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3 KPI’s You Need to Monitor for eCommerce Website

“Knowledge is power.” Indeed! But unfortunately, many eCommerce businesses are not scaling their profit margin with their user data. They got rich data but poor information. What does that mean? Well, in simple words, they cannot see the profitable resources that this data brings in and possess the power to remodel their wrong arrangements into righteous directions to amplify their profits. In short, they can’t see the wood for the trees.

With the propulsion of digital analytics today, eCommerce companies are leveraging this golden opportunity. So, what are KPIs? Which KPIs should an eCommerce use to measure? 

Hey guys, here in this blog, we will unveil 3 KPIs that are crucial to eCommerce businesses. You can use them to apprise impactful improvements to your eCommerce business success.

With no further delay. Let’s jump in!

Key Performance Indicator What is a Key Performance Indicator (KPI)? Why is it important?

It is a metric against a principal objective that describes – how well a business or any individual is performing in their key roles and what are their positive or negative effects on other operations?

It’s like a signpost that tells you your actual position on the map. This roadmap helps you recognise the path that you might need to perceive to obtain your business aims. Why are KPIs so important in Ecommerce Business? “What gets measured gets improved” – a famous quote by Peter Drucker fits very well in this scenario. as KPIs do provide objectivity.

Okay, time to discuss the specific KPIs for eCommerce.


3 Essential KPIs to Track for Your Ecommerce Website

We believe that by now you know what KPIs are and how much power it holds for your business improvements? Let’s dig into 3 crucial KPIs for eCommerce website:

1. Web Traffic Conversion Rate | New Sign Up

Your conversion rate will reveal the truth on how your landing page & call to action are encouraging audiences towards them. Conversion rates are the percentage of website traffic taking some action on your website such as “Signing up”. This brings you, new customers, every month.

What’s a good conversion rate?

The average conversion rate for online buyers worldwide is within 2.89 and 3.31 percent. That means out of every 100 visitors, 2 or 3 will convert & sign up as a new user. To bring in more conversions, you may perform small tweaks to attract more new users to sign up.

Here’s what I mean: Say that you get 20k visits to your website and that 2% of visitors convert & become new users and buy a $100 product, you’ll earn $40k.

Now, imagine that if you can increase your website landing page conversion rate by nearly 0.5%, then you’ll make an additional $10,000! That way, the result is compounded.

(No. of website conversions ÷ No. of Leads (New customers)) x 100 = Your eCommerce website conversion rate

These were just the numbers but the real power of conversion rates is only unleashed whenever you track and keep improving every step of your marketing funnel.

2. Customer Retention or Customer Lifetime Value (CLV)

Have you ever measured how much a single customer is worth to your business success or failure? You can do that through CLV(Customer lifetime value) KPI. It is the average amount of ‘net profit’ that an individual consumer is predicted to contribute to a company over the entire timespan of their relationship.

So, now you know that determining on – how much a customer is worth to your business? Yes, it is daunting, but an essential task as it will help you understand the ROI, and depending on it you can strategise your future goals. Also, you get to know how much your company holds the power to retain a customer. 

Following stats will help you to know why CLV is crucial and extremely useful at the same time?

  • 5% rise in customer retention increases firm profits by 25-95%.
  • Gaining new customers is approximately 5 to 25x times more costly than retaining current ones.
  • Repeat consumers spend 67% more than new buyers.

Amazed? Want to calculate the lifetime value of your customers? Use this formula:


3.Total Income and Gross Profit Margin

While you run a business there are so many KPIs that need to be taken into consideration: Team building, Product Development, Marketing Funnel, Customer Service, etc., but there is this one important KPI that is most important & you should never lose sight of & that is ‘Profit’.

To measure the ‘gross profit margin’ you need to calculate 2 things:

  1. Total Income – the sum of money you earned through sales.
  2. Cost of goods sold (COGS) – sum amount of your total business costs that include employee salaries, manufacturing, sales & marketing, operations, etc.

Calculating your profit ->  

Then calculate your gross profit margin percentage using this formula:


A business cannot sustain if it eventually doesn’t make a ‘Profit’. If you hold a high gross profit margin, reinvest the earned money cleverly to grow your business further using KPIs. However, if you have a poor gross profit margin then it’s high time to think as you have cash flow problems that would ultimately stunt your business growth.


KPIs for eCommerce | Bottom Line

With KPIs, you’ll have a precise, detailed knowledge of your business with which you can now make informed & decisive arrangements. But don’t forget that the real power of KPIs always lies in your expertise to evaluate the data. It can help you trace out actionable insights to improve your business. 

With these 3 KPI, you can deliver long-term eCommerce business success by consistently bringing the right products and marketing activities that are working wonderfully. These actionable insights help you to work in directions that can attract a targeted audience (new sign-up), convert them ( increasing total sales) & retain them successfully (gross profit margin). Eventually, working towards one goal to harness insights to propel you forward.

So, which KPI are you most keen to come to knock with first? Let us know in the comments below!



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