Have you ever wondered why big online stores like Amazon or eMAG are so successful? No, it's not just because of their products – it's because they know exactly what to measure and what to do with their data. If you also want your online store to truly stand out from the crowd, it's time to get acquainted with KPIs, or Key Performance Indicators!
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KPIs, Your Online Store's Best Friends
CR, AOV, CRV… for many, understanding and using these seemingly meaningless KPIs is a perpetual struggle, but it's better to think of them as new friends: if you get to know them and treat them well, they'll make your everyday life better. In this article, we aim to help you make good, data-driven decisions for your online store with easy calculations and tips!
What can you use them for?
Or rather, what can't you?
Once you find the metrics that best suit your online store's goals, they'll guide you like a GPS through the labyrinth of e-commerce, showing you when to re-evaluate and change direction.
If you want to know how many people click on your ads and how many actually make a purchase, or which campaign generated the most revenue, the right performance indicator will quickly reveal it.
But don't worry, we won't overwhelm you with numbers and spreadsheets! In this article, we'll explain simply and clearly why KPIs are important and which ones you should pay attention to.
Ready? Let's dive in!
What are the most important KPIs for your online store?
Here's a summary table – and then let's look at each KPI in detail, point by point, to see what you need to know!
1. Traffic and Your Visitors – because first impressions are everything
Assessing your online store's traffic is definitely a good starting point – and it's not just the numbers that matter, but also the subtle clues that help you understand why visitors aren't converting into customers.
You can track this either in your online store platform's own admin interface, or (which we recommend) in the Google Analytics 4 system.
Wherever you look at your results, don't just pay attention to how many people visit your site, but also how they behave there! This helps you understand how effective certain decisions and campaigns are. It might even reveal that your site is most frequently found not by your original target audience.
If we want to measure traffic with KPIs, two very important indicators are Bounce Rate, or the bounce rate and the Traffic Sources, which means which channel your customers came from.
First, let's take a closer look at the bounce rate. If visitors quickly leave your site, it's likely they aren't finding relevant content or what they expected. Not only the text, but also the design, navigation, and page speed can play a role in this – a UX, or user experience research, can help uncover where you're losing valuable visitors.
To understand your traffic, the channels, or traffic sources - it matters whether from organic search, paid ads, or social media your visitors come.
Furthermore, it's important to understand which of your channels attracts what quality (how relevant) of visitors to your webshop, as this will help you organize the resources allocated to each channel. For example, if your social media page attracts many visitors to your webshop, try to leverage its potential even more with paid ads or other tools that can increase your reach.
However, if you see that your site receives little organic traffic (i.e., without paid ads), in addition to paid campaigns, a well-functioning, strong SEO, or search engine optimization strategy, is also crucial for your webshop to be visible online.
2. Customers and their carts - every click counts
If you want to know what percentage of your visitors become customers, your next KPI is the Conversion Rate, or conversion rate. Its name might help you understand why we called KPIs "bogeymen," but there's no need to fear it, because the calculation is this simple:
#m1-y#Conversion Rate = (number of purchases / number of visitors) x 100##
And the result you get is incredibly useful!
If you get a low value, it's worth checking your purchasing process, as it seems many people are leaving empty-handed – meaning they abandon your site even before starting a purchase. Identify areas where your webshop needs help or redesign, because with conversion-optimizing changes you can quickly improve the customer experience and thus increase sales!
But if we're already looking at customers' shopping carts, it's also interesting to see how much they spend on average – that is, what the average cart valueis, or in English, Average Order Value (AOV). This metric is used to track and optimize webshop performance. It can help when making strategic decisions, whether about marketing or pricing. Here's how to calculate it:
#m1-y#Average Cart Value = revenue / number of orders##
#m1-p#Tip: You can increase your average cart value with package deals, cross-selling, or upselling!##
A cross-selling means offering complementary products to the item originally selected (for example, a top with a pair of trousers, a serum to enhance the effect of a face cream, or a suitable mouse, case, and laptop stand with a laptop, etc.). The upselling during which you can offer a more expensive alternative instead of the originally selected product.
Believe me, in certain cases (e.g., unique color and design, better material quality, more memory, better camera, etc.), customers are happy to pay a little more if there's an option they like better.
Does every customer order the contents of their cart, thereby increasing the average cart value? Certainly not! And this is where the cart abandonment ratecomes in. This KPI shows how many customers abandon their purchase with items in their cart.
Important difference: with the conversion rate just mentioned, the visitor leaves with an empty cart, whereas in the case of cart abandonment, they turn back before payment.
A low conversion rate and high cart abandonment suggest that the purchasing process has stalled in some way. If customers don't complete their purchase, it's worth optimizing the shopping experience.
3. Customers - It's not enough to acquire them, you also need to retain them
For those familiar with the business world, it's no secret that every customer must be earned. Furthermore, existing customers must also be retained.
If you manage to get your customers to return regularly, your business will certainly grow in the long term.
You might have already guessed that now the returning customer rate will follow. Webshops that successfully retain their customers achieve much more stable revenue and embark on the path of cost-effective operation.
#m1-p#Tip: if you are not satisfied with the rate, develop your loyalty program, provide personalized offers, or give coupons!##
Do you already have a stable base of loyal customers? It's great if you have many returning customers as a webshop owner, but it's not worth stopping here, because we haven't asked a very important question yet: how much money do these returning customers bring in total?
Customer Lifetime Value (CLV), or the customer lifetime value is exactly for this, as it shows the revenue generated during the customers' lifetime, thereby also measuring long-term customer relationships and customer loyalty. The higher the CLV, the better you can retain your customers, and the more they spend in your webshop.
#m1-p#Tip: If you received a low score, personalized marketing and well-functioning customer service can be key factors worth focusing on!##
4. Marketing Performance - advertising in the right place is invaluable
As an online marketing agency, with many years of e-commerce experience and success stories behind us, we can confidently state that it is definitely worth investing in marketing campaigns – but it's crucial to allocate the budget efficiently and data-driven!
Measuring marketing campaigns not only helps you know how much you've spent, but also to see how effectively you convert your visitors into customers. Just like other areas of business, this doesn't happen by magic. The Click-Through Rate (CTR), or the click-through rate , shows how many people clicked on your ad compared to the number of views.
If your click-through rate is low, then your target audience probably doesn't find your message appealing enough.
By crafting the right message, you can capture your viewers' attention.
#m1-p#Tip: Try to put yourself in your target audience's shoes and ask yourself: what kind of ad would I like to see, what would I click on immediately?##
Another useful metric is the Return on Ad Spend (ROAS), or the return on ad spend , which aims to compare the money spent on ads with the revenue generated from them.
If you received a ROAS value higher than 1, congratulations, you're earning more than you spent! However, if your ROAS value does not reach 1, it's worth rethinking the campaign budget or the message you want to convey.
E-commerce trends for increasing KPIs
Or how can we improve our KPI values, become more efficient, while leveraging the opportunities offered by technology? There are many useful tools and features that make things easier for webshop owners, but we're not selling a pig in a poke when we say that the market is currently buzzing with artificial intelligence. A our previous articlewe also touched upon the topic, exploring AI copywriters, which can be valuable tools for webshops, for instance, in quickly generating SEO-friendly product descriptions.
What can you gain by integrating AI?
One of AI's greatest advantages is its ability to analyze in seconds the vast amount of data that the human eye would take long minutes or even hours to scan and process.
While online marketing undeniably offers the advantage of being measurable, let's be honest: when you have a thousand things on your plate, you're not eager to sift through every single event or data point on your site just to draw some conclusion, good or bad.
We understand that the vast opportunities presented by AI and the overwhelming flood of information in the market can be daunting, leading to many questions. How can I use AI to improve my webshop? Should I really hand over "power" to artificial intelligence when I've managed perfectly well without it until now?
We've compiled a few examples where implementing AI can be highly beneficial:
- Personalized Customer Experience: if you offer a wide range of products, you need a lot of data for efficient operation. You must consider individual customer choices, activity, and purchase frequency to provide relevant product recommendations to everyone – and an excellent tool for this is, for example, an AI-powered advertising algorithm.
- Customer Service Automation: By integrating a chatbot, customers can get quick answers to their questions, and you'll be relieved of the burden of handling frequently asked queries. This frees up your time to focus on more complex issues, development, and strategy formulation.
- Inventory Management: AI can help predict demand, allowing you to optimize your inventory. This reduces costs and enhances the customer experience.
Developing these areas can indirectly improve your KPI values by promoting efficient, swift operations – and your customers will be more satisfied.
Is AI a good fit for your operations?
It sounds great that these seemingly "simple modifications" can bring about such significant changes in your webshop, but it's far from certain that they'll be a perfect fit for everyone.
It might be worth using AI to make your webshop operate more efficiently, if, for example:
- you collect a large amount of data about your customers,
- you have a wide product range,
- or your email inbox is flooded with hundreds of customer inquiries daily.
But remember, you don't need to keep up with every trend.
If you operate a smaller webshop with a narrower product range, or if manual solutions and personal connections work better in your field, then you should consider other approaches. Furthermore, if you don't yet have reliable, structured data – although this should be remedied as soon as possible – then you shouldn't bother with AI integration for now, because without quality data, it won't be your helper, but rather your enemy.
Just as people in life, companies and businesses also progress at their own pace, and what works best for each during development varies. The most important thing is to remain authentic, both you and your brand.
Summary
Without tracking KPIs, you take a huge risk, as you're practically managing your webshop blindly. It's worth starting by selecting 2-3 KPIs that best align with your goals. Then, of course, you can gradually expand the list. Monitor how your metrics evolve under certain changes and market influences, and find the best solutions to be successful in the long term.
#promobox-en#It's perfectly fine if you struggle with performance metrics and would rather entrust your webshop's KPI values and efficiency improvement to experts. We'd be delighted to help you on your journey, and we eagerly await your inquiry!##
