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How to Measure Success in Ecommerce & Track Most Important KPIs?

  • Saypr
  • 2020-03-29
  • While it is great that you have set-up your e-commerce site and business seems to be going as 

    planned, how do you really know if your e-business is actually doing well or not? Have you given a thought as to what success means to your online store?

    It is important for every business to define its own Key Performance Indicators or KPIs. The KPIs are what drives all the key actors in business towards success. 

    By having a clear knowledge of what success means to your e-commerce business, you will be able to appreciate every effort, time, and expense made towards your e-commerce goals.

  • Defining Your KPIs and Success Factors

    In trying to define the KPIs for your e-commerce business, you should know that your primary business goals form the basis of this. There are actually key steps to follow and some major considerations that you cannot ignore when defining your KPIs. 

    Some of the major considerations that you need to acknowledge come by way of seven quick-shot questions and these include;

    Q1: What business objective do you hope to achieve?

    Q2: What is the importance of the achieved business objective to your organization?

    Q3: What measures do you have in place to determine and estimate progress?

    Q4: In what way can the outcome of the business objective be controlled by you?

    Q5: Is the responsibility of achieving your business objective entirely of your making?

    Q6: What measure(s) is/are on ground to let you know that your business objective has been achieved?

    Q7: What steps do you have in place to review your progress in your bid to achieve your business objective?

    Typically, in defining your KPIs, you will have to be concise and clear. If for example, your business objective for the year has to do with increasing your sales revenue, you can the refer to this as a "Sales Revenue Growth KPI". So in defining this "Sales Revenue Growth KPI" in line with the seven quick-shot questions above, you could have;

    Q1: What business objective do you hope to achieve?

    A1: A sales revenue increase of 10% by the end of the calendar year.

    Q2: What is the importance of the achieved business objective of your organization?

    A2: If this business objective is achieved, the profit level of the business is increased.

    Q3: What measures do you have in place to determine and estimate progress?

    A3: The level of progress is going to be determined by the amount of sales revenue (in USD) recorded.

    Q4: In what way can the outcome of the business objective be controlled by you?

    A4: The business objective outcome can be controlled by you in the following ways;

    • Boosting your sales team by employing more competent sales personnel.

    • By encouraging your current customer base through targeted promotions to purchase more goods and services from your business.

    Q5: Is the responsibility of achieving your business objective entirely of your making?

    A5: Yes, it is the responsibility of your Sales Manager to achieve this KPI metric.

    Q6: What measure(s) is/are on the ground to let you know that your business objective has been achieved?

    A6: Simply put, the way of knowing if the business objective has been achieved is a reflection of the level of increase in Sales Revenue for the year. If your "Sales Revenue Growth" reaches 10%, then one of your business objectives for the year has been achieved.

    Q7: What steps do you have in place to review your progress in your bid to achieve your business objective?

    A7: A review of the progress made in achieving the business objective of an increase in Sales Revenue by 10% in the year will be done every quarter.

  • Comparing the success of your KPI

    Still using the "Sales Revenue Growth KPI". It is important to note that comparing your success should be done in relation to the success of your immediate competitors. 

    It is not enough to achieve a sales revenue growth of 10% and think that your business has been an undoubted success. You have to put your success story in a proper perspective. This often means comparing it to the success of other similar level businesses in your industry. 

    If for example, a huge percentage of businesses in your industry recorded a 30% growth in sales revenue for the year, and your business only recorded a 10% growth, while you achieved your initial business objective KPI, the truth is your business really underperformed for the year in question when compared to your competitors.

  • What are the most important KPIs that you should track?

    As you define the KPIs for your e-commerce business, it is important to keep track of five key indicators for success. By keeping track of these five KPIs, you should be able to determine the level of success of your business.

    1. Sales Growth: As seen in the defining KPI example above. The Sales Growth of your e-business forms a key measure for the success or otherwise of your business and should be properly monitored.

    1. Source of Income: This is another KPI that you should keep track of. It is important to know the source of income for your business. This will help you in taking the best decisions necessary to boost sales and revenue.

    1. The concentration of Revenue: Understanding what products are earning you the most revenue will help you in making very wise business decisions. For example, you could dedicate more funds to promoting the product(s) and further boosting sales. 

    1. Long-term Profitability: Your profit margin over an extended period of time is very important. As it forms the basis for your continued business operation. You need to keep track of your profit margins, to see if they are increasing, sustained, or dwindling.

    1. Working Capital: You will need capital to run your business and to be in operation. This is a KPI you should keep track of, as you need to be able to pay staff salaries, pay hosting fees, e-commerce platform monthly fees (if you are operating from an e-commerce platform) and every other miscellaneous expense that keeps your business operable on a day-to-day basis.
  • Other KPIs:

    While you can have a broader KPI like growth in sales revenue, you can also define specific KPIs which ultimately bring you a step closer to your business goal. Some of these KPIs include;

  • #1: Increase in targeted SEO traffic:

    Another KPI for your e-commerce business is an increase in your targeted SEO traffic. This KPI complements your efforts at achieving the business objective KPI of a 10% "Sales Revenue Growth" in the calendar year. 

    As traffic increases on your site, your leads and rate of conversion rises as well. With rising conversion rates, your sales revenue is more than likely to grow.

  • #2: Improved Conversion Rates:

    Just as you can have a KPI for improved targeted SEO traffic, you can also have a KPI for better conversion rates. 

    As mentioned before, with better conversion rates your business would take an upward trajectory in-terms of sales revenue, which is in line with your business objective.

  • #3: Repeat Customers:

    One of the goals of any e-commerce site lies in its ability to convert leads to customers. 

    However, retaining these customers and transforming them to "repeat customers" is one KPI that is worthy of attention. Repeat customers are the ones that sustain an e-commerce business and keep it going.

  • #4: Positive Reviews:

    You can also define KPI by the quantity and quality of customer reviews. Positive reviews from your customers will be great in promoting your product(s) and e-business. 

    With positive reviews, you have increased traffic, leads, conversion rates, and a better chance of reaching your business objectives.

  • #5: Longer Time On Site:

    The longer people stay on your e-commerce site, the better your chances of converting them to customers. In truth, most people spend less time on a site that they are not interested in. 

    This can also be a KPI that you can explore as this metric enables you to know the average length of time visitors spend on your site in relation to your average sales per day, for example.

  • #6: Less Bounce Rates:

    The average visitor to a site expects it to load within a 1 to 3 second timeframe. The longer your e-commerce site loads, the greater your bounce rate. This is the rate at which visitors move on to another website because of the long loading time. 

    You can define a KPI by the bounce rate with your objective being to achieve fewer bounce rates.

  •  #7: Easy Navigation & Good User Experience:

    When your e-commerce site offers easy navigation on an intuitive, interactive, and user-friendly platform, you are more than likely to improve the length of time visitors spend on your site. 

  • #8: Newsletter Subscription:

    You could also define a KPI by the frequency, quality, response, and a number of subscriptions to your digital newsletters. Newsletters are a great way of generating leads and repeat customers.

  • Saypr - Helping e-commerce Sites achieve their KPIs

    If you need a helping hand in achieving your KPIs, Saypr is the firm to trust. We create highly innovative digital solutions that will help to answer those seven quick-shot questions (mentioned earlier) in defining your KPIs and success factors. 

    Saypr uses sophisticated applications in measuring your KPI metrics and ensuring that your business objectives are met at the end of the day. 

    We offer friendly, reliable, and quick service delivery to ensure that your e-business remains a flourishing and highly successful one.

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