Key Performance indicators, or KPIs, help an organization to measure the progress towards their goal. So, KPIs allow you to adjust timely, where a when needed. In this blog post we will explain you which KPIs are important and how you can use them to achieve your goals.
Now, what are KPIs exactly?
KPIs are measurable elements of your online store that provide insight into the success of your online store. They enable you to take decisions, not on intuition, but based on facts. To be able to really do something with these KPIs, it is important that there is a basis of support from within the organization for these KPIs. For example, if you suggest a KPI for the number of visitors to your online store, you must be certain that also your colleagues are convinced that the KPIs can be achieved. After all, their jobs should lead to achieve the KPIs. Initially this may lead to reluctance--not everyone likes to be judged on hard figures--but success is also better measurable because of this, which has a positive impact on motivation.
Make KPIs SMART
In order to really make things happen with KPIs, they have to be included in your SMART goals. This is an abbreviation for Specific, Measurable, Attainable, Realistic, Timely. These terms are briefly explained hereafter.
- Specific - a goal has to be specific. In order to do that, you need to answer the six W-questions: Who is involved? What do you want to achieve? Where do you want to achieve this? When do you want to achieve this? Which restrictions are there? Why is this goal so important?
- Measurable -this is where your KPIs are of importance. Which criteria are you measuring to measure the progress towards your final goal? Ask questions as 'How much..?' and 'How do I know when the goal is achieved?'.
- Attainable -Describe what is necessary to reach a goal. What tasks need to be performed? What attitude is needed? What skills are needed? What budget is needed?
- Realistic -in order to reach a goal, you should be able to achieve this and have the will to achieve it. Try to be ambitious here. That way, you will find more motivation to reach the goal.
- Timely -every goal needs a deadline in which the goal is to be achieved. Without this deadline, there is no sense of urgency.
Four clusters for your KPIs
KPIs are included in the SMART objectives, so basically, a summary of the main statistics. Many of these statistics can easily be measured with Google Analytics. We use four clusters for the overview:
- Acquisition -these are the visits to your online store via different channels, such as organic (non-paid search results) and paid (for example Google AdWords).
- Behavior -these are the actions carried out in your online store. For example, a click-through to an application form or a placement of the product in the shopping cart. These are also called micro-conversions.
- Activation -these are the ultimate conversions in your online store, such as a completed form or a purchase in your online store.
- Loyalty -this is not as easy to measure in Google Analytics (at least not in the free version of Google Analytics). Luckily there are other tools for this, like the apps by LoyaltyLion and Prooflink.
The most important KPIs for your online store
We now know what KPIs are and we know what SMART goals are. We also know how KPIs play a part in SMART goals. Therefore, it is now important to determine which KPIs are important to your online store. To keep a good overview, I have divided the KPIs into the same four clusters as mentioned before.
The two most important KPIs are in all likelihood the number of products sold and the resulting turnover.
- Singular visitors vs. returning visitors
- Average time on the website
- Number of page views per visit
- Traffic source
- Daily period of visits
- Amount of paid traffic
- Visit to the blog
- Brand or display advertising click-through rates
- Performances affiliate network
- Shopping cart abandonment rate
- Newsletter subscriptions
- Chat sessions
- Social media followers
- Number and quality of (product) reviews
- Number of orders
- Average order amount
- Total turnover
- Main product groups
- Conversion ratio
- Conversion rate over a longer period of time
- New customers vs. returning customers
- Average order amount new customers vs. returning customers
- Number of 'refer-a-friend' requests
- Number of reviews written about you
How do I measure the most important KPIs for my online store?
Most KPIs you can measure with Google Analytics. If you are not using this already, I advise you to start with our white paper 'Getting started with Google Analytics (for online retailers)' that can be downloaded below.
To give you an idea of the possibilities, I'll show you a KPI per cluster and how you can measure it.
Acquisition: Measure traffic source
With Google Analytics, you have an insight into the most important traffic sources for your online store.
Behavior: Measure time on page
Do you want to know if your pages are being read thoroughly by your visitors? The time they take to read a page is an indication of this. This doesn't mean that a short time visiting a page is always a bad thing. For example, a page with your contact details could have a short visit time, because your customers can quickly find a phone number that they want to call.
Activation: number of orders
In Google Analytics, you first have to set your goals. For most online stores, a purchase in the online store is one of these goals. Once this is set up, you can--after some time--see how often someone has placed a purchase through Conversions > Overview > Achieved goals.
Loyalty: New customers vs. returning customers
Under Behavior > New vs. returning visitors, you can view the value of first time visitors of your online store and returning visitors.
If you have any questions regarding the use of Google Analytics, please download our Google Analytics manual.
Now, what should I do with this data?
Now that you know which KPIs you can use, it is important to choose the most important ones. This can be different for each online store owner, so choose the KPIs that you can measure easily and that are of value to you personally.
With these KPIs, you can then build a dashboard, where, per month, the desired results are compared with the actual results.
In addition, describe your SMART goals, so you can also describe what you will do to obtain the desired results. You can find more info on how to formulate SMART objectives, including examples, on: About Money.
More info on KPI models can be found at Optimizesmart.com.
One more thing..
SEOshop wouldn't be SEOshop, if we didn't had a few apps that can help you measure your KPIs! Therefore, take a look at the following apps: