A KPI (key performance indicator) is a parameter that is used as a measure of success.
The term comes from general business administration and is mostly used in the context of profitability figures, key figures for liquidity, customer relationship values, communication figures, etc. KPIs are individually determined and monitored by entrepreneurs depending on the corporate structure and respective priorities.
In order to measure the performance of an online shop, different KPIs can be defined using web analytics such as Google Analytics. The following is a description of the important parameters for e-commerce:
Shop operators can use the order value to estimate how much the marketing costs must be increased in order to increase the ROI and, hence, the profits. This KPI can be optimized through measures such as cross selling. However, the branch segment in which a shop operates as well as the margins for the various products should always be taken into account.
This KPI is based on the number of purchases divided by the total number of visits and then multiplied by 100. The conversion rate is given as a percentage. Benchmark comparisons are always important in order to find out which value is useful. The conversion rate can also be set in relation to the products in the shopping baskets, e.g., to determine if there are any usability problems with the ordering process.
A look at the bounce rate as a KPI tells marketers how high the chance of a potential customer becoming a buyer is. The lower the bounce rate, the higher is the probability that the visitor will lead to a conversion. However, it should be considered which pages should be used in the computation of the bounce rate or whether certain actions may lead to high bounce rates.
Analyzing the orders per visitor helps determine the average value of a visitor as a KPI. Based on this, measures can be used to raise the number of orders per visitor such as a simplification of payment options or cross selling offers.
The dwell time is one of the key parameters that is important for the success of online shops. The longer a visitor stays on the page, the more likely it is that he/she will buy. The dwell time is also an important KPI for conversion optimization and SEO.
This can be used to quickly tell if visitors leave the shop via typical and deliberate exit pages, e.g., after completing an order or if faulty subpages lead to the exit.
This KPI can be used to determine how interesting the offer of the online shop is, how effective the shop’s customer retention is, or if specific marketing measures are successful. However, other factors must also be taken into account in the evaluation of this KPI such as the price segment of the product range. The higher the number of returning visitors is, the higher is the likelihood that they will buy.
The more pages a visitor views, the more he/she contemplates on an offer and the more probable it is that he/she will purchase. It is hereby important to assess whether certain special offers may lead to a temporary reduction in the number of pages per visit.
The term KPI is also used in search engine optimization. Here, examples of KPIs include parameters such as link popularity, SEO traffic, and the click-through rate in SERPs. Thus, all the important performance measures in SEO can be regarded as KPIs.
Many KPIs for shop operators also coincide with key figures that are relevant for SEO. Once again, this clearly shows that SEO is a part of marketing and e-commerce and that the different disciplines should not only work next to each other but with other in order to be successful. For example, the dwell time or the bounce rate, as important ranking criteria, should also be taken into account in the search engine optimization.
This KPI is interpreted differently by SEO tools. Basically, the visibility provides clues on how strong a website is linked and how many good positions the website occupies based on relevant keywords. Normally, the top 100 placements of a website are sampled to determine the visibility. The value can, however, vary from one SEO tool to another since different indices and crawlers are used for the evaluation. Basically, the higher the visibility, the better.
For a long time, the page rank was one of the most important metrics for SEOs in assessing the value of a page. Today, however, the page rank is just one of the many values that can be considered when reviewing a page. It is particularly interesting if it goes down after an update or in cases where a website no longer has a page rank after it had been previously awarded a value. Thus, the page rank is more of a KPI indicator.
Keyword positions can be important KPIs for SEOs since the