance of those metrics.

There are four characteristics that KPIs must essentially have-

• Must relate to the basics and help in achieving the goal.

• Must give the accurate result

• Must show real-time results

• Must help you to take immediate action according to the crisis- 

Also, we mustn’t forget that we need more than one metric to create KPIs. 

Ready to analyze the website performance?

Given below are the performance indicators, to aid you in analyzing your website performance and make further development strategies for its future growth.

Conversion rate- Not all who visits your website will be your real clients. But there will be visitors who will acknowledge your work and would love to convert into paid customers. But for that, you need an effective landing page alongside the Call-to-action button. But by analyzing the number of web visitors visiting your website and the number of visitors who have turned into paid customers, you can understand the areas you need to improve and boost the conversion rate.

If the conversion rate is between 2%-3%, you can expect the conversion rate to be good. That means out of 100 site visitors at least 2-3 of them have to convert themselves.

By improving the landing page, you can always improve the conversion rate by at least 0.5%.

To calculate the conversion rate=

Number of Conversions ÷ Number of Leads 100

Average order value- Do you realize how much money on average are your customers spending on your products? If not, then you must understand the demand for your products. It is because more order value will always result in an upsurge of revenues and who doesn’t want that? 

Moreover, you can always adjust the marketing expense for acquiring new customers from the revenue that has been generated. 

How are you going to calculate Average order value?

Total revenues earned ÷ number of orders that have been placed

Shopping cart desertion rate- Some visitors add products to their shopping cart and finally leave the site without purchasing. It’s very frustrating from the viewpoint of an entrepreneur. 

However, thanks to AI who realizes this pain and always helps in retarget those visitors to complete the payment.

But unless you understand the real cause of their abandonment, you can’t reinforce the bond. There might be several reasons behind that act- they might not have trusted the site, faced issues while making payment using a digital card, found the check-out process to be a complex one. 

Once you can discover the problem and eradicate the issue, it becomes easier for you to gain their confidence and improve the sale.

The percentage of abandonment rate is calculated  by-

1-[(Finished transactions) ÷ (shopping carts added)] 100

Customer Acquisition Cost- Winning the trust of a customer is not an easy task. You need to invest a hefty amount, to promote your brand, convey the brand message and also for offering lucrative perks.

To measure the success of a business, you need to measure the amount you have spent originally and the number of customers you have gained in return. 

The calculation will be=

Total amount spent on Sales and Marketing ÷ Total number of customers acquired

Customer Lifetime Value- Customer is the pillar of any business. After all, they are the ones who will be buying the products, generating revenues for the enterprise. So valuing customers and establishing a strong bond with them is crucial to continue the business successfully in the long run.

CLV aka, Customer Lifetime Value allows you to predict the forthcoming cash flows by fostering the customer relationships. How much you should spend to acquire a customer is dependent on this metric.

The calculation of Customer Lifetime Value will be=

Average customer value Average Lifespan of customer

Gross profit margin- You can call this metric to be the doctor of your business. It is because just like a doctor examines the health condition of a patient, Gross profit margin helps in determining business position.

After all the expenses you have incurred and the revenues you have earned, it is essential to fathom the present scenario of business and understand how far you are from your goal.

The calculation will be-

(Total Revenue you have earned- Cost of Goods sold)÷ Revenue 

Final Note

Understanding the KPIs can be interesting, and also frustrating at times. You need to invest both time and money and also maintain a strong bond with your clients. But hard work pays off and the above key metrics will always be beneficial in making future strategies for a successful business online.

But what is most needed is a well-structured, SEO-Friendly website to secure your online business in the long run and for that, it is essential to invest in the best website design company and reach the maximum target audience in minimum time.