In the cutthroat world of e-commerce, stagnation means falling behind. How can you keep a pulse on your business and ensure you’re always progressing toward your goals?
Three words: key performance indicators.
Key performance indicators (KPIs) are metrics that help sellers track their progress toward specific business goals. In e-commerce, KPIs typically measure performance in business-critical areas like marketing, sales, and customer service.
For example, DTC brand Lovevery sells high-end toys individually, in bundles, and through several popular subscription models. Here are a few of the KPIs the company might track:
There are a ton of KPIs you can track. But which ones are the best for measuring your online store’s performance? Let’s dive in and take a closer look at some of the top e-commerce metrics.
Top E-commerce KPIs to Track
When you choose the right KPIs and consistently work on improving them, your online business can reach levels you only dreamed of.
Here’s how a solid set of metrics can help you grow.
For e-commerce merchants and sellers, pursuing growth without carefully selecting the right KPIs will be, at best, frustrating. At worst, it could cause you to move away from your goals.
Here’s a closer look at the top e-commerce KPIs for marketing, sales, and customer service — plus, why they matter and how to incorporate them into your growth plan.
This high-level metric tracks how many visits your e-commerce website or marketplace store gets over a given period of time. While it doesn’t mean much on its own, it’s a useful leading indicator. If traffic volume significantly increases or decreases, you’ll want to investigate why using a platform like Google Analytics, then take steps to increase your number of site visitors via search engine optimization (SEO) and other methods.
💡 Why Traffic Volume Matters
📈 Formula for Store Traffic Volume
Traffic Volume = Total Number of Visits in Selected Date Range
Your conversion rate is the percentage of visits to your store that result in sales. Note that most sellers use visits (or sessions) rather than unique visitors.
💡 Why Conversion Rate Matters
📈 Formula for Conversion Rate
Conversion Rate = Number of Sales / Number of Store Visits
An engaged social audience is a valuable asset for any retail business. Engagement measures the degree to which your audience interacts with your brand on social platforms.
💡 Why Social Media Engagement Matters
📈 Formula for Social Media Engagement
Social Engagement Rate = Number of Reactions+Shares+Comments / Number of Followers
You’ll also want to calculate this for each social media channel so you can see where your community is most engaged, and which channels may need some effort.
Email CTR is the percentage of email recipients who click on a link in your email. While this is more of a vanity metric, it can help you understand what resonates with your audience, as well as optimizing days or times to send messages.
💡 Why Email CTR Matters
📈 Formula for Email CTR
Email CTR = Number of Unique Clicks / Number of Delivered Emails
CAC reveals your total cost in sales and marketing expenses to get a new customer. This KPI is also called Cost Per Acquisition (CPA). You should have your overall CAC rate for your business, but you may also calculate it per channel as well.
💡 Why CAC Matters
📈 Formula for CAC
CAC = (Cost of Sales + Cost of Marketing) / Number of New Customers
RoAS measures how much revenue you earn for every dollar you spend on advertising. In other words, it shows how efficiently your ads convert eyeballs into sales. There is some debate on whether it’s preferred to measure RoAS or TACoS (Total Advertising Cost of Sales).
💡 Why ROAS Matters
📈 Formula for ROAS
ROAS = Revenue from Ads / Cost of Ads
Of course you’re tracking sales! But, like store traffic volume, we’ve included it in this list to make sure you don’t miss the forest for the trees. Changes in your total revenue can be a major signal of both challenges and opportunities.
💡 Why Sales Matter
📈 Formula for Total Sales
Total Sales = Sum of All Revenue Streams
The add to cart rate is the percentage of store visitors who add at least one item to their cart. This is, of course, a great indication of buyer intent, as well as how interesting your products are to consumers.
💡 Why Add to Cart Rate Matters
📈 Formula for Add to Cart Rate
Add to Cart Rate = Unique Visitors with Items in Cart / Unique Store Visitors
Shopping cart abandonment rate tells you the number of visitors who start an order, but don’t complete it. It captures any user who puts an item into their cart, but doesn’t purchase it. This is one of your greatest opportunities to optimize and convert more sales.
💡 Why Cart Abandonment Rate Matters
📈 Formula for Cart Abandonment Rate
Cart Abandonment Rate = (Transactions Completed – Carts with Items) / Transactions Completed
This metric is similar to cart abandonment rate, but comes further down in the customer journey. It only captures users who actually start the checkout process by entering information.
💡 Why Checkout Abandonment Rate Matters
📈 Formula for Checkout Abandonment Rate
Checkout Abandonment Rate = (Checkouts Completed – Checkouts Started) / Checkouts Completed
COGS reflects the direct expenses associated with buying or making a product. It’s the cost of everything in order to get a product ready to sell. It may include fixed costs like overhead and storage, but does not include shipping to customers, management salaries, sales, and marketing costs. You may also see it expressed as an overall percentage as well.
💡 Why COGS Matters
📈 Formula for COGS
COGS = Costs to Acquire or Manufacture Products
Gross profit margin tells you how much money you have left after accounting for COGS. It offers a high-level checkup on your e-commerce store’s financial health.
💡 Why GPM Matters
📈 Formula for GPM
Gross Profit Margin = (Revenue – COGS) / Revenue
NPM shows how much revenue you have left after accounting for COGS plus other expenses, such as operating expenses, taxes, interest, and one-time payments.
