The 4 Most Common E-Commerce KPI Benchmarks: How to Use Them to Drive Your Business


The world of setting and measuring the perfect KPIs, or Key Performance Indicators, for your business is filled with calculations and benchmarks. After all, with any online business, everything can be measured and everything should be measured. From employee utility to Google Adwords management and Google Analytics, there are hundreds of tools for setting and measuring KPIs to see how your business is performing in each specific area.

A KPI is a unit of measurement that communicates how well an organization or individual performs against their principal objectives. At the end of the day (or quarter), if you really want to know how your e-commerce business is doing, then you must set and measure your e-commerce KPI benchmarks thoroughly. In this guide, we will give you a look under the hood at different types of KPIs, how to set them, and how to measure them.



Identifying Your KPIs

An interesting thing to note is that most e-commerce companies usually have large sets of data available or the ability to gather data. However, they might not know how to use it to their advantage. As in any business, knowledge is power, and the power of data in e-commerce selling is hugely impactful. Every business, no matter how big or small will have different sets of e-commerce KPI benchmarks that they will want to measure.

What really matters are the ones that you choose to focus on and the way you utilize them to reach your e-commerce business goals. One of the main points of KPIs is to teach you about your business so that you can recognize trends over time.

In selecting which KPI’s to focus on, you need to have a good understanding of your business and what your quarterly and long-term goals are. Here are a few examples to guide you along the way:

  • Shopping cart abandonment rate
  • Conversion rate
  • Cost of customer acquisition
  • Average order value

All of these KPIs are the metrics that matter most in e-commerce. To track these, most businesses will use a tool like Google Analytics that will provide insight into the data points of each of these KPIs. To keep things simple, we are going to break these down one-by-one to make sure you’re getting the most of this guide and can utilize everything you’ve learned as quickly as possible.

When the Cart is Abandoned, Not All Hope is Lost

Cart abandonment is a term used amongst e-commerce businesses to identify visitors that have placed items in their shopping cart but then abandon the cart altogether or left the website without actually purchasing anything. Obviously, this is a less than ideal situation for any e-commerce business; the reasons for why a visitor may do this can be varying.

From distractions to indecision, there are ways that we can track visitor’s actions on the site and figure out why the cart abandonment occurred and what we can do to prevent it from happening in the future.

Calculating the cart abandonment rate is pretty simple. All you need to do is divide the number of completed purchases by the number of shopping carts created. To turn the rate into a percentage, subtract your number from one, and then multiply it by one hundred. Once you have this data you can determine ways to decrease the rate of cart abandonment over time.

"Once you have all of these metrics in place, you will be able to understand  your e-commerce business better than ever and ultimately build a stronger  business that is driven by data derived from e-commerce KPI benchmarks and not  just intuition."  -Click to Tweet-


Measuring Your Conversion Rate Pays Off

If you want to know exactly how effective your website and landing pages are, then you will want to measure your conversion rate for your e-commerce business. Conversion rates can be measured on everything from calls-to-action to marketing emails. Additionally, knowing how to manage your PPC ads on Google Adwords is crucial.

The important thing here is that you want your website to lead customers through the sales channel effectively, and even though the site may look appealing on the surface, it may not be performing the way that it should. For example, if your home page is getting heavy amounts of traffic but you are not getting sales, or people are not contacting you, then something on the home page needs to be changed.

With A/B testing you can make changes to the homepage, or any page for that matter, and see if your conversions are increasing or decreasing. By tracking and measuring this e-commerce KPI benchmark, you will be able to generate more revenue for your e-commerce business and have a more user-friendly website for your customers. We recommend using these nine effective ways to increase your conversion rate for your e-commerce business.

Customer Acquisition Costs

In the world of e-commerce and online marketing, customer acquisition costs are commonly referred to as CAC. CAC is more or less, how much your e-commerce business is paying to acquire a customer through paid or organic marketing.

To reflect positive earnings, you have to change the way you are marketing, make changes to the website, or start offering more niche products. That’s why understanding this e-commerce KPI is so important. It will also allow you to see how many customers you have acquired in a given period of time and affect the way you determine and set your marketing budgets.

All in all, if you don’t know how much money you are spending on acquiring each customer, you will never know where your business is making money and losing money.

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The Average Order Value

Knowing the average value of every purchase order is crucial to your e-commerce business. Also known as AOV, this metric will allow you to see how much money each customer is spending on your site, which in return, can be used to measure against your CAC KPIs. In order to increase your AOV, while decreasing your CAC, you will need to measure each one and determine the profit margins for each customer.

To calculate your average order value in a given time frame, you will need to take your total revenue and divide it by the total number of orders. Once you’ve done this, you will have a metric for the average amount each customer is spending on the site. Compare this with your CAC metric and you will know exactly how much money you are making or losing off each customer, week after week.

Once you have all of these metrics in place, you will be able to understand your e-commerce business better than ever and ultimately build a stronger business that is driven by data derived from e-commerce KPI benchmarks and not just intuition.

Final Thoughts

While all of this may initially seem daunting, these steps are valuable when it comes to assessing your growth and progress as a company. The only way to be better is to actively use everything in your toolbox to get you there! Reflecting quarter by quarter will ensure that you are setting yourself up for success, and KPI’s are a great way to do so.

We wish you luck as your business continues to grow and thrive!

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