How’s your online business doing?
Have you achieved the goals related to sales and leads?
To find out the answers, you have to look into the factors to identify your progress toward sales, marketing, and other goals.
And some of those factors are likely to be conversion rate, sales, revenue, cart abandonment rate, etc.
In marketing languages, such factors which are used to monitor and evaluate the progress of any business is called KPIs.
KPIs or Key Performance Indicators are a measure of performance over time for a certain goal. KPIs provide targets for teams to achieve, a milestone to determine progress, and insights that help make an informed decision.
Simply put, it is used to measure the progress of a company’s business goals.
In this blog, we will walk through some key KPIs for your e-commerce business.
The conversion rate is the percentage of visits to our website that ends up becoming sales. It is calculated by dividing the number of total conversions by the number of total visits.
Remember that conversion will depend on the objective of our website, so it varies. It can be from the download of an ebook or product catalog, a budget request, through a registration (lead), the subscription to our newsletter or the purchase of a product.
If we use Google Analytics to calculate this metric, we must bear in mind that it calculates it automatically based on the number of sessions, which is not the same as visits (since a user can make several visits to the web and generate with each session different). If we want it to show it to us concerning the number of users, we must configure it personally.
To get the most out of this powerful indicator, it is necessary to break down and analyze the pages that generate the most sales and the most effective traffic channels (SEO, SEM, social media campaigns, etc.).
Life Time Value:
The Life Time Value (LTV), or customer lifetime value, is the estimate of the revenue that is expected to be obtained per customer during its life cycle.
Or, put another way, it is the total benefit that the client will generate for us throughout our business relationship. To calculate the LTV we must multiply the average ticket by the relationship time and the number of purchases made.
The number of sales:
Sales are the total number of transactions made in a period.
We can measure this indicator by day, week, or month, and even by hours if we have a large volume of sales. The interesting thing is to see its evolution over time and detect seasonality in the sales of your online store to get the most out of digital marketing actions.
The ROI (Return of Investment, or return on investment, in Spanish), reveals how efficient the marketing actions carried out have been since it measures how much the investment has brought us.
The formula for this indicator is:
[ (Profit Obtained – Total Investment) / Total Investment ] x 100% = ROI
Thanks to this KPI we can evaluate the effectiveness of our marketing strategies and find out where we should invest more to obtain better performance. If we carry out campaigns on social networks or Google Ads, it is essential to analyze this indicator for each of the campaigns carried out.
Cart Abandonment Rate:
Abandonments refer to the percentage of visits (or visitors) that start a sales process but do not finish it. This is one of the main KPIs for e-commerce since it gives us very valuable information about the effectiveness of our purchase process.
A very high cart abandonment rate is usually related to one of these problems:
- The forms are too long
- Existence of information or content that the user dislikes in the purchase process (such as additional expenses) or that limits the possibility of finalizing the purchase (such as the hated “we do not ship to the Canary Islands”).
- The existence of technical failures at the programming level, make it impossible for the user to finalize the purchase from certain devices or browsers.
- Web usability problems that make it difficult for the user to make a purchase quickly and comfortably (important buttons not visible, font with inappropriate sizes, etc.).
We must analyze in which part of the process a higher volume of dropouts occurs, detect the problem and take action to solve it.
With this ratio, we refer to economically quantified sales.
Thanks to this indicator we can see how much each of the specific digital marketing channels or actions has brought us, and assess whether the investment we have made in a campaign has been profitable or not.
As with the number of sales, we must value seasonality and encourage its increase by setting goals regularly.
The acquisition cost or cost per lead is the amount that we need to invest to get a client. To calculate it, we must divide the acquisition cost by the total number of clients obtained.
The interesting thing is to analyze this value by traffic source (SEO, Google Ads campaigns, Facebook Ads campaigns, email marketing…) and see how much it costs us to get a lead in each one. This will help us optimize the budget allocated to each channel.
Ranked Keywords That Drive Conversions:
When we talk about ranking keywords, we refer to the search terms associated with our product or market that are bringing traffic to the website and generating conversions.
The organic channel is one of the most powerful sources of traffic and has the best conversion rate since if we position ourselves for the right words, users will see our website in the first results of Google when they are looking for our products or services.
With this powerful SEO KPI, we will detect which are the words that are generating income and those business keywords for which we are not correctly positioned. This way, we can begin to take action on it.
We recommend that you analyze at least, and monthly, the keywords for which your business is displayed and, above all, the words that generate conversions and try to stay in the best possible positions.
Measuring and controlling the traffic that reaches our online store is vital if we want to increase the conversions of our business.
From Google Analytics we can see the traffic that reaches the web from each channel and see its evolution over time. We can also analyze the quality of this traffic through the conversion rate per channel.