Building a data-driven ecommerce store: KPIs
Marketers can’t seem to get enough data. We’re swimming in numbers, percentages, and constantly looking for patterns to try and tell “stories.” It feels like every marketer wants to talk about how they’re data-driven. Josh was spot on last month: “Our discipline has clearly pivoted from a collective of purely gut-driven creatives to a growing herd of dashboard-loving nerds.”
In fairness, I should probably offer up the rest of the quote.
And, in almost every way, that fondness for data has fundamentally changed marketing for the better — particularly at a time when delivering the personalized experiences consumers expect requires effective use of data.
For e-commerce businesses, being data-driven can seem particularly perplexing when you’re keeping track of so many different metrics. From open rates to time on site, it can be interesting to look at all the data, but difficult to understand what numbers really matter. Deciding which KPIs (key performance indicators) to focus on can protect your business from “shiny number syndrome.” The goal is to help you establish a real data-driven business – one with data points that help inform the decisions you make going forward as opposed to a reactionary tactic.
Historically, the go-to KPIs for ecommerce have centered around email, which makes sense since email is responsible for a considerable percentage of revenue for many ecommerce stores. The issue is that there are a lot of other KPIs unrelated to email that help paint a clearer picture about your business.
Which KPIs to track?
Before diving into any analytics or reports, you need to determine what the goals are for your ecommerce store – beyond just making money. KPIs will vary depending on your industry and business model.
According to Shopify:
KPIs can and should differ for each of an online retailer’s goals, whether those are related to boosting sales, streamlining marketing, or improving customer service.
Shopify has outlined some great goal examples for ecommerce stores:
GOAL 1 — Boost sales 10% in the next quarter. KPIs include daily sales, conversion rate, and site traffic.
GOAL 2 — Increase conversion rate 2% in the next year. KPIs include conversion rate, shopping cart abandonment rate, associated shipping rate trends, and competitive price trends.
GOAL 3 — Grow site traffic 20 percent in the next year. KPIs include site traffic, traffic sources, promotional click-through rates, social shares, and bounce rates.
GOAL 4 — Reduce customer service calls by half in the next 6 months. KPIs include service call classification, page visited immediately before the call, and the event that lead to the call.
It’s important to remember that these KPIs can and should evolve as your business grows.
KPIs by channel
Email marketing KPIs
Chances are you’re already bobbing around in the data from your email marketing campaigns. Obviously your goals will determine which metrics you should pay attention to. Let’s dive in.
- List growth
Determined by how many new email addresses have been added minus the amount of unsubscribes.
- Email sharing
Determined by the amount of shares an email gets to social media.
- Bounce rate
The total percentage of emails that could not be delivered.
- Spam complaint rate
Calculated by the number of complaints divided by the number of emails sent.
If you want to improve your email deliverability, check out these tips.
To understand your email engagement:
- Unique open rate
This is the number of unique opens divided by number of emails delivered. The emails delivered is the list size minus the bounced or suppressed addresses. If someone opens an email twice, it won’t count toward the open rate.
- Click-through rates
The number of unique clicks divided by the number of emails delivered.
You can take this a step further and look at demographic segment engagement rates to understand how certain regions are interacting with your emails. This could warrant a reason to segment and send by region if you find interesting results.
If you’re looking to better understand the buying behavior of your audience:
- Days to purchase/visits to purchase
- Visitor loyalty and recency
- Time on site
- Average time before purchasing
- Average order value
- Conversion rate
Paid Social & Advertising KPIs
If you’re looking to monitor engagement with your ads:
- Click-through rate
To measure if your ads are leading to conversions:
- Conversion rate
To understand if your ad spend is justifiable:
- Gross profit after ad cost
How can you tell if you got your money’s worth? If gross profit after ad cost isn’t possible, try to calculate ROAS (return on ad spend). For every $1 spent, how much revenue did you get back?
I hate to break it to you, but view count is a completely crap metric. We live in a world where you can essentially buy views and robots roam the interwebs practically unchecked. To really understand if a video is working, you need to think about engagement rate and social shares.
- Engagement rate
How long is your audience watching a video? Is there a sharp drop off at a particular moment? Are there certain sections of your video that your audience is rewatching? These answers can influence how you create videos going forward or lead you to tweak your existing videos.
- Conversion or number of emails collected
If you have gated or enabled a call to action in a video, look at the conversion rate to determine if the placement is working effectively.
- Click through rate
- Social Shares (not likes)
If your videos are setup for social sharing, the number of social shares can also be a good metric to monitor but beware, bots may be messing with your actual numbers. For more on video metrics, check out this handy guide.
- Organic social KPIs
Similar to video views, likes can also be bought and manufactured. To get a better idea of how your audience is engaging with your organic social, look at these data-points.
- Social media mentions
Influencers aren’t cheap. It’s best to have a KPI measurement plan before investing a lot into paid influencer marketing. If you’re just getting started with influencer marketing or need a refresh, check out this post.
If you’re looking to track conversions and ROI:
- Associate an offer code with an influencer and see how it does
To monitor influence and reach:
- Social shares (again, not likes)
Customer happiness KPIs
If you’re interested in understanding customer satisfaction, brand loyalty, or even why you’re struggling to get repeat customers, look at these metrics.
- Number and quality of product reviews
- NPS (net promoter score)
- Number (or percentage) of repeat buyers
- Number of transactions in a given time frame
Metrics that don’t matter
While these metrics can be fun to watch, the reality is that they’re vanity metrics and aren’t super relevant.
- Likes & views
These are vanity metrics, likes can be automated and views, like video, don’t necessarily correspond with engagement, which is more important.