The main KPIs in e-commerce
One of the important advantages of marketing in e-commerce is the measurable result of investments in advertising and online store development. Measuring the main business indicators of the Internet project with magento advanced reports allows you to effectively use this data to optimize business processes. We have combined the most important key performance indicators in a diagram, which should know every e-commerce representative:
KPI (key performance indicator) – a system of indicators that allows you to measure and evaluate the effectiveness of activities aimed at achieving strategic and tactical goals of the company. KPIs are used to evaluate traffic by indicators not directly related to business objectives. They are used by marketers to set objectives and assess the achievement of business goals.
CPC (cost per click) – the amount that an advertiser pays to search engines and other Internet publishers in a single click on his advertising, which brought one user to his site. The pay-per-click advertising model is called PPC (Pay Per Click). CPC = expense/number of clicks.
CPM (cost per mille) – model of relations with the advertiser, which provides for a fixed payment for a thousand impressions of the ad. CPM = cost/number of displays x 1000
CTR (click through rate) – the ratio of the number of clicks on an ad to the number of impressions. It is measured as a percentage. CTR = number of clicks/number of impressions x 100%. Directly depends on the quality of setting up advertising campaigns and the relevance of the offer. Most advertisers seek to increase clickability because it has a direct impact on other KPIs (cost per click, profitability, revenue, etc.).
Traffic volume – the amount of traffic (clicks, visits) for a certain period of time. This indicator requires additional segmentation, as it reflects the number of attracted users, but does not show their quality.
Bounce rate – the percentage of users who viewed only one page while visiting the site. It allows estimating the quality of traffic and its sources.
Time on the site – time spent by the user on the site within one visit. Usually, the average is calculated for all users. It allows estimating traffic quality and quality of different sources. Most often, the higher this indicator is, the better. It is important to note that when calculating the duration of stay on the site, the time spent by visitors on the last page is not calculated, because there is no way to determine it.
Viewing depth – the average number of pages viewed within a single visit by a visitor to the site. The average is calculated for all users for the period. Usually, the higher the index, the better. But there are situations when the greater depth of viewing signals that users find it difficult to find the right one. Viewing depth = the number of times they see the information.
Conversion rate – the ratio of the number of visitors who have made a targeted action (filled out a form, made a purchase, subscribed to the newsletter, etc.) to the total number of visitors, expressed as a percentage. One of the main performance indicators. The higher the conversion rate, the better. It can be both synthetic (registration, viewing the target page, etc.) and business KPI (purchase). CR = number of target visits/total number of visits x 100%.
CPO (cost per order) – the cost of attracting one order. The ratio of marketing costs related to the implementation, to the number of orders, received. One of the most important indicators. It is critical for ROI. It is necessary to strive to reduce CPO in order to increase profitability. Often it affects the traffic volume, so it is important to find a balance between CPO and the required number of visitors. CPO = attraction cost/number of orders.
CPA (cost per action) – the cost of an effective website visitor action. It is also used to indicate the model of payment for Internet advertising, where only certain actions of users on the advertiser’s website are paid. The target action can be not only a purchase but also any other: registration, subscription, adding to the basket, etc. Usually, a decrease in CPA increases profitability. CPA = expense/number of targeted actions.
