Polish company Netwise S.A. joins the collana Group
Home / Polish company Netwise S.A. joins the collana Group The
Every online shop measures the company’s success against specific metrics such as turnover or profit. However, there are many more KPIs in e-commerce that online retailers need to keep an eye on. After all, by using the right metrics, you can better understand where the business stands and which measures can actually help you achieve your goals.
In this article, we’ll reveal which e-commerce metrics are particularly relevant, how to calculate them and how you can improve them. With the right figures, you’ll always have a firm grip on the helm of your business!
The 10 most important KPIs you should track for your online shop are: conversion rate, click-through rate, average order value, returns rate, customer lifetime value, customer acquisition costs, return on investment, customer retention rate, cart abandonment rate and bounce rate.
These are KPIs that measure the success, performance and customer satisfaction of your online shop. They can be divided into sales KPIs, which relate to turnover and orders; marketing KPIs; customer KPIs; and performance metrics for your online shop.
We’ll show you how to calculate and improve these.
For many businesses, conversion rate (CR) is the most important KPI in e-commerce. This metric shows you how many visitors to your online shop carry out a desired action – usually a purchase. It therefore measures how effectively your shop converts prospective customers into paying customers.
A low conversion rate means that, although many people visit your shop, only a few actually buy anything. A high conversion rate is a sign of your success as an online retailer.
| Formula | CR = (Number of conversions : Number of visitors) × 100 |
| Example | Your website had 4,000 visitors last month, 200 of whom made a purchase. CR = (200 : 4,000) x 100 = 5 % |
To optimise your conversion rate, you need to make the shopping process as simple and pleasant as possible for your customers.
Even small measures can improve the KPI. Incidentally, according to eCommerceDB in 2024 at an average of 3.3 %.
This KPI tracks how many people click on a link or an advert after seeing it. It therefore measures how effectively your online marketing captures your customers’ attention and whether your message encourages them to take action.
If an e-commerce business has a low CTR, it attracts little attention. A high KPI, on the other hand, indicates that your campaign is achieving its objective and attracting visitors to the website.
| Formula | CTR = (number of clicks : number of impressions) × 100 |
| Example | Your advert was displayed 8,000 times and 200 people clicked on it. CTR = (200 : 8,000) x 100 = 2.5 % |
To improve this e-commerce KPI, you need to tailor your adverts more effectively to your target audience and make them more appealing.
One Study by Wordstream shows that the industry average for this KPI is 2.69 % (Google Ads Search Network) and 0.51 % (Google Ads Display Network). A good figure lies between 2 and 3 %. The higher, the better.
AOV is a KPI that indicates the average value of a shopping basket in your online shop. In other words: how much do your customers spend on average? A high AOV indicates that shoppers are willing to spend more per order, which has a positive impact on profitability. A low value suggests that customers are making several small purchases.
| Formula | AOV = Total turnover : Number of orders |
| Example | Your shop generates €50,000 in turnover from 800 orders. AOV = 50,000 : 800 = €62.50 |
Improve the KPI by providing better incentives to encourage buyers to purchase more products.
However, what constitutes a good figure depends on your objectives, products and target audience.
Returns can result in high costs for a business and are an indicator of customer satisfaction. The return rate (RQ) allows you to track how many orders are returned. A high RQ means that many customers are dissatisfied – for example, with the fit or quality – or that their expectations have not been met. A low rate, on the other hand, means that your products are popular with customers.
| Formula | RQ = (Number of returns : Number of orders) × 100 |
| Example | Out of 3,000 orders a month, there are 250 returns. RQ = (250 : 3,000) x 100 = 8.3 % |
To improve your RQ, you should reduce the number of returns. To do this, you need to identify the reasons for returns and then eliminate them, or at least reduce them. The following measures are possible:
Return rates in e-commerce vary significantly depending on the sector. For example, the The University of Bamberg’s European Return-o-Meter (2022), stating that this stood at 64.30 % in the fashion and accessories sector, whilst it stood at 4.96 % in the home furnishings sector.
This KPI allows you to assess the long-term value of a customer to your shop. A high CLV indicates that your customers return regularly and generate significant revenue over time. A low value, on the other hand, means that they only make one-off purchases or buy infrequently.
Why is this important? Because the CLV helps you assess how much you can invest in customer acquisition, whether your investment in marketing activities is worthwhile, and which customers you should offer special benefits to.
| Formula | CLV = Average order value × Purchase frequency × Customer retention period |
| Example | For the past four years, a customer has been purchasing items with an average order value of €60. She places orders on your website around five times a year. CLV = 60 × 5 × 4 = €1,200 |
Measures that strengthen customer loyalty, increase the average order value or improve the customer retention rate help to boost this KPI.
Through a loyalty scheme, customers with a Probability of 62 % You’ll also spend more money on your website.
