According to Investopedia, KPI (Key Performance Indicator) is a set of quantifiable measures that a company or industry uses to gauge and compare performance in terms of meeting their strategic and operational goals. AdAge mentioned that 93 percent CMOs are under more pressure to deliver a better ROI. Yet, if marketers do not understand marketing performance, they can’t deal with the problem at all. Therefore, good marketers should be obsessed with ecommerce KPIs given that focusing on your company’s KPI will help develop your unique road map to success.
Strategic CFO suggested that if you want to succeed in your business, you should track your progress so nothing slips through the cracks. KPIs are here to help monitor that as it can be used to encourage accountability and provide an opportunity for small victories. Karen Louise, a CEO of Health, Wealth and Balance, said that KPIs are important factor in assisting company’s growth. KPIs, she said, can measure your targets, create an atmosphere of learning, receive important information, encourage accountability, and boost morale. From reviewing employee performance to tracking company progress, that’s how much KPIs matter.
Marek Kich, a CEO at X-Coding IT Studio, added that KPIs are applicable in different levels of operations. That is one of the reasons why company loves them. It is a measurable and comparable indicator as well. He mentioned that good KPIs should concern margin of sales, percent of satisfied customers, employee’s productivity, customer service effectiveness, and so on.
Juuso Lyytikkä, the head of growth at Funnel, has shared the key metrics for ecommerce that you should measure in order to help improve your ecommerce marketing.
Brand Name Search
Brand awareness often gets bad impression simply because you constantly show ads to the audience. However, this does not mean that brand building is fruitless. Instead, it can be your first step towards a sale. In order to measure your branding efforts, place KPIs against brand name searcher. You can use Google Search Console to measure impressions against your brand name. Go to search traffic > search analytics > queries then check the ‘impressions’ box to see all impressions on search queries.
Customer Acquisition Cost (CAC)
CAC is key for measuring your paid marketing efforts. You can identify activities which generate majority of sales and strong ROI by collecting cost data and segmenting it to your channel. Understanding CAC also helps you spend your marketing budget more wisely by determining your poorest performing activities.
Brand awareness measures who is aware of your brand, and audience reach shows how far your message is getting. Facebook and Instagram provide ‘reach metrics’ on those who have seen your ads at least once. This includes those who have seen your ads multiple times. Hence, if you wish to measure individual impressions as well as frequency, it is worth testing Instagram ads. There are also other ways such as Adwords/Bing ads, YouTube and video, and influencer marketing.
On-site metric is easy to find. You can find it in Google Analytics. Also, pay more attention to these broad KPIs:
- Sessions – This is a number of times user has visited your website. Usually, it will end after 30 minutes of inactivity. Anything after this will count as new session.
- Pages/session – This is the average number of pages viewed per session.
- Users – Number of people who visited your website. And if someone visit your page on their desktop, followed by second visit on mobile, this will count as two different users.
- New users – It shows you the number of users that visited your page for first time during a specific time frame. However, if a returning visitor clears their cookies, they will be classed as a new user.
- Bounce rate – You can see percentage of users who visit your page and leave after visiting only one page.
- Average session duration – It will show you how ‘sticky’ your website is.
There are a dozen metrics you can obsess in email. But Juuso suggested to track these top 5 email marketing KPIs on daily basis:
- Open rate – Percentage of users who open your email. Many focus on optimizing only, but next metric is potentially more important.
- Click-through rate – Calculate this by dividing number of clicks (total or unique) by number of sent emails, then multiplying that by 100.
- Conversion rate – Percentage of recipients who completed a purchase or other kind of action on your website.
- List growth – Calculate this by subtracting unsubscribes from new subscribers, and dividing this by total number of subscribers on your list.
- Bounce rate – percentage of emails that were delivered unsuccessfully.
Ecommerce Retention Metrics
If you run a subscription-based ecommerce model, it’ll be easier to manage ecommerce retention metrics. Here are four retention metrics to include in your marketing dashboard:
- Purchase frequency: Number of customers shopped more than once over a period of time. Measure this over a period of 12 months.
- Repeat purchases: Number of repeat customers from entire customer base. Calculate this by dividing number of customers who buy more than once with your entire customers’ base.
- Time lapse: It shows amount of time that passes between 2 purchases for particular customers. If you understand this, you will have time retention emails more effectively.
- Average LTV: Average amount spent by each customer over their lifetime. It will inform your benchmark CAC and help decide how much to spend on acquiring a customer.
Net Promoter Score (NPS)
NPS is survey you can use to ask customers on a scale of 1 to 10 how likely they are to recommend your brand to others. It can be used to improve your brand as well as to get free-of-charge promotion as customers will promote your brand to their friends (if they are happy with your brand). To do this, humbly ask your customers the question: “how likely are you to recommend (name of your brand) to a friend?” Customers will then segment into three categories promoters who score between 9 and 10, passives who score between 7 and 8, and detractors who score anywhere between 0 and 6. After knowing how much they score your brand, you can decide whether to continue producing, improve brand, or eliminate the unnecessary.
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