The 12 Most Important e-Commerce KPIs You Need to Monitor and Improve

There is no denying that data is a gold mine for e-Commerce businesses. It provides invaluable insights into customer behavior, operational efficiency, and overall performance. However, the sheer volume of data available can be overwhelming and make it easy to lose sight of the information that will make the most impact on your business. By identifying, tracking and analyzing key performance indicators (KPIs), e-Commerce business can optimize strategies, enhance customer experiences, and drive growth. We’ve worked with hundreds of e-Commerce businesses, from big to small, and these are the top 12 e-commerce KPIs that they all regularly monitor. Plus, we share what to do when they are underperforming.

1. Conversion Rate

Description: The conversion rate measures the percentage of visitors who complete a desired action, such as making a purchase, out of the total number of visitors.

Insight: A high conversion rate indicates that your website is effectively persuading visitors to take action.

Action plan if underperforming:

• Conduct A/B testing on key pages (landing, product, checkout) to identify effective design and content changes.
• Simplify the checkout process by reducing steps and removing unnecessary form fields.
• Improve product descriptions and images to make them more compelling and informative.
• Enhance website speed and mobile responsiveness to ensure a smooth user experience.
• Use clear and strong calls-to-action (CTAs) to guide users towards conversion.

2. Average Order Value (AOV)

Description: AOV is the average amount of money spent by customers per order. It is calculated by dividing total revenue by the number of orders.

Insight: A higher AOV suggests that customers are purchasing more or higher-priced items.

Action plan if underperforming:

• Implement upselling and cross-selling techniques on product pages and during checkout.
• Offer bundle deals or discounts for purchasing multiple items.
• Introduce a loyalty program that rewards customers for higher spending.
• Highlight best-selling or premium products on your website.
• Provide free shipping thresholds to encourage larger orders.

3. Customer Lifetime Value (CLV)

Description: CLV estimates the total revenue a business can expect from a single customer account over the entire relationship.

Insight: Understanding CLV helps in making informed decisions about customer acquisition costs and long-term marketing strategies.

Action plan if underperforming:

• Enhance customer support to build strong relationships and encourage repeat purchases.
• Personalize marketing efforts with targeted email campaigns and product recommendations.
• Offer exclusive deals and early access to new products for loyal customers.
• Implement a feedback system to understand and address customer pain points.
• Invest in quality customer service and after-sales support.

4. Cart Abandonment Rate

Description: This KPI measures the percentage of online shoppers who add items to their cart but do not complete the purchase.

Insight: A high cart abandonment rate indicates potential issues in the checkout process.

Action plan if underperforming:

• Simplify the checkout process by reducing the number of steps and required information.
• Offer multiple payment options to cater to different customer preferences.
• Display clear shipping costs and delivery times before checkout.
• Send cart abandonment emails to remind and incentivize customers to complete their purchase.
• Ensure website security to build trust with customers.

5. Traffic Sources

Description: Traffic sources indicate where your website visitors are coming from, such as organic search, paid search, social media, direct traffic, or referral traffic.

Insight: Analyzing traffic sources helps determine the effectiveness of various marketing channels.

Action plan if underperforming:

• Optimize your website for search engines (SEO) to improve organic traffic.
• Invest in targeted advertising campaigns on platforms that drive the most traffic.
• Leverage social media marketing to engage with your audience and drive traffic.
• Collaborate with influencers or other brands for referral traffic.
• Use content marketing to attract visitors through valuable and relevant content.

6. Bounce Rate

Description: The bounce rate is the percentage of visitors who leave your site after viewing only one page.

Insight: A high bounce rate may indicate that your landing page content is not engaging or relevant to visitors.

Action plan if underperforming:

• Improve the quality and relevance of content on your landing pages.
• Ensure that the page load time is fast to prevent visitors from leaving due to slow performance.
• Create a clear and intuitive navigation structure to guide visitors to other pages.
• Use engaging visuals and interactive elements to retain visitor interest.
• Provide clear CTAs that encourage visitors to explore more of your site.

7. Customer Acquisition Cost (CAC)

Description: CAC is the total cost of acquiring a new customer, including marketing and sales expenses, divided by the number of new customers acquired.

Insight: Monitoring CAC helps evaluate the efficiency of your marketing efforts.

Action plan if underperforming:

• Optimize your marketing campaigns to improve targeting and reduce wasteful spending.
• Focus on high-converting channels and allocate more budget to them.
• Enhance your referral program to leverage word-of-mouth marketing.
• Streamline your sales process to reduce costs associated with customer acquisition.
• Improve your website’s conversion rate to make your marketing spend more efficient.

8. Return on Advertising Spend (ROAS)

Description: ROAS measures the revenue generated for every dollar spent on advertising. It is calculated by dividing total revenue from ads by the total ad spend.

Insight: A high ROAS indicates effective ad campaigns.

Action plan if underperforming:

• Review and optimize your ad creatives and targeting strategies.
• Focus on high-performing keywords and audiences.
• Test different ad formats and placements to find the most effective ones.
• Analyze the entire customer journey to identify and fix any bottlenecks.
• Use retargeting ads to re-engage visitors who have shown interest but did not convert.

9. Customer Retention Rate

Description: This KPI measures the percentage of customers who continue to make purchases over a given period.

Insight: A high retention rate indicates customer satisfaction and loyalty.

Action plan if underperforming:

• Implement loyalty programs to reward repeat customers.
• Send personalized follow-up emails to engage with customers after their purchase.
• Offer exceptional customer service to resolve any issues quickly.
• Gather and act on customer feedback to improve your products and services.
• Create engaging content and offers to keep customers interested in your brand.

10. Net Promoter Score (NPS)

Description: NPS measures customer satisfaction and loyalty by asking customers how likely they are to recommend your business to others on a scale of 0 to 10.

Insight: A high NPS indicates strong customer loyalty and satisfaction.

Action plan if underperforming:

• Analyze the feedback from detractors (those who scored 0-6) to understand their issues.
• Address common complaints and improve those areas of your business.
• Engage with promoters (those who scored 9-10) to leverage their positive experiences.
• Implement a customer service strategy that focuses on exceeding customer expectations.
• Continuously monitor and improve product quality and customer interactions.

11. Product Performance

Description: This KPI tracks the sales performance of individual products, including units sold, revenue generated, and inventory turnover.

Insight: Understanding which products are performing well helps in inventory management and product development.

Action plan if underperforming:

• Analyze why certain products are underperforming (price, quality, demand).
• Adjust marketing strategies to better promote underperforming products.
• Consider discontinuing or discounting products that consistently perform poorly.
• Gather customer feedback to identify potential improvements or changes.
• Optimize inventory levels to avoid overstocking and reduce storage costs.

12. Website Performance Metrics

Description: These metrics include page load time, mobile responsiveness, and site uptime.

Insight: Website performance directly impacts user experience and SEO rankings.

Action plan if underperforming:

• Optimize images and other media to improve page load times.
• Ensure that your website is mobile-friendly and responsive.
• Regularly test your website for performance issues and resolve them quickly.
• Use a reliable hosting service to ensure high uptime and fast performance.
• Implement a content delivery network (CDN) to speed up content delivery to users globally.

The key to successfully leveraging e-Commerce analytics is not just collecting data but interpreting and acting on it. By closely monitoring these 12 KPIs, e-Commerce businesses can gain deep insights into their performance and customer behavior. Regularly reviewing and analyzing these metrics ensures that your e-Commerce strategy remains agile and effective.