Key performance indicators (KPIs) are specific metrics that help organizations measure and track their business performance. Each conversion goal for a website could have one or several KPIs attached to it. For example, a conversion on an ecommerce website will have any of the following KPIs:
At the start of your conversion optimization process, invest time in identifying KPIs to measure, track, and ultimately improve.
These KPIs should have a meaningful business value attached to them. Sometimes marketing or technology departments focus on a metric and ignore the fact that it might not have a real business value. For example, the number of page views per month for an ecommerce website holds little business value by itself. The conversion rate or the average order value, on the other hand, has a direct impact on the company’s bottom line. Although general KPIs are shared across industries and within the same vertical markets, it is common for different organizations to have unique KPIs. It is also natural for departments within a single organization to have different KPIs that they are interested in tracking and improving.
KPIs should be trackable. You should be able to express them numerically. To measure an organization’s progress toward its goals, you have to be able to measure current performance and future progress.
Finally, the question you should ask to determine whether a KPI should be tracked is, “What is the business value?” For example, if a person wants to track the number of monthly visitors to a website, we ask, “What is the business value?” There may be no business value in simply increasing the number of visitors.
The following are some of the common KPIs tracked by many ecommerce websites:
The number of orders a website captures remains the most critical factor for an ecommerce website.
This KPI calculates the average amount a customer spends when placing an order with an ecommerce website. In some instances, a conversion optimization project or particular optimization software will focus on increasing the average order value as opposed to increasing the number of orders. Most companies consider that increasing the average order value is more challenging than increasing conversion rates. The total monthly revenue generated by a website is equal to the average order value multiplied by the number of orders in the same month.
In few instances does the number of items per order have a direct impact and business value associated with it. It’s typical of upsell and cross-sell software to focus on this metric since it shows the capability of the software to increase the number of items customers are ordering. We rarely see real value in tracking this metric on our projects, but again, this will vary based on the business and the client.
This represents the number of visitors who start the checkout process but never place an order with the site. It is typical for an unoptimized checkout process to have abandonment rates anywhere from 45% to 80%. We have seen few ecommerce websites with checkout abandonment rates close to 92%. To put this in perspective, an 80% abandonment rate means that for 100 website visitors who start the checkout process, only 20 of them successfully complete it. The remaining 80 visitors leave the website without placing an order. From our experience, the best optimized checkout process has an abandonment rate of 20%.