KPIs (or Key Performance Indicators) are the objectives and targets to be reached for an e-commerce store. By definition, they are easily measurable to provide a good visibility on the progress of a project or the growth of an online store. KPIs are now the compass for companies to measure and analyze each life cycle of an activity, a strategy or a visitor's behavior. KPIs are also used to compare a company's performance to that of its competitors and to determine if the strategies implemented are effective or not.
Discover 19 most important e-commerce KPIs: the key indicators to manage your online store. They are categorized according to what they measure and the business unit they correspond to. We distinguish three types of KPIs: the global benchmark KPIs, the conversion KPIs and the retention KPIs.
Global benchmark KPIs
Traffic
Traffic is the number of visits to a website. Traffic is the KPI that allows us to know the number of users and the number of visitors. A user can accumulate several visits to a store. After 30 minutes of inactivity, a visit becomes unique. Traffic is one of the most important KPIs because it allows:
- correlations on any given event with a peak or a consequent drop in visits;
- observation on the global evolution of the performance of an e-commerce site;
- measuring the ratios of the sales made via the website, such as the ratio of the number of visitors to the number of buyers.
The source of the traffic can be:
- Direct: the link to the e-commerce site is written directly in the search bar;
- Organic: the visitor found a site on a search engine by typing a specific keyword;
- Referral: the visitor came from a site that displayed the URL;
- Paid: the visitor has clicked on an acquisition campaign.
Organic acquisition
An Organic acquisition is the growth of a site's traffic achieved through non-paid means. These are methods that improve visibility on the search engines, without the help of paid ads or sponsored links. The main techniques of organic acquisition are search engine optimization (SEO), content marketing, and social networking. Organic acquisition improves the positioning of a site (a brand, e-commerce site, blog...) in the search results of visitors like Google or Bing. By improving the organic acquisition, you increase the visibility of your e-commerce site and therefore its traffic. It is a performance indicator that is true to the quality and volume offered organically.
Working capital
Working capital is the amount of money needed to manage current operations or operating expenses (OPEX), to purchase goods and services and to amortize debts. It is the minimum amount needed to keep your business going. It is one of the KPIs that indicate the financial volume that guarantees the proper functioning of a company.
Working capital requirement
Working capital requirement (WCR) is the amount of money needed to cover current expenses and operating costs (OPEX). WCR is the difference between a company's current assets and current liabilities. WCR is an important KPI of a company's financial health and can be used to measure the company's ability to manage its short-term cash flow. The higher the WCR, the more likely the company is to have difficulty paying its short-term debts. Having a low WCR means that a company can manage its cash flow and orders (via inventory) in the short-term effectively.
Engagement KPIs
Click-through rate (CTR)
The CTR is the ratio of visitors who clicked on a CTA (call-to-action) button. The click-through rate is calculated by dividing the number of clicks by the number of impressions. For example, a campaign with 10 clicks for 100 impressions has a CTR of 10%. The click-through rate mainly concerns online advertising. According to Google it also refers to product listings and keywords used in a campaign. The click-through rate is a key indicator of the areas of improvement to perfect customer acquisition.
Social media engagement
Social media engagement is the KPI by which a brand or organization analyzes its communication actions with customers or users via social networks (Facebook, Instagram, Twitter, LinkedIn, Tiktok, YouTube...). It is specific because it involves:
- The development of content created for these social media outlets
- Sharing links to products and services
- Developing targeted advertising campaigns and using analytics to monitor and measure customer engagement
Engagement on social media can help build brand awareness, increase traffic, and boost sales. It also allows businesses to gather feedback and suggestions directly from consumers. This can be very helpful in improving the product and service. Social media is a great way to connect with customers and build lasting relationships. By focusing on creating quality content and engaging in relevant conversations, businesses can build their brand and online presence, and increase their conversion rate, and therefore orders and sales.
Program participation rates
Program participation rate is the percentage indicator of visitors and customers who participate in subscription programs. The participation rate is a measure of the number of people who participated in a specific campaign, initiative, or project. It is often expressed as a percentage and is calculated by dividing the number of participants by the total number of people who should participate in the event (newsletter, webinar, special orders, loyalty program...). It is one of the main KPIs for customer loyalty. The participation rate measurement can also be used to compare participation between different initiatives and determine the most effective ways to reach their objectives.
Net promoter score
The net promoter score (NPS) is the KPI that calculates customer satisfaction and loyalty. The NPS indicator can be used to highlight the quality of customer service and showcase the company’s performance. The net promoter score ranges from -100 to 100 and is calculated according to the results of a simple, single-question survey. According to their specific result, each responder falls into one of these 3 categories:
- Detractors: from 0 to 6
- Passives: 7 to 8
- Promoters: from 9 to 10
The NPS is calculated by subtracting the number of detractors from the number of promoters divided by the number of responses, all multiplied by 100.
Conversion KPIs
Conversion rate
The conversion rate is the percentage of visitors who perform an action (a click, a purchase, a download, a share...) on an e-commerce site. This can be a good indicator for:
- the effectiveness of the design and UX of an e-commerce site;
- success with increasingly effective A/B testing campaigns;
- analyzing the effectiveness of a feature, a campaign or the success of a product.
If an acquisition campaign for an online store has 1000 impressions and 100 people clicked on it - the campaign has a conversion rate of 10%.
Customer acquisition cost (CAC)
Customer acquisition cost (CAC) is the total cost for acquiring a single customer. CAC is one of the most important KPIs for the growth of an online business. It is necessary to set a maximum customer acquisition cost for each acquisition platform (Google Ads, Meta Ads Manager, LinkedIn Ads...) because different sources do not have the same lead density and quality. Example: an e-commerce site for sports shoes probably has a lower CAC on a professional relationship platform (e.g. LinkedIn) than on a social network that offers direct buying features and a young audience (e.g. Instagram) where the target audience is more qualified.