💡 Why NPM Matters
📈 Formula for NPM
Net Profit Margin = (Revenue – COGS – Operating and Other Expenses – Taxes – Interest) / Revenue
AOV tells you the average amount customers spend per order in your store.
💡 Why AOV Matters
📈 Formula for AOV
AOV = Revenue / Number of Orders
RPV reflects the average revenue generated from each visit to your store. It’s essentially a function of your AOV and conversion rate.
💡 Why RPV Matters
📈 Formula for RPV
RPV = Total Revenue / Number of Visits
RPV can also be calculated by multiplying your AOV by your conversion rate.
Stock levels tell you how much inventory you’ve got on hand. More complex models also reflect how much inventory is inbound at various stages of the supply chain.
💡 Why Inventory Level Matters
📈 Formula for Average Inventory
Average Inventory = (Beginning Stock + Ending Stock) / 2
While looking at your Average Inventory, you’ll also be interested in your Inventory-to-Sales Ratio. This formula conveys how much capital is invested in inventory compared to how much you make on the products’ sales. Your goal is to have a lower ratio (meaning efficient cash to inventory).
Inventory-to-Sales Ratio = Average Inventory / Net Sales
CSAT is a measure of how happy your customers are, and can include many different factors. It’s a high-level metric that incorporates a variety of customer experiences and interactions with your business.
💡 Why CSAT Matters
📈 Formula for CSAT
A sophisticated customer survey tool will incorporate many factors and even open-ended comment analysis to aggregate a CSAT score for you. If you need a manual measure, here’s an easy shortcut:
CSAT = Number of five-star reviews / Total reviews
NPS is another metric that can include many factors, but it usually hinges on customers’ responses to the key question, “How likely are you to recommend us to friends and colleagues?”
💡 Why NPS Matters
📈 Formula for NPS
Customers answer your NPS question on a scale of 1 – 10. Those who respond with 9 or 10 are promoters. Those who respond with 6 or below are detractors.
NPS = % Promoters – % Detractors
LTV calculates the average lifetime net profit from a single customer over the entire relationship. Because many factors influence LTV, it’s important to reassess this metric every couple of years.
💡 Why LTV Matters
📈 Formula for CLV
Customer Lifetime Value = (Average Transactions per Month * AOV * Average Gross Margin * Average Customer Lifespan in Months) / Number of Customers in Period
Retention is the percentage of customers who return to make repeat purchases with your business. You can almost count this as a “brand loyalty rate”.
💡 Why Customer Retention Matters
📈 Formula for Retention Rate
Customer Retention Rate = (Customers at End of Period – New Customers) / Customers at Beginning of Period
If you have subscribers or recurring sales, churn rate is a great KPI to measure how many customers have left your brand.
💡 Why Churn Rate Matters
📈 Formula for Churn Rate
Churn Rate = (Customers at Beginning of Period – Customers at End of Period) / Customers at Beginning of Period
Your return rate shows how often customers send items back to your store after receiving them. You want a low return rate, of course, but it is also a learning opportunity.
💡 Why Return Rate Matters
📈 Formula for Return Rate
Return Rate = Number of Returns / Total Fulfilled Orders
This is simply the volume of support requests submitted by customers via channels like email, chat, or marketplace messaging. If your business is growing, you can also measure the number of tickets as a percentage of completed orders (shown below) for a more accurate reflection of support needs.
💡 Why Ticket Volume Matters
📈 Formula for Service Ticket Rate
Customer Service Ticket Rate = Number of Service Tickets / Total Completed Orders
This KPI measures how long it takes, on average, to resolve each customer service ticket. This is an average metric. Some inquiries will be solved quickly whereas others might take longer. You’ll want to keep an eye on these long-term tickets as well.
💡 Why Resolution Time Matters
📈 Formula for ART
Average Resolution Time = Total Time to Resolve Tickets / Number of Tickets
This list is extensive. Different businesses will prioritize different KPIs. Chances are, you will track all of these metrics at different points in your brand’s journey. Don’t get overwhelmed trying to monitor (or fix) all of them at once.
When it comes to choosing the most important KPIs for your business, the best place to start is by setting your goals and then working backwards to identify which metrics will help you track your progress toward those goals.
We recommend keeping your goals SMART:
Researching industry benchmarks for each KPI can help you set realistic and helpful goals.
Resist the temptation of vanity metrics that make you feel good but don’t actually help you make decisions. If you’re making the effort to track a KPI, it should have a direct impact on how you run your business.
You’ve already got your hands full with running your store. Put team members in charge of tracking the specific KPIs relevant to their work, and invest in e-commerce analytics tools that automatically track your most crucial metrics for you.
If metrics are applicable to the company, make sure they’re publicly available. Allowing everyone to keep an eye on key metrics will help keep them front-of-mind when planning future initiatives.
Over time, you might find that your original goals and KPIs evolve. For example, if a warehouse rebuild makes meeting a KPI impossible, you’ll need to adjust your targets and strategy so you can continue to move forward and grow.
As you scale your e-commerce brand, the right KPIs will prove crucial to your continued success.
For the right mix of metrics, don’t overdo it. Focus on the core growth levers for your business and choose the top three to five KPIs that truly reflect your performance in each of those areas.
Remember, time invested in setting clear goals and tracking them is never wasted — but your decisions are only as good as the data they’re based on.
