e-commerce KPI to Track ROI and Conversion Rates

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There are 10 mandatory KPIs used to track performance, return on investment and conversion rates for ecommerce websites. Known as eCommerce KPI - these ratios and percentages are used in addition to traditional conversion rates and return on investment calculations. These KPI need to be trended over time ideally month after month, but can be as granular as weekly measurements. Once there is a year's worth of data, seasonal fluctuations will become apparent, as well as site performance measurement indicators. When analyzing performance and overall ecommerce health, these KPI need to be compared against the same time last year. This takes seasonality out of the equation and factors for sustainability.

  1. AVERAGE ORDER VALUE (AOV) - total revenue divided by orders
  2. BUYING SESSIONS - visitor sessions with a purchase divided by total sessions
  3. NEW VS RETURNING VISITOR % - new visitors divided by all unique visitors
  4. RATIO NEW to RETURNING VISITORS - new visitors divided by returning visitors
  5. CUSTOMER RETENTION RATE - previous unique buyers divided by previous unique visitors
  6. ORDER CONVERSION RATE - orders divided by visitors
  7. BUYER CONVERSION RATE - buyers divided by visitors
  8. SHOPPING CART ABANDONMENT RATE - percent of sessions where item was added to cart but the order was not completed
  9. ORDERS PER SESSION - orders divided by sessions
  10. ITEMS PER ORDER - items divided by orders

The ratios and measurements for these KPI vary from site to site, and are highly dependent on the industry and online business model. The ideal way to set these markers, is to either select a time range where the site was performing at optimal capacity, measure the ecommerce KPI and use the ratios as targets. A secondary option is to back into these ecommerce KPI ratios. This can be achieved by setting the ideal or needed web revenue, identify all the segments that make up traffic (such as direct load, search engines, email marketing, etc), identify the conversion rates for each traffic segment, project the volume of traffic it would take to generate the desired revenue based off of known conversion rates, and then work out each Targeted eCommerce KPI based on this ideal traffic projection. When making projections, it is better to sandbag results, rather than being overtly optimistic. Set realistic goals, that can then be matched under known conversion rates. Thus the focus shifts to increasing traffic for the known segments, while potentially adding new tactics to the online marketing mix.

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