10 KPIs Every eCommerce Website Should Be Measuring

Efrem Epstein
September 14, 2023

In the bustling world of eCommerce, understanding how your online store is performing can be the difference between soaring success and falling flat. Whether you just started your first eCommerce business or are working for an established brand, you’ll need to track your shop’s progress in achieving your business goals. This is why eCommerce KPIs are so important. KPIs, or Key Performance Indicators, refer to measurable values that help you see your progress toward your business objectives.

There are no shortage of KPIs from which one can choose. But with so many metrics at your disposal, which ones should you focus on?

The Importance of eCommerce KPIs

Defining eCommerce KPIs

In short, KPIs are navigational tools.  KPIs provide insights and data that guide your eCommerce store through every step of your business journey. You could almost think of them as your store’s website’s personal GPS, which provides direction and clarity amidst a sea of numbers. The road may take unexpected turns, but the KPIs offer guidance every step of the way.

Why are KPIs critical for eCommerce success?

Imagine driving a car without a dashboard: No speedometer, fuel gauge, or warning lights. That’s akin to running an eCommerce site without tracking its KPIs.

KPIs not only highlight areas of success but also pinpoint potential pitfalls. They tell you where you’ve been, where you are and how to get to where you want to be. In short, KPI metrics are among the best consultants your business can have.

Key Performance Indicators (KPIs) Every eCommerce Site Must Track

Conversion Rate

Arguably, the most vital of the eCommerce KPIs is the Conversion rate. This metric represents the percentage of visitors who ultimately convert into customers. Conversion rate can be the first indicator of an area needing improvement or tweaking. A low conversion rate may indicate an issue with your site’s UX or product listings.

As noted above, conversion rate is the percentage of prospects who become actual customers. For example, if your online store has 1,000 weekly visitors and  100 visitors make a purchase, your conversion rate is 10%. Tracking the conversion rate is one of the best ways to determine if your marketing strategy and sales processes are working.

Average Order Value (AOV)

While Conversion rate is a great way to track customer growth, it is also very important to measure how much your visitors are actually spending. This is why Average Order Value, or AOV, is another of the important eCommerce KPIs.

AOV is, as its name indicates, the average value of each completed customer order. For example, let’s pretend that over the past week your website recorded 50 orders with a total aggregate revenue of $1,000. In this case, your weekly AOV would be $20.

Two of the more effective ways to boost AOV include upselling and cross-selling.

Have you ever been encouraged to buy a slightly more expensive version of a product because of its added value? Well, that’s upselling. Cross-selling, on the other hand, occurs when the consumer is being encouraged to add complimentary products to their cart.

To use an example, let’s imagine your store sells fresh fruits and vegetables. If a customer is buying tomatoes, you could upsell them by encouraging them to buy a special pricier organic variety. But you could also cross-sell by encouraging them to buy some lettuce and mushrooms with their tomatoes, in order to make a salad.

In short, AOV is very useful in mapping customer engagement strategies for your eCommerce store. Tracking this eCommerce KPI can lead to revenue growth.

Customer Lifetime Value (CLV)

Amongst eCommerce KPIs Customer Lifetime Value (CLV) is one of the most crucial long-term indicators.

CLV is often broken down into sub-metrics, including Historic CLV and Predictive CLV. Historic CLV is a measure based on past customer behavior. For example, let’s pretend your Website sells calendars for $7. Now, let’s imagine that a certain customer bought a new calendar every December for the past 10 years. The Historic CLV for this customer would be $70.

Historic CLV is one of the simpler eCommerce KPIs to calculate. In fact, it's far simpler and more straightforward than Predictive CLV. However, Predictive CLV  is arguably the more useful of the two.

Predictive CLV aims to predict the financial value of the customer to the business based not only on past behavior but future behavior as well. Hence, the calculation for Predictive CLV relies on assumptions. So if we were to take the Historic CLV example involving calendars, we would only be able to calculate the Predictive CLV with 100% accuracy if we knew how long the customer would live. Obviously, that’s impossible. Moreover, we would also have to know as a fact that the individual would remain a customer for their entire life.

However, we can use data to make assumptions. Perhaps, we know that the customer is 62 and the average customer continues to buy calendars until age 83. We could then add the 10 years the customer has made purchases and add it to the 21 future years of purchase that we are predicting.  The CLV for this customer would then be 31*7 or $227.

Often CLV is done by modeling averages over large data sets to calculate reasonable assumptions for this KPI.

Shopping Cart Abandonment Rate

Sometimes eCommerce KPIs can help pinpoint a micro issue with your eCommerce Website. One example of this is the Shopping Cart Abandonment Rate.  

As its name suggests, the Shopping Cart Abandonment Rate is a KPI that measures what percentage of shoppers start product selection without completing the check-out process. For example, let’s imagine that 50 customers visit your site initiate product selection but only 40 complete check-out. In this case the Shopping Cart Abandonment Rate would be (10/50) or 20%

A high Shopping Cart Abandonment Rate might indicate that there are issues with your checkout process. Perhaps it’s too lengthy or too confusing.

