Every online business should keep a close eye on their key performance indicators (KPIs) if they want to beat the competition and remain relevant in our ever-evolving, technology driven market. These indicators include several data points, ranging from SEO rankings to coupon usage. Furthermore, the best way to monitor these metrics is through KPI reporting.
The beauty of technology today is the ability to monitor each of these metrics from any computer. Online software and other programs facilitate the understanding of data and how it can help a company improve. Without this incredible technology, businesses would not be able to improve and grow as quickly.
KPIs are not the same for every business, however. Every organization will have their own unique metrics to measure, based on the products or services they sell. On that note, there are several KPIs that every online business should be familiar with.
Here are a few of the most important.
- Conversion Rates
Conversion rates involve far more than simply getting traffic on your website. They indicate how many visitors are actually purchasing from you. Your website can track how many people visited your page, how many actually purchased something, and then turn that into a percentage.
Measuring conversion rates is arguably the most important metric, simply because it shows if your digital marketing efforts are paying off or not. There’s no point in spending money on emails, content, and SEO if no one is making any purchases.
- Cost of Acquiring a Customer
This metric ensures that you aren’t spending more on a customer than they’re buying from you. Otherwise, the two cancel each other out. There are several things that go into acquiring a customer. The most obvious is what you put into marketing.
Marketing is an investment, and though you may not see immediate returns, you should start to see your investment paying off. You’ll also consider the rate you’d pay an affiliate to refer an order to you and any extra costs for running a transaction. All in all, these costs should not be greater than what a customer pays you. If the number is greater, you need to make some serious changes to your company setup to avoid putting yourself out of business.
- Shopping Cart Abandonment
Sometimes conversion rates are low. When that happens, it’s time to look at your shopping cart abandonment rate to see how many customers considered purchasing something. This is the closest customers come to making a purchase before leaving your site.
The average cart abandonment rate is 68 percent, making it a major metric consideration. When measuring cart abandonment, there are several things to consider, including the reason the customer abandoned the cart in the first place. It could be for personal reasons, or it could be a problem with your website or transaction process. These are important things to measure if you want to optimize sales.
- Average Order Value
This one goes alongside measuring your cost to acquire a customer. It delineates how much revenue is generated with each order and creates an average to estimate how well your online store is doing. With this knowledge, you can predict revenues for your business, which is invaluable.
Every online business needs at least a few high value orders, and if you aren’t getting them, your metrics can tell you that something needs to change in your business – whether that’s the pricing or the website layout.
- One-Time Customers
This concept is also known as “churn” in reference to customers that make a single purchase, but never return. Customer retention is very difficult to master in any business, and if your churn is high, it’s a sign that your company is struggling.
If you want to lower the number of one-time customers, it’s important to encourage your customers to return. Focus on boosting your customer engagement metrics through social media, blogging, and other appropriate digital tools.
All of this information can be harnessed for good when measuring it with the proper technology. Monitoring these KPIs can be the key to driving business strategies and facilitating growth for any company. Firms would do well to utilize the technology available to them for measuring metrics and defining business success.