CAC that is too high should not be favored, just as CAC that is too low may indicate a lack of relevance to the visitors who are being targeted. The CAC varies according to the platform, the sector of activity, the prices applied, and therefore the number of orders.
Cost per acquisition (CPA)
The cost per acquisition or CPA is the cost related to a transaction resulting from a paid campaign. The cost of acquisition is an essential KPI to measure the profitability of a marketing campaign. If a campaign cost €1000 and generated 5 actions, then the CPA is €200.
How to calculate the CPA? By dividing the total ad spend by the number of conversions generated.
By calculating CPA, a company can analyze the return on investment (ROI) of a campaign. The cost per acquisition must also take into account the customer's lifetime value - because an acquisition probably results in more than one order/purchase. The CPA must be weighted with this lifetime value (CLV). Hubspot reports a ratio of 3:1. That is a CLV of 3 times the acquisition cost.
ROAS (Return on Ad Spend)
The Return On Ad Spend (ROAS) KPI is one of the most important indicators. It is your total revenue (including VAT), divided by the sum of all your online ad spend.
Example: a ROAS of 2.00 (or 200%) means that for €1 invested in advertising, you generated an average of €2 over the same period (as tracked and then attributed to your ad campaigns). There is also the ROAS break-even, i.e. the ROAS below which you do not generate profit given your average gross margin.
Average basket
The average basket is the average amount that visitors and customers spend when they purchase on an e-commerce site. The average customer basket is a KPI that allows you to adjust your commercial strategy.
This ratio is a useful indicator for marketing and sales teams. It helps them understand consumer behavior and provides them with valuable information about the most popular and the most profitable products. In addition, the average basket is a very effective indicator for e-commerce sites, as it allows brands to understand where they should focus their efforts to maximize their revenue.
How to calculate it?
Divide the total amount of sales by the total number of transactions.
Retention and loyalty KPIs
Customer Lifetime Value (CLV)
Customer lifetime value (CLV) is a KPI that allows companies to measure the value of a customer over the whole period between their first and their last purchase. This value is calculated based on the recurring revenue generated by a customer and is used to guide marketing and sales strategy. It is also useful for determining which products and services to offer to each customer, and understanding how much of the marketing budget to devote to each customer segment.
Understanding customer lifetime value is essential for companies looking to optimize their customer relationships. It helps companies understand how important a customer is to their business, and to define strategies for customer retention. CLV can be used to predict future customer revenues and better understand their profile and buying habits. Customer Lifetime Value is a concept that allows companies to measure the long-term average value of a customer and help direct marketing efforts. It is a valuable tool for companies seeking to build customer loyalty and develop profitable strategies.
Retention rate
Retention rate is the percentage of customers who continue to purchase from a company over a period of time. This retention rate indicates the loyalty of a customer to a brand. E-commerce retention rate is the percentage of customers who continue to purchase from an e-commerce site over a given cohort.
This business metric is a key indicator of the health and performance of a company or organization. Retention rate can also be used to measure customer and employee satisfaction. A high retention rate is considered one of the KPIs of good management and good health. Conversely, with a high churn rate KPI (more unique to companies with a subscription model), companies and organizations may know that they need to improve their offerings, and thus strengthen their retention rate.
Shopping cart abandonment rate
The shopping cart abandonment rate is the percentage of customers who add products to their cart and then abandon their order before proceeding to checkout. The abandonment rate helps to target several areas for improvement:
- proposed payment methods;
- products’ cost;
- ergonomics of the e-commerce site.
The shopping cart abandonment rate is calculated by dividing the number of transactions by the number of shopping carts created. The industry benchmark is around 70% (Baymard statistical study).
The analysis of the checkout performance (conversion tunnel) can be done on an analytics tool like Google Analytics 4 (GA4) by setting up events at each step of the conversion path.
Return and refund rates
The return and refund rate is the percentage of purchased products that are returned by customers and then refunded. It can be used as a KPI of customer satisfaction and product quality. Companies can use the return/refund rate to adjust their products and services to meet customer needs and maximize sales. A high return and refund rate can indicate several things:
- the products do not meet the customers' expectations, which could require, for example, some adjustments to the online product descriptions;
- dissatisfaction with the logistics partner (damaged package, delivery too long and badly organized...).
Conversely, if the return and refund rate is low, it may indicate that products and services are meeting customer expectations and that the customers are satisfied.
E-mail acceptance rate
The e-mail acceptance rate is the percentage of e-mails that reach their recipients.
The e-mail acceptance rate is the key indicator of the quality of an e-mail campaign. It expresses the campaign’s deliverability as a percentage. That is the number of successful deliveries to the sending base (recipients). The higher the acceptance rate, the more effective the mailing campaign is and the more people it reaches. Several factors can help improve the UX, and thus the acceptance rate:
- content (text, visuals, title, preview...);
- format;
- length;
- distribution software.
Using up-to-date lists, sending personalized e-mails, and including an unsubscribe option improves the acceptance rate of a campaign.
Abandoned cart at checkout
Shopping cart abandonment occurs when the user leaves the e-commerce site before proceeding to checkout. It is often due to :
- additional costs that are too expensive (deliveries, taxes...);
- a funnel that is still too long (account to create, multiple identifications);
- very long delivery times;
- too restrictive return, exchange, or refund policy;
- limited payment options;
- low trust in the brand and/or suggested payment platform.