It can also signal other issues. Are there issues with transparency? Are customers being hit with surprise hidden charges? It may be worth taking the time to look at the entire check-out process with fresh eyes and see how this KPI can be improved.

Total Visits

In discussing eCommerce KPIs, one of the simplest to understand is Total Visits. In short, it’s the total number of visitors to your site measured over a period of time.  If you had 3,000 unique visitors to your site last month, then your Monthly Total Visits was 3,000.

But don’t be fooled by its simplicity. Total Visits is one of the most important KPIs for a company to track.  Often it will be obvious why the number of Total Visits fluctuate.  Perhaps you’ve spent more on advertising in the current month.  If it’s December, some eCommerce stores may see a seasonal surge of gift-buyers.  

However, unexpected drops should not be ignored. Did a recent advertising campaign underperform compared to previous ones? Did a new competitor take a bit out of your market share?

Tracking the Total Visits can help determine which questions need to be asked.

Bounce Rate

Have you ever left a website almost immediately without clicking a single button? If so, you contributed to that site’s Bounce Rate.

The Bounce Rate is a KPI that measure the percentage of visitors who leave a website without taking a single action.  If you have 100 visitors and 12 of them leave without a single click or keystroke, then your Bounce Rate is 12%.

Bounce Rate is a good metric for evaluating UX and overall website design. A high Bounce Rate may indicate that a redesign should be considered.

It can also be a sign that your site is attracting visitors who are expecting something different. If this is the case, perhaps your SEO and keyword strategies could use some tweaking.

And on the flip side, a low Bounce Rate means that visitors engage  with your site. If the site recently had a redesign or added features, this can sere as a nice validation.

Customer Acquisition Cost (CAC)

Customer Acquisition Cost (or CAC) is another one of the useful eCommerce KPIs. This is  especially true for businesses with a paid advertising budget. CAC measures the average amount of money a company needs to spend to “acquire” a customer.  

In calculating CAC, you divide the total costs spent on obtaining new customers by the total number of new customers acquired. For instance, if you spent $10,000 to advertise your products on social media and acquired 2,000 new customers, you have a  CAC of $5. With this metric, you’ll know whether you’re spending excessive money to bring in new customers, whether or not your strategy is effective, or whether your strategy’s impact has changed from a previous time period.

This KPI is especially useful when conducting budget analysis. A high CAC might mean it's time to rethink your marketing strategy. Perhaps your messaging needs refining. Or there might be more efficient paths to reach your target customers. Paying attention to CAC can help identify the issue while it’s still early and correctible.

Customer Retention Rate

Good marketing and branding can attract new customers. If you want to keep them, you’ll need a good product a good product and experience.

Customer Retention Rate is an eCommerce KPI designed to measure how good a job you are doing at engaging your already existing customers. If you had 200 customers purchase an item from you two months ago and 100 of them made a purchase in the last month, then your Customer Retention Rate for the period would be 50%.

If your Customer Retention Rate drops, it can signal multiple things. It might mean that your product experience needs improvement. However, it can also signal that your customer experience could use some tightening up. This can be a good time to reach out to some of your past customers and hear some feedback directly from them.  

Return on Investment (ROI)

One of the best known eCommerce KPIs is Return On Investment (or ROI). In simple terms, ROI is a ration that measures how much you’ve earned compared to how much you’ve spent.  It is calculated by taking the net amount earned after expenses and dividing by the amount spent.

For example, let’s pretend a company were hires a salesperson for $60,000. If that salesperson brings in $120,000 in revenue then the ROI on that hire would be 100%.

Let’s further pretend that the salesperson went on a business trip, paid by the company, with a total cost of $3,000. Now let’s imagine that the meetings on this trip resulted in $4500 in new business for the company. The ROI on this trip would be 50%.

ROI is very important for assessing whether business spending is maximized on the most ideal resources and, if not, where it might be best reallocated.

Email Open Rate

Many of the above eCommerce KPIs focused on either the Website UX  (e.g. “Bounce Rate”) or budgetary issues (e.g. “ROI”).

In that regard, the Email Open Rate is a unique KPI. As its name indicates, it measures what percentage of emails sent to customers are opened.

A low Email Open Rate may indicate that you should adjust the frequency or timing of your mailings. It may also mean it’s worth experimenting with different Email Subject Headings.

Email Open Rate is a crucial metric to monitor. If customers aren't opening your messages then it doesn’t matter how amazing the designs or content is on the inside. In fact, boosting an Email Open Rate can impact several other KPIs above as well (e.g. “Total Visits”), leading to increased revenue for your eCommerce site.


KPIs are keys to eCommerce success

Success in eCommerce isn't just about having a great product. It's about looking at your numbers, understanding your performance and making informed decisions as to what comes next.  

Tracking KPIs are a great way to make sure that your eCommerce store is keeping its eye on the larger goals, even during the busiest moments of the business. By focusing on these 10 KPIs, you'll be setting your eCommerce store up for sustainable success.