How to Manage, Visualize KPIs for Ecommerce
Is your online store making money?
You could put in hundreds of hours of work, countless sleepless nights, and have drunk gallons of coffee. But despite all this effort some people’s stores just don’t make a profit. However, as a business owner, there is so much more that you should look at to determine the success of your actions so far.
What inexperienced Ecommerce practitioners think is that selling online is either black or white, it either works or it doesn’t. However, the truth is that a shop could be doing a lot of things right, but one or two parts of their process are letting them down. Or the other way around, they’re doing only one or two things right and still managing to sell. Understanding this is the key to analysing your business and seeing how to make it a success.
This article will discuss key performance indicators (KPIs) and how managing them can improve the performance of your site.
What are KPIs?
One of the biggest advantages digital retail has over its physical counterpart is the level of monitoring and tracking that can be used to understand the strengths and weaknesses of a business. With a huge amount of data available, online businesses can learn what is going well for them and what isn’t.
Key performance indicators (KPIs) are selected metrics that are the most valuable to your business. No matter the industry, there are some metrics that are universally used, such as profit and number of customers. One of the important aspects to note here, is that there is so much data available, but not all of it is valuable. Identifying what information is needed to take a customer through a sales funnel and into a conversion is how a company defines their KPIs.
These metrics are then monitored for performance, different strategies are tried and tested to improve them, with the results also noted. Through this process of optimisation, a business can improve their online sales.
One of the most used analytics tools is Google Analytics, this is free to use and will provide most businesses with all the data they require. There are other tools out there to analyse KPIs, which will often be for more specialised use cases and should be researched on a case by case basis.
KPIs for Ecommerce
Depending on the amount of time, resources and knowledge you are ready to commit, tracking KPIs can be monitored on a sliding scale of sophistication.
There are four main business areas that online KPIs can fall into, which can be gone into more detail if needed. These are sales, user experience, customer support and satisfaction, and marketing.
Some of the most common KPIs that are used across eCommerce include:
- Revenue / profit
- Total customers
- New customers
- Customer lifetime value
- Average order size
- Conversion rate
- Cost of acquisition
These need to be monitored closely to understand the performance of your website. For further detail, as an example, you could monitor your individual marketing channels under these metrics as well to understand what’s the most successful. With this information you might choose to allocate spend differently.
Visualisation and Reporting
Tracking and monitoring all the KPIs is not very helpful if the information is not understood and learnt from. When confronted with a spreadsheet or wall of data, pulling out the key takeaways is not always straightforward. This is why it’s important to visualise KPIs and report on them clearly.
For this, you have to decide on time periods you are wanting to compare your data between. Is this a week vs week comparison, year on year? You want to make sure there is enough data included to be able to make meaningful judgements, but that it is targeted enough for the specific need.
Visualising KPIs can be done through charts and graphs, the one you choose will depend on the purpose of the KPI and analysis.
Some of the most frequently used are:
- Bar graphs
- Line graphs
- Pie charts
- Map views
- Table views
Another way to visualise KPIs is to place them into funnels for processes that have multiple stages - which all online sales funnels do.
What is key when establishing your KPIs is to understand what factors are important to your business becoming a success. The next step is then making sure these are tracked properly to give reliable data, followed by analysing this data consistently to draw learnings from. If a business is able to implement these stages correctly there can be huge benefits to their sales and online processes. It won’t bring overnight success, but you might be surprised about some of the insights KPIs can provide which can quickly make a difference.