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Jorge Zuñiga Blanco discusses KPIs and how to understand them in eCommerce

Jorge Zuñiga Blanco / Blog /

The truth is that on the KPIs (key performance indicators) for eCommerce, key indicators that tell you how you are doing things, there has already been a lot written. However, only in general terms and sometimes inaccessible for those in eCommerce. Jorge Zuñiga Blanco, an entrepreneur and eCommerce expert from Costa Rica, explains KPIs for eCommerce and how to distinguish them from metrics.

When we speak of metrics, it is just data. If we are talking about a website or any other tracking tool of social networks, we can refer to numbers we get from tools like Google Analytics. All that data is raw data. Some of it can be used as KPIs, but not all.

KPIs are generally the result of mathematical operations that take into account metrics. There are many tools available that can calculate them, but if you don’t have the budget or do not want to spend too much time trying to figure out which tool is best for you, you will need to create them by using spreadsheets.

KPIs are not necessary if you don’t have a strategy. KPIs are indicators that you have met your strategic objectives. If you don’t know what your goals are, it will be difficult to find the right eCommerce KPIs that can help you determine if your progress towards them is happening. Zuniga says that the common phenomenon of having too much information is quite common.

Although you may have a lot of data, you may not be able draw any conclusions because you don’t know what you want. First, define your strategy and your objectives. This can be about your business or specific actions or promotions.

It is not a strategy to say “I want more sales.” Sales are the outcome of many stages. This is why you need to act in each stage, making decisions that will lead to a certain level. You must have an indicator to tell you how each stage is going.

This is where KPIs really shine. They can be used to create a dashboard for your business. Just as a car doesn’t tell us how fast we are going, but also has many indicators and red lights that indicate if something is wrong. The car’s sensors capture data that informs the electronic brain that something is not working. The instrument panel turns on a red light to indicate that the car is responding.

Leads do not refer to the number of visitors to your website. They are those you have “fished” through social media, e-mail marketing or blogs. You can access all that data free of charge in Google Analytics, and put it in context to the amount you invested in your “fishing” efforts.

It is not important how many clicks an advertising action generates, but how many sales are made. KPI could be defined as the percentage result of dividing total campaign cost by sales attributable to the campaign. This will give you an idea of the profit (or Return on Investment, as it is commonly known) these campaigns produce and how much it costs to sell. This information is extremely useful for comparing different campaigns and when performing A/B testing.

It is essential that a substantial portion of users complete the sales process in order for sales to occur. You can use KPIs to measure the progress of the sales process at key points (the funnel-funnel of sales/conversions) to help you determine which areas of your eCommerce store are reaching the predetermined goals and where you need to act.

Conversion rate is simply the percentage of visits that result in sales. It provides information about the entire process. It is one of the most important KPIs in any analysis. It is not able to tell us where potential customers are abandoning their orders, even though it is extremely useful. It’s more helpful to break down the % conversions based on the origin of the visits. This will help us determine which channels are the most effective.

The bounce rate is an example of a metric that can be obtained directly from analytics. It can also be used as a KPI. Zuniga says that bounce rate is a measure of the number of visitors who abandon the homepage. It does not require any interaction from the user. This is an indicator of how effective this page is in retaining visitors. It also indicates whether the page’s ‘call-to-action’ is being effective.

The average purchase value is the sum of all purchases over a given period and the number buyers. If we add it to the cost per lead and advertising performance, it gives us information about profitability as well as whether we are meeting our sales goals per customer.

The important thing is that before launching to measure, you have to be clear about what you want to measure, why it is measured and, most importantly, what actions we are going to take based on what the indicators tell us.

Don’t forget that an isolated KPI doesn’t tell us much. It is important that we know how to relate to each other and observe the temporal evolution according to the corrective actions that we have taken in each case.