How to Manage, Visualize KPIs for Ecommerce | Practical Ecommerce

This post will offer a framework for identifying, tracking, and visualizing key performance indicators. It applies to all company sizes — big and small.

Start by establishing the most important metrics for your business.

KPIs for Ecommerce

First, decide the reporting period. Weekly? Monthly? The answer usually depends on who is monitoring.

Senior management likely looks at the data once a month. Mid-level managers need it weekly, typically.  Marketing and operations personnel who are implementing campaigns may require the data daily or even hourly. The good news is that many business intelligence tools allow for custom timeframes. 

KPIs for ecommerce companies typically include:

Drilling Down

Once you’ve established your KPIs, set alerts and notifications for meaningful increases or decreases. Identifying problems quickly can prevent long-term damage. Drill down to the root cause, such as:

Identifying the cause of a problem KPI is not always easy. Often advanced analysis is required. For example, an increasing customer acquisition cost may have multiple reasons, such as new competitors, competing products, and a shift in consumer demand.

If purchase frequency is not increasing, consider a segmentation analysis for insights on marketing to specific consumer groups or for certain product categories.

Charts and graphs can help interpret your KPIs. The type of visualization depends on the purpose.

Other helpful visualization tools in my experience include funnels (for multiple-step conversions),  bubble charts (to understand high-performing products by, say, three metrics), and waterfall charts (to show how various components impact a metric, such as profit).

A waterfall chart can show how various components impact a metric, such as profit in this example. Source: Wikipedia.

This content was originally published here.

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