How to define KPIs is a question asked frequently on Google every month. Because if you are one of the people who would like to know the answer, understand that the first step is to distinguish KPIs from metrics. There is a difference between these two concepts, but one that many people end up confusing. Want to understand this now?
A metric is the parameter being measured. In e-commerce, there are several types. "Number of customers," "new customers," "returning customers," "page speed," "session duration," "sales rate," "click-through rate," Gross Merchandise Volume ( GMV ), search intent (used in SEO), etc., are all metrics widely used in e-commerce.
An online store can have, for example, a sales rate of 1% in the current month and 3% in the following month. She may also have 10% repeat customers now and 15% in the next few weeks. In short, metrics are meant to measure and their values vary over time.
A KPI, an English acronym for Key Performance Indicator, is what indicates a goal to be achieved. You set a KPI so you can achieve a goal. That is, if your sales rate is 1% today, then you might want to set a target of 5% for the next month to improve your performance.
To define a KPI you must write it in one sentence. For example, “Get 100 new customers in the month of April”. Soon after, you need to list the actions you will take in the period to achieve this goal and, of course, carry them out.
HOW TO DEFINE IMPORTANT KPIS IN E-COMMERCE
To define important KPIs for your e-commerce business, you should start with your Organizational Culture , which is composed of Mission, Vision, and Values. In this case, we will only work with the concept of Vision.
Just to remind you, the Vision is the objective that a company intends to achieve in a certain period. It should be stipulated using a phrase such as “Become the largest online tie store in Brazil by 2031”.
Let's say that to achieve this Vision you need to sell 1 million ties by the early 30s. That means you'll have to sell an average of 100 ties a year, 8 a month, 2 a week, 296 a day.
So, if you're only selling 4 ties a month today, you'll definitely want to improve your “sales rate” metric, as it's nowhere near your Vision. So, you will stipulate a KPI like “increase sales rate by 10% next month”. In the following months you will do the same, until you reach an acceptable percentage to beat your Vision, which is to sell 1 million ties in the next ten years.
Once this is done, you can include other metrics such as "sales by category", "sales by promotion", "recurring customers", "number of orders", "cart abandonment" and "bounce rate", among others, and create KPIs for each of them. Track them and share them with your employees so they can help you optimize your processes and achieve your Vision.
SHARED VISION AND KPIS
By sharing the Vision, metrics and important KPIs with your employees, they will be able to have many insights for improvements in your company. This will undoubtedly help your e-commerce to reach goals more easily.
To group metrics and KPIs in real time, I recommend software like Microsoft's Power BI . With it, you can centralize your e-commerce data, analyze everything more easily, correlate information, gain insights, and enjoy other benefits.
Through Power BI it is also possible to share visualization packages with your team, thus letting everyone know what is happening and what needs to be improved.
- As soon as you can click on “E-commerce sales” and learn how to set goals properly.