Acquiring new customers is a typical cost item for online retailers. The CAC breaks down these costs and shows what it actually costs you to attract a new customer to your online shop. This metric takes into account all marketing and sales expenditure required to convert visitors into buyers. A low CAC indicates that you are already operating efficiently. A high CAC, on the other hand, suggests that you need to optimise your customer acquisition strategy.
| Formula | CAC = Cost of customer acquisition : Number of new customers |
| Example | Last month, they spent €8,000 on sales and marketing and, as a result, gained 200 new customers. CAC = 8,000 : 200 = €40 |
To reduce your customer acquisition costs, you need to make your marketing and sales activities more efficient:
Always consider CAC in relation to CLV. A healthy business usually has a ratio of at least 3:1 (CLV:CAC). This means that, over the course of the relationship, a customer will bring in at least three times the cost of acquisition.
ROI is one of the most important key performance indicators across all sectors. It helps you assess whether your investments and expenditure are paying off. A high ROI indicates that your investments are paying off and that your shop is operating profitably. A low or even negative ROI, on the other hand, indicates that you are spending more than you are taking in.
| Formula | ROI = (Profit : Investment cost) x 100 |
| Example | You invest €5,000 in a marketing campaign, which generates revenue of €20,000. After deducting all costs, you are left with a profit of €7,500. ROI = (7,500 : 5,000) x 100 = 150 % This means that for every €1 you invest, you get €1.50 back. |
You can increase your ROI by making more efficient use of your investments whilst maximising your profits. The following approaches will help you to do this:
This KPI enables you to see how many customers remain loyal to your shop and keep coming back to buy from you. This is important because you can generally generate more revenue from regular customers. A high customer retention rate is desirable here, as it is also an indicator of customer satisfaction.
| Formula | Customer retention rate = (Customers at the end of the period – New customers during the period) : Customers at the start of the period × 100 |
| Example | At the start of the year, your shop had 1,000 customers. Over the course of the year, you gained 300 new customers, bringing your total customer base to 1,100 by the end of the year. Calculating the customer retention rate shows you what percentage of your original customer base has remained loyal. Customer retention rate = (1,100 – 300) : 1,000 x 100 = 80 % |
To improve this KPI, you should nurture your relationships with your existing customers and offer them incentives to make repeat purchases. Measures such as those recommended for CLV therefore work well here too. This allows you to improve two KPIs at once.
Investing in regular customers pays off, as Studies show. Whilst sales to new customers are successful in only 5–20 % of cases, the success rate for regular customers is 60–70 %.
In some cases, prospective customers add items to their basket but do not complete the purchase. It is precisely this bounce rate that the CAR measures. A high figure means that many potential buyers abandon their purchase – often due to obstacles in the checkout process. A low figure means that everything is fine and you have nothing to worry about.
| Formula | CAR = (1 – completed purchases : shopping baskets created) × 100 |
| Example | Last month, 1,000 shopping baskets were created in your shop. Of these, only 400 resulted in a completed purchase. The CAR shows how many people abandon their shopping baskets. CAR = (1 – 400 : 1,000) × 100 = 60 % |
As most problems occur during the checkout process, you should analyse this and remove any obstacles:
Did you know? In Germany, the average shopping basket abandonment rate stands at 65,7 %. In the price range between €1 and €30, it is as high as 77 %, as the uptain Half-Year Report 2024 revealed.
The bounce rate is seen as an indicator of whether your website is meeting visitors’ expectations. This KPI measures how many visitors leave the shop immediately after visiting it. Reasons for a high bounce rate could include visitors not finding what they were looking for, or technical or content-related barriers. The lower the figure, the better.
| Formula | BR = (number of bounces : total number of visitors) × 100 |
| Example | Last month, 5,000 people visited your online shop. 2,000 of them left the site straight away without viewing any other pages. BR = (2,000 : 5,000) x 100 = 40 % |
To achieve a low bounce rate, you should provide a technically sound, well-structured website with relevant content.
Use modern systems to measure metrics and KPIs. Otherwise, manually collecting data can lead to errors and high costs. Shops with different business models, for example, rely on ERP systems.
An ERP system consolidates data from various areas – from procurement and sales to warehousing and accounts – and provides you with the key performance indicators in real time. This means you can see how your business is performing at any time and react immediately if KPIs start to go off track.
With collana diva now You have real-time access to your company’s key e-commerce KPIs – from conversion rates and return rates right through to customer lifetime value. This allows you to see at a glance whether you are meeting your targets, where there is room for improvement, and which measures are worth implementing.
Thanks to automated reports, you’ll save time and be able to focus fully on what really matters: growing your business successfully. The only thing you need to do? Book a no-obligation consultation with our experts!
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Do you want to view your key performance indicators – from conversion rate to CLV – in real time and improve them in a targeted way? Together, we’ll set up KPI dashboards, automated reports and workflows in diva now that enable you to make clear decisions and make your growth measurable.