Ever heard of KPIs? If you did your store analytics, you probably did.

Without these key performance indicators (it’s what KPIs stand for!) you’re flying blind—making decisions based on guesswork rather than solid data.

By understanding and acting on them, however—you can turn insights into actions that drive sales, boost customer satisfaction, and set your business on a path to success. 

Let’s break down why these numbers matter and how they can transform your eCommerce strategy.

What are KPIs in eCommerce?

You know what they say:

KPIs is the heartbeat of your online store.

A doctor checks vital signs to assess health. From your store’s perspective – these metrics tell you whether your business is thriving or needs attention. 

Key Performance Indicators are exactly what they sound like.

They are metrics (mostly numbers) that indicate how well or how poorly your store is performing.

Whether it’s boosting sales, fine-tuning your marketing, or leveling up your customer service, KPIs give you the insights you need to make smart, data-driven decisions that push your business forward.

Why you should pay attention to Ecommerce KPIs?

There’s a business maxim usually called Goodhart’s Law that (roughly) states:

“When a metric becomes a target, it stops being a good metric.”

A good example of Goodhart’s Law is often depicted with the Cobra Effect story—an event in India where a bounty was offered for dead cobras, leading people to breed cobras for the reward, ultimately increasing the cobra population.

In this context, trying to address any KPI in isolation will lead to poor business outcomes. And it’s one of the most common instincts of inexperienced store owners.

An Example of Bad Use of KPIs in Ecommerce

Think of this:

Let’s say you only focus on increasing website traffic (an important eCommerce KPI). You can publish a whole bunch of content about trending topics that will attract visitors quickly.

While you might see a surge in traffic, there’s little chance they’ll convert into customers, because you’re not attracting the right kind of visitors to your site. So, you just wasted a lot of resources to get traffic that produces no revenue.

How to Use KPIs For Better Ecommerce Performance

Faced with the scenarios above—and considering your business as a whole, you’d do the following:

• First, do market research to identify areas where content marketing could provide value to your target audience.
• Then create relevant, engaging content that not only attracts visitors but also aligns with your offerings and is highly likely to convert.
• Finally, you might mix in some advertising campaigns to reach market segments that content marketing isn’t ideal for.

That way, you’re getting more traffic, that traffic is converting into customers, and you generate real business growth instead of growing a single metric.

Sales Metrics

Sales-related metrics are the ultimate scoreboard. These are the KPIs that directly translate to revenue, so they’re always going to be the ones you most closely scrutinize.

Total Sales

If they’re flat or dropping, it’s time to dig deeper and figure out what’s holding you back.

There’s a lot of context that needs to go into sales such as seasonality, special offers, etc. But it’s fair to say that you always want sales to be going up.

Churn Rate

Churn rate is the percentage of customers who stop doing business with you over a certain period.

In the context of D2C brands, churn rate typically refers to the percentage of customers who stop purchasing from the brand over a specific period.

However, if you have a subscription component to your business, the churn rate is much more important and plays a key role. Factors such as product quality, poor service, and competitors entering the space can all influence the churn rate.

if your churn rate is growing, it usually merits a deep dive into the

Cost of Goods Sold (COGS)

The COGS is a crucial metric that is often overlooked. It refers to the direct costs associated with producing the goods sold by your store.

If the COGS is too high, it means your profit margins are too thin and you might need to reassess your pricing or sourcing strategies.

A slow but consistent rise in the COGS is a problem in the making. It might hint at supply chain issues that need to be addressed, or it may be a sign that you need to renegotiate contracts with suppliers.

Customer Acquisition Cost (CAC)

Customer Acquisition Cost (CAC) is another critical KPI. It’s the cost of acquiring a new customer, and it includes all the marketing and sales expenses related to it.

A rising CAC can mean your marketing isn’t effective or the competition is increasing.

If your CAC gets too high, it may cost more to get a new customer than what they spend on your products, and you’d be operating at a loss. Thus, keeping an eye on CAC and finding ways to reduce it is key for a sustainable eCommerce business.

Average Order Value (AOV)

The Average Order Value (AOV) is the average amount of money each customer spends per transaction. It offers insights into customer behavior and spending patterns.

A higher AOV is generally better as it means you’re extracting more value from each transaction. However, this isn’t always the case.

If AOV is decreasing, you may need to consider strategies such as upselling or bundling products to increase it. Truly understanding and leveraging this KPI can lead to increased profitability for your eCommerce business.

Shopping Cart Abandonment Rate

The Shopping Cart Abandonment Rate measures the percentage of shoppers who add products to their online shopping cart but leave before making a purchase.

A high rate may suggest issues with the checkout process or the pricing. Identifying and addressing these issues could significantly reduce this rate, leading to increased sales.

Customer Lifetime Value (LTV)

Customer Lifetime Value (LTV) is a prediction of the net profit attributed to the entire future relationship with a customer.

This metric helps you understand how much you can reasonably spend to acquire a new customer or retain an existing one.

If your LTV is declining, it might suggest that customers aren’t staying with your business for as long as they previously did, signaling the need to improve customer retention strategies.

Customer Retention Rate

Closely tied to the LTV, this measures the percentage of customers you manage to retain over a given period.

If your retention rate decreases, it may indicate dissatisfaction among your customers, which requires immediate attention.

