After creating an e-commerce tailored to your business, it's not enough to add the products and make changes according to the tastes of those who manage it. It's important to measure the results, not only so that you can have a real sense of what happens when a potential customer visits the store, but also to ensure that nothing fails and that improvements are implemented to enhance sales - in the case you already have a well-structured business with satisfactory results.
The results are measured through previously defined KPIs - Key Performance Indicators –, which should be analyzed periodically. As a general rule, when talking about an e-commerce, it's important to take the following into account:
Number of visits
This is the first indicator that should be taken into account, mostly because without visits it's guaranteed that there are no orders. How many visits did you have last month? How about last week? And how many visitors did you have two weeks ago? And two months ago? Is the number of visitors increasing, or has there been a breakdown in that number? In order for you to evaluate what does and doesn't work in the online store, first, you need to know how many people visit it.
Number of orders
The number of orders is an essential indicator, which can be deepened and divided into a set of more specific indicators (number of orders paid, number of orders placed in the mobile version of the store, number of orders paid by credit card...). With this information, it's possible to analyze the billing for a certain period of time, as well as the number of orders.
Conversion rate (number of orders paid / number of visits x 100)
The conversion rate shows what percentage of visits actually contributes to the growth of the business. In 100 people, how many are actually customers? If the conversion rate is 4%, for example, it means that in a group of 100 people, 4 placed an order and made the purchase. These values should be analyzed frequently, so that you can have a clear notion of the impact of the implemented modifications.
Cost of customer acquisition (investment carried out / number of new customers)
Different strategies can be chosen to captivate new customers and make the brand known to new people. However, it's important to know whether the amount invested is having the necessary return in terms of achieving the goal. The cost of customer acquisition evaluates the amount invested in the actions took to convert a person outside the brand into a customer. With the help of this indicator, it's possible to make comparisons between the different strategies and actions implemented, finding out which one works best in this aspect.
Number of views on product pages
Which product pages do customers visit most? Do they match the best-selling products or do they match product pages that have never received orders? Knowing this value, as well as the quantity of that same product that was sold, it's possible to analyze the conversion rate of each page, and understand whether it’s being visited by the most suitable customers, those who look exactly for the displayed product (or not).
Average Ticket (billing value / number of orders)
This KPI evaluates the average amount spent by customers. It's simple math: just divide the amount invoiced in a certain period of time by the number of orders placed in that period. Knowing this amount, it will be easier to put into practice some actions to encourage customers to increase the amount spent on each order.
Number of new customers and number of repeat customers
Are orders always placed by new customers? Is there something in the product and/or service that makes people lose interest in buying? Or are we talking about a product with a fairly extended average life and therefore the fact that there are no repeat customers is a good sign? If, at some point, orders are made only by customers who have already bought at least once, it means that you're not able to attract new customers. This is valuable data that will interfere with the communication and the marketing strategy.
Abandoned carts rate (number of unfinished orders / total number of orders x 100)
An abandoned cart is an order that was left incomplete. For some reason, after adding the product to the cart, the customer decided that it would no longer finish the purchase. Several studies indicate that only 20-25% of orders are finished, so it's normal that this rate is around 75-80%. However there are some techniques that can be put into practice to counteract these values – it's possible to lower the rate of abandoned carts.
Number of visits through different channels
How do customers get to the store? Through sponsored posts on social networks? Through references in the media? Through the brand’s newsletters? Or do they simply search the name of the store in a search engine and choose the first result? By knowing the channels that bring more customers to the e-commerce, it will be easier to understand where the audience is, and, of course, act accordingly to captivate new customers and retain existing ones.
Net profit (Total invoicing – total costs)
This is a clear indicator of the success of a business – there's no point in selling too many products if the invoiced amount is not enough to sustain the brand; in addition to having to cover all the costs of the company, the business has to make a profit. After withdrawing the value of all costs (production, wages, domain, accommodation, water, electricity, internet, shipping...) to the invoiced amount, what is the profit? This is the value that defines whether the online store is billing enough to be sustainable in the long term.
These are the main KPIs of an e-commerce, but every case is different and there are others to consider depending on the goals of the company. Be that as it may, it's important that all performance indicators are clear, specific, and objective, so that there's no room for two different interpretations. Only with a set of relevant KPIs is it possible to analyze the true state of the business, achieve goals, and implement strategies and actions that make a difference in its growth.
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