Important KPIs in e-commerce: with these key figures, the online shop can be controlled successfully

Which factors are essential for the success of a shop in e-commerce and how does the retailer recognize its weak points? The performance of an online shop is measured by means of KPIs (key performance indicators). These metrics can be used to control e-commerce business and quantify strategic and operational targets.

What is a KPI?

KPI stands for key performance indicator and describes measures that can be used to determine the performance of company activities. They serve the management and controlling to monitor and evaluate an enterprise’s processes. In online trading, a better understanding of the success of the website can be developed. Which KPIs are relevant depends i.e. from distribution channel, industry and company size.

Which indicator set should a company select to make the success monitoring and control as efficient as possible? We present a selection of the most important KPIs in e-commerce .

Customer acquisition cost (CAC) – how do I calculate the customer acquisition costs?

Customer acquisition costs encompass all necessary costs to convince a customer to purchase a product or service. Every company wants to acquire customers. How can online retailers best win new customers? There are a lot of possibilities here. The most obvious way is probably the advertisement. However, not every website visitor attracted by advertising automatically becomes a customer. This is where the cost aspect comes into play. How much does the acquisition of a customer cost? Which marketing measures are worthwhile for the company? To check the effectiveness of an acquisition channel, the CAC can be calculated.

Calculation: Share the total costs associated with the acquisition by all new customers within a given time period.

The costs include product costs and research, marketing and access costs.

Customer lifetime value (CLV) – how are earnings per customer calculated?

Another KPI is the customer lifetime value (CLV). This represents the value of a customer over the entire period of its clientele for a company. How long and how much revenue is made with a specific customer? This includes all previous monetary transactions as well as potential revenues that could be generated in the future. If the online retailer knows this KPI, he can plan long-term sales precisely and thus acquire a decisive advantage over his competitors. Often, companies want to recoup their initial investments as quickly as possible, and then stop promotions that seem unprofitable at first glance. However, the CLV KPI is usually disregarded and potential customers, who profit from the online shop only on the second or third purchase, are lost.

Example calculation of customer lifetime value

Profit generated by a customer per year: 2 000 €
How long has the customer been active? 4 years
Acquisition costs of the customer: 3 000 €
Lifetime Value of the customer: 2 000 € x 4 years – 3 000 € = 5 000 €

Conversion rate - what does it mean and how can it be calculated

The relationship between visitors and buyers can be understood as conversion rate. The higher the conversion rate, the more website visitors become real customers (who buy something). The effect of certain measures with regard to a defined target can also be measured exactly by means of the conversion rate. For example, the shop owner can see how many clicks in percent have led to an action. A good conversion rate usually entails a staggering of sales. How can the conversion rate be optimized accordingly? An example of this is the appropriate choice of payment methods. Which payment methods are relevant in the respective industry, region and customer target group? If the customer does not offer his favorite payment methods at the checkout, the (potential) customer is likely to abandon the purchase and all previous efforts were in vain.

What is a unique visitor?

Unique visitors are the individually counted users of a website. The term expresses how many people have visited a website in a certain period of time. In contrast to the visits, a unique visitor is counted only once - even if he visited the website more often.

Average order value (AOV) – what significance does shopping cart have in e-commerce?

The average purchase value (shopping cart) is another important KPI to assess the impact of marketing campaigns and, if target deviations are identified, to take the right action in a timely manner.

Here it makes sense to compare the various marketing channels to identify the highest AOV acquisition channel. Which should then be targeted.

Total sales / number of orders = AOV

Product return rate in e-commerce

The company is only successful when the customer is satisfied with the order, the goods and the shipping. If this is not the case, then it comes to a revocation of the goods and a subsequent return.

Depending on the industry, returns are more or less significant. The fashion industry, especially, faces an extremely high return rate due to the accuracy of fit of garments. Returns per se will not be completely avoidable. However, the rate can be significantly reduced by successful trade marketing. To do this, the merchant must first locate the reasons for the returns. The product may e.g. be damaged, the customer did not like it or simply the wrong item was delivered. Which products are sent back very often? Does the packaging possibly not provide sufficient protection? Can the production take too long, which in turn leads to long delivery and waiting times?

Measuring metrics through KPI dashboards

Online merchants must be able to maintain an overview and react immediately to target deviations. Manual monitoring takes a lot of time and is usually confusing due to paperwork or Excel spreadsheets. KPI dashboards provide a good benchmarking, helping optimize the process.

What is a KPI dashboard and what advantages does it offer?

Basically, a KPI dashboard acts as a collection point, measuring and aggregating the company's key KPIs - both in B2B and B2C. Unlike traditional KPI methods, dashboards provide performance-relevant information in real-time and in visually appealing format. This has the advantage that successes and failures become more transparent and tangible for the company. Malformations can be discovered and corrected immediately. In addition, a KPI dashboard can be connected to all industry-standard services. This includes e.g. payment, data analysis and social media.