You may need to work on improving customer service, offering loyalty programs, or finding other ways to increase customer satisfaction and loyalty. Remember, a happy customer is a repeat customer.

Gross Profit

The Gross Profit metric captures the total revenue that remains after deducting the direct costs associated with producing and delivering your products.

This is what most people think about when discussing a business’s financial health. After all, what’s more important than staying in the black?

Without question, growing gross profit and gross profit margins should always be in your crosshairs. There’s no situation in which you should want less profit for a sustained business.

Return On Ad Spend (ROAS)

Return on Ad Spend (ROAS) is your go-to metric for figuring out whether your advertising dollars are pulling their weight. There are a lot of caveats to how this is measured, but you should always have a good understanding of your basic ROAS.

A strong ROAS means your ads are hitting the mark and driving profitable sales, while a low ROAS signals it’s time to tweak your targeting, creative, or even reconsider your ad channels. Don’t just set it and forget it—monitor this closely so you can optimize your campaigns and ensure every dollar spent is bringing you closer to your goals.

Site Marketing Metrics

Site-related metrics focus on the performance and user interaction of your eCommerce website. While they’re not directly related to revenue, these metrics can provide valuable insights into user experience and site effectiveness.

Store Traffic

Store Traffic is the total number of visitors your eCommerce website receives. That’s it.

But traffic isn’t just about counting heads; it’s about understanding who’s walking through your virtual doors and why.

Sure, the total number of visitors gives you a snapshot, but the real gold lies in the details. You could see a dip in traffic and still keep your revenue steady—or even grow it—if you’re trimming the fat and losing visitors who were never going to buy anyway.

Bounce Rate

The Bounce Rate measures the percentage of visitors who navigate away from your site after viewing only one page.

If visitors are landing on your page and then bailing immediately, that’s a red flag (unless you want them to).

To turn this around, you need to optimize your user experience, making sure visitors find exactly what they’re looking for and have a reason to click through to the rest of your site.

Every entry point to your site should have a very obvious way to get visitors to the next step toward making a purchase decision.

New vs. Returning Visitors

New vs. Returning Visitors is like your eCommerce store’s loyalty gauge. It tells you who’s checking you out for the first time and who’s coming back for more.

If you’re seeing a flood of new visitors but not enough repeat customers, it’s a sign that you might need to work on your customer retention strategies—whether that’s through better follow-up, loyalty programs, or simply offering a more engaging experience.

The sweet spot? A solid mix of both. You want a steady stream of new visitors while also building a loyal base that keeps coming back.

Newsletter Subscribers

We’re going to assume you’re sending out regular newsletters and collecting subscribers.

If not, we need to talk, right now.

If your subscriber list is growing, it’s a strong signal that your content is hitting the mark and that people see value in what you’re offering. But don’t just focus on the growth; pay attention to engagement too.

Are your subscribers opening your emails, clicking on links, and taking action? If not, it might be time to re-evaluate your content strategy and make sure you’re delivering what they want.

Conversion Rate

If you can only track one KPI for your eCommerce store, make it the conversion rate. Conversion rate is simply the percentage of visitors that turn into paying customers.

A dropping conversion rate should always prompt you to dig deeper into the causes and invest in CRO if it’s necessary.

Revenue Per User Session

Revenue per user session tells you how much money you’re making every time someone visits your site. It’s a quick snapshot of how effective your site is at converting visitors into paying customers.

You can find the revenue per user session metric on most analytics platforms like Google Analytics. In Google Analytics, head to the “Ecommerce” section under “Conversions.”

New Customer Revenue

New Customer Revenue is all about measuring the dollars coming in from first-time buyers.

This metric gives you a clear picture of how well your efforts to attract new customers are paying off. If this number is climbing, your marketing is doing its job. But if it’s stagnant or dropping, it’s time to reassess your approach.

Remember, these new customers are the lifeblood of future growth, so nurturing them from the start is key to long-term success.

Product Review Quality

Product Review Quality gauges the feedback your products are receiving from customers. This aspect can greatly influence potential customers’ purchasing decisions.

If your reviews are predominantly positive, it shows that customers are satisfied with your product quality. Conversely, negative reviews may indicate a need to improve your product or address customer concerns.

But don’t feel the need to pad your numbers. Some negative reviews are unavoidable and they can genuinely help you improve your offering.

Chat Sessions

Every time someone starts a chat, it’s a sign that they’re interested enough in your product or service to reach out directly.

On one hand, more chat sessions are a good sign that you’re engaging your would-be customers.

But here’s the kicker: it’s not just about quantity.

Pay attention to what’s driving these chats. Are customers struggling with the checkout process? Are they unsure about product details? Use this metric to identify friction points on your site and turn those conversations into opportunities to close the sale.

What To Do With eCommerce KPIs?

Understanding your KPIs is just the first step; the real power comes from what you do with them.

KPIs are not just data points—they’re actionable insights that should drive your decision-making process.

Use them to identify strengths and weaknesses, spot trends, and make informed adjustments to your strategy. Whether it’s tweaking your marketing campaigns, optimizing your website for a better user experience, or refining your product offerings, KPIs give you the direction you need to make impactful changes.

Don’t just track your KPIs—act on them.

Every KPI is an insight waiting to be extracted and it does you absolutely no good on its own. Tracking KPIs is a complete waste of time unless you plan to put them to good use.