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What are the website KPIs that really matter?


Starting your own business takes ambition, determination, and a lot of hard work. How do you make sure your time and effort pays off? Key performance indicators (KPIs) will put you in control of your destiny. What’s more, KPIs are easy to implement. Just follow our simple tips below.

What are KPIs anyway?

KPIs are a set of measures that tell you how your online shop is performing. You can set KPIs for any area of your business, from sales and marketing to customer service and manufacturing.

An example of a marketing KPI would be: the amount of online traffic visiting your website. If you set a goal to grow the traffic visiting your site by 5% a month, the KPI will help you see whether you are achieving your target (or exceeding or missing it).

Why do KPIs help?

KPIs help you prioritize your work, see where you are succeeding, and reveal where you need to place extra effort.

Staying on top of your numbers might seem like obvious advice, but busy entrepreneurs sometimes forget to put KPIs in place.

There are hundreds of KPIs you can put in place but it’s a good idea to start with a limited, focused number of measures. Thriving businesses concentrate on their vital metrics, pay close attention to them, and put tactics in place to respond to the things they learn.

What makes a KPI useful?

Useful KPIs have three key characteristics:

  • Relate to your business goals. Have you defined your income, profit, or growth targets? If so, KPIs will help provide milestones on the path to achieving your ambitions.

  • Easy to understand. If you can’t understand a KPI, it won’t be helpful to your business. The trick is to keep the data as simple as possible, so that you don’t feel overwhelmed by information.

  • Automated. By putting systems in place to automatically produce KPIs, you are more likely to observe and respond to them. If you have to use your calculator and perform lots of sums before you understand the metrics…you are likely to find excuses to avoid engaging with your KPIs.

How to get started

Every online shop is unique, and every business gets to define its own set of KPIs. Here are three questions to help you work out which KPIs are right for your business:

1. What are your revenue and gross profit targets?

Revenue is the amount of income your business generates. Gross profit is the amount of profit you make after you subtract the costs of manufacturing and selling your products.

It is a good idea to do your research and understand what healthy revenue and gross profit looks like for e-commerce businesses in your sector or industry.

Once you’ve set your revenue and gross profits targets, you can relate all your KPIs to these vital measures of business success.

2. What is the average order value (AOV) in your sector?

Average order value (AOV) means the average amount of money your customers spend per order. Once again, it’s a good idea to do some research and find out the average order values in businesses that are similar to yours. It might take some detective work to find this out, so try joining an online entrepreneurs forum. Knowing the ‘norms’ in your industry will help you set realistic AOV targets.

3. What size of audience do you need to reach?

When you start a business, you need to get creative and build a loyal tribe of customers. An important question to ask yourself is: how big is the audience I need to reach? Where are they? Who are they?

Once you have established your ideal customers, find out how they like to access information. What are their most-used social media platforms? Do they go to live events? What bloggers and influencers do they respond to?

Exploring these questions will help you set KPIs that build and grow your audience. For example, if your target customers watch a lot of YouTube, and you are going to use that channel to reach them, a good KPI would relate to ‘Total watch time’ - i.e. the total time viewers spend watching your videos.

Keep your KPIs SMART

When you’re ready to put your KPIs in place, it’s a good idea to use the SMART framework to make your KPIs powerful:

  • Specific: give every target a clear and specific measure of success, rather than a broad or vague goal
  • Measurable: decide how you are going to evaluate your progress against a goal (for example via weekly or monthly reports)
  • Attainable: be realistic about what you can achieve within any given time period. Better to exceed your goals than continually fall short.
  • Relevant: make sure all your KPIs relate to your broader business goals (and to your income and profit targets - see above)
  • Timely: give each KPI a timeframe (and make sure you check your progress within the timeframe)

Three KPIs to begin with

As a business owner, you get to decide the KPIs you want to put in place. But in the world of e-commerce, there are three metrics that we suggest you prioritize:

1. Website traffic

Website traffic measures the total number of visits to your e-commerce site in any given period of time (i.e. a day, month or year). To sell products or services online, you have to generate sufficient traffic to your site, so measuring this number is a vital step on your journey to running a thriving, sustainable online shop.

To help your brand attract traffic: make sure you’ve got a clear, short, and memorable domain name. For e-commerce businesses, the .shop domain name will tell your customers (at a single glance) that you are ready to sell to them. To learn more, check out these brilliant examples of .shop websites.

2. Conversion rate

Your conversion rate tells you about the percentage of people who visit your site and then go on to buy goods (or take other important steps, such as signing up for your newsletter). Why is this so important? Because it tells you about the online experience you are giving your customers. If you are attracting a lot of site visits but your conversion rate is low: you need to find out why people aren’t buying your products.

If you want to dig even deeper into this area, you can also set ‘Shopping cart abandonment rate’ KPIs. These will help you learn about whether people find it easy and enticing to shop on your site.

3. Gross profit margin

If you are starting your own business, then we can’t say this often enough: keep a close eye on your gross profit margin. This is the KPI that tells you whether you’re going to have money to grow your business over time, or whether you need to re-evaluate your business plan.

Every business and sector has its own definition of a healthy gross profit margin. Improving gross profit takes trial and error for every business. But you can only work to improve your margin if you understand it in the first place. To get started, there are lots of free online calculators that help you establish your gross profit margin.

KPIs might not be the most exciting part of running a business, but once you put them in place, you are in a great position to take your company from strength to strength.

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