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The Complete Guide to Ecommerce KPIs

If you’re running an ecommerce store, then you know the importance of monitoring key performance indicators (KPIs). 

By tracking the right KPIs, you can make data-driven decisions that will help you grow your business. And without paying attention to your KPIs, you run the risk of making decisions that could hurt your business.

So what are the most important KPIs for ecommerce businesses and how can you track them?

In this article, we’ll go over everything you need to know about ecommerce KPIs.

Why Ecommerce KPIs Are So Important

It’s never been easier to start a business. If you have a laptop, your web hosting, project management, and payment processing can all be taken care of online.

And if you dropship, run PPC ads, or use ecommerce automation tools, you can pretty much run your business on autopilot for a very low cost.

But just because it’s easy to start an online store doesn’t mean it’s easy to run one successfully. In fact, according to Web Retailer, as many as 90% of all ecommerce businesses fail. One of the easiest ways to ensure that this doesn’t happen to your business is to focus on the right KPIs.

What is a KPI?

A key performance indicator (KPI) is a metric that you track to see how well your business is performing.

For example, if you’re tracking the number of visitors to your website, that would be a KPI. If you’re tracking the number of sales made through your website, that would be a KPI.

And if you’re tracking the number of visitors who become customers, that would be a KPI.

Here are a few of the most important KPIs for you to track:

  • Number of visitors to your website
  • Number of sales made through your website
  • Number of visitors who become customers
  • Conversion rate (the percentage of visitors who make a purchase)
  • Average order value (how much each customer spends on average)
  • Gross margin (the difference between what you sell your products for and what they cost you)
  • Customer lifetime value (how much each customer spends on your products over the course of their life)

These are just a few of the most important KPIs for ecommerce businesses. By tracking these metrics, you can get a good sense of how well your business is performing and where you need to make improvements.

Let’s take a look at how Intuit, one of the largest business software companies in the world, uses KPIs to its advantage.

When it comes time for them to tackle a new conversion rate optimization project, they don’t just look at one KPI. They track several. They start by reviewing click data from Google Analytics and past Optimizely tests.

Then they use Crazy Egg reporting to see how users are interacting with their site. They also look at customer surveys and support tickets to get feedback on what’s working and what’s not.

And finally, they use A/B testing and heatmaps to test different changes on their site to see which ones have the biggest impact on their KPIs.

When they figured out that 50% of their traffic wasn’t converting from a particular pricing page because of issues with the navigation bar, for example, they updated the user experience of that page to solve that problem. 

This focus on multiple KPIs is what’s helped Intuit grow into the multi-billion dollar company it is today and stay at pace with the competition.

Quick Tips to Improve Ecommerce KPIs Today

Especially since KPIs are something that are gathered over time, you may be wondering what you can do to improve your ecommerce KPIs today.

Here are actions you can take for short-term improvement:

Tip 1: Improve Your Website’s Design and User Experience

You might not know exactly what’s causing potential customers to leave your site without making a purchase, but there are some design and user experience (UX) changes you can make that will likely have a positive impact on your KPIs.

Start by looking at your website from the perspective of a potential customer. Is it easy to find what they’re looking for? Is the checkout process straightforward? Are there any areas of your site that are confusing or difficult to use?

Over time, you will be able to track user behavior across your site and figure some of these things out better, but here are a few general rules of thumb:

  • Ensure that your website is designed for mobile devices. More and more people are shopping on their phones, and if your site isn’t optimized for mobile, you’re likely losing out on sales.
  • Make it easy for potential customers to find what they’re looking for. If they have to click through several pages to find the product they want, they’re likely to give up.
  • Make the checkout process as simple as possible. The fewer steps there are, the more likely people are to complete a purchase. If the customer has to leave the site or jump through any hoops to get an order, they will probably abandon it.
  • Make sure your site is secure. Include SSL certificates and other security measures to make sure people feel safe giving you their personal information.

Tip 2: Use Pop-Ups and Other Forms of Conversion Rate Optimization

Pop-ups can be annoying, but they’re also one of the most effective forms of conversion rate optimization.

A well-designed pop-up can help you capture email addresses, get people to sign up for your newsletter, or even make a sale.

Here are a few tips for using pop-ups effectively:

  • Make sure the offer is relevant to the user. If you’re selling women’s clothing, for example, don’t show a pop-up for men’s shoes.
  • Make the pop-up easy to close. No one wants to be stuck on a website with a pop-up they can’t get rid of.
  • Don’t make the pop-up too intrusive. You want people to see it, but you don’t want it to take over the whole screen.
  • Consider using a tool like OptinMonster to create and manage your pop-ups.

Another form of conversion rate optimization is A/B testing. This is when you show two different versions of a page to two different groups of people and see which one performs better.

For example, you might test two different headlines on your homepage to see which one gets more people to click through to your product pages.

Although this is more of a long-term strategy, A/B testing can be a great way to improve your conversion rates and, as a result, your KPIs. And you can get started with A/B testing right away.

Tip 3: Improve Your Site’s Search Engine Optimization

One of the best ways to improve your ecommerce KPIs is to make sure your site is ranking high in search engines.

This is where search engine optimization (SEO) comes in. SEO is the process of optimizing your site to rank higher in search engine results pages (SERPs).

There are a lot of factors that go into SEO–and many of them are long-term plays–but there are plenty of things that you can do that will boost your rankings almost instantly (especially if your site health is poor).

First, crawl your website for any errors. You can do this for free with Screaming Frog SEO Spider.

Once you have a list of errors, start fixing them one by one. This could be things like 404 errors, broken links, or duplicate content.

As you fix these errors, your site’s health will improve and your rankings will start to increase.

With this free SEO tool, you can also see any titles and meta descriptions that are either too long, too short, or missing.

If you have any titles that are too long, cut them down to the recommended length of around 55 characters. If you have any meta descriptions that are too short, flesh them out a bit so they’re at least 150 characters.

You can also use this tool to find any pages on your site that don’t have a meta description and add one.

Updating your titles and meta descriptions is an easy way to give your site a rankings boost.

Tip 4: Offer Free Shipping on Orders Over a Certain Amount

We’ve all picked out a cool new shirt that we like, gone through the checkout process, seen it cost $5.99 to ship, and left it there without looking back.

It’s crazy, but it’s the way the world works.

Shipping cost is the number one reason for cart abandonment, so it’s important to offer free shipping on orders over a certain amount.

The magic number seems to be $50, but you might need to play around with that a bit depending on your product and your margins.

People are also more likely to spend more if they know they don’t have to pay for shipping, so offering free shipping can actually increase your average order value.

To offer free shipping, you’ll need to factor the cost of shipping into your product prices. But if you do it right, it will be well worth the effort.

Some ecommerce platforms–like Shopify–have built-in features that let you offer free shipping without raising your product prices.

Tip 5: Use High-Quality Product Images

A fantastic way to sell more products is to use high-quality product images.

Product images are one of the most important elements on your product pages, so you need to make sure they’re as good as they can be.

Your product photos should be clear, well-lit, and show the product from different angles. You might even want to consider using lifestyle photos to give potential customers a better idea of how the product can be used in real life.

In addition to high-quality photos, you should also use product videos when possible. Videos are an excellent way to show off a product in action and give potential customers a better idea of what they’re buying.

You can use free tools like Canva or PicMonkey to edit your product photos and make them look even better.

Adding videos to your product pages can be a bit more work, but they’re definitely worth it if you can effectively demonstrate your product in use to your customers.

Long-Term Strategies for Ecommerce KPIs

Since KPI tracking is an ongoing process, you need to make sure you have strategies in place for long-term success.

Here are a few things you can do to make sure your ecommerce business is on the right track:

Strategy 1: Think About Unintentional Consequences

Sometimes, one metric will go up while another goes down, and it’s not always clear why.

For example, you might see a decrease in conversion rate even though your traffic is increasing.

In this case, it’s important to think about the potential unintentional consequences of your actions.

One possibility is that your increased traffic is coming from low-quality sources that are less likely to convert. Or it could be that your increased traffic is coming from mobile devices, and your mobile site isn’t as optimized for conversion as your desktop site.

There are a lot of potential explanations for why one metric might go up while another goes down. It’s important to investigate these things so you can make the necessary adjustments to your strategy.

Similarly, you need to have a clear understanding of what your metric drives. If it needs a second metric to complete the picture, make sure you’re tracking both of them.

For example, if you’re looking at conversion rate, you must also look at average order value. A high conversion rate is great, but if your average order value is low, you’re not going to make very much money.

Strategy 2: Build Online Relationships Through Affiliate Programs

When done right, affiliate programs can be a great way to build strategic relationships with other businesses in your industry.

By partnering with complementary businesses, you can reach new audiences and promote your products to people who are already interested in what you’re selling.

In addition, affiliate programs can help you track important metrics like traffic sources, conversion rates, and average order values. This data can be incredibly valuable in helping you optimize your marketing efforts and improve your bottom line.

However, it’s important to carefully select the businesses you partner with, as affiliate relationships can also damage your brand if not managed properly. Make sure you choose businesses that share your values and have a positive reputation in your industry.

Strategy 3: Grow a Social Media Following

Social media can be a great way to connect with potential and current customers, promote your products, and build relationships with other businesses in your industry.

The key to social media success is to create valuable content that your target audience will actually want to see. This could include blog posts, infographics, images, videos, or anything else that would be relevant and interesting to your audience.

When creating this content, make sure that it’s consistent with your branding and that it’s shareable. You want people to actually want to share your content, so make sure it’s high quality and interesting.

For example, a swimwear company might want to embrace the summertime vibes by posting images and videos of people enjoying the sun and water in their swimwear or participating in beach and water sports.

This would be an example of content that’s relevant to their audience and brand, and it would be something that people would actually want to share.

In addition, you need to be active on social media. Posting great content isn’t enough if you’re not also engaging with your audience. Make sure you’re responding to comments and questions in a genuine and human way.

People can tell when you’re just trying to sell them something, so make sure your interactions are genuine and authentic.

Strategy 4: Create an Email Newsletter

Over time, building an email list and sending a newsletter is one of the best ways to retarget repeat customers or prospective buyers who have shown interest in your products.

Email newsletters are a great way to keep people updated on your latest products, special deals, or promotions, and they can also be a great source of content.

Your newsletter doesn’t usually have to be long or complicated. It depends on what your product is and who your target audience is, but a good rule of thumb is to keep it relevant and concise.

If you’re not sure where to start, take a look at some of the other newsletters in your industry for inspiration.

Strategy 5: Build Out Content on Your Website

Building out content will take a while, but it will be worth it. One of the best ways to improve your website’s SEO and organic traffic is to create valuable content that people want to read.

This could include blog posts, infographics, images, videos, or anything else that would be relevant and interesting to your audience.

Not only will this help you attract new visitors to your website, but it will also help you build relationships with potential and current customers, boost your search engine visibility, and help you provide value to more people.

When creating this content, make sure that it’s consistent with your branding and that it is shareable. You want people to actually want to share your content, so make sure it’s high quality and interesting.

The type of content you create will largely depend on what kind of ecommerce product you’re selling. If you sell tools and power tools, for example, some articles might be titled “Best Tools for X,” and others might be titled “How to Do X.”

You may even have some thought-provoking articles such as, “5 Home Improvement Ideas You Can Do on Your Own.”

Creating great content takes time and requires an understanding of your audience, but it will be worth it in the long run.

Next Steps

Now that you know the basics of ecommerce KPIs, it’s time to start tracking them. If you’re not already doing so, start by setting up Google Analytics for your website.

This will give you a good overview of your website traffic and how people are finding and interacting with your site.

From there, you can use Crazy Egg Recordings and Snapshots to get an idea of how people are using your website and what’s working well.

And finally, start experimenting with A/B testing to see how you can improve your website conversion rate.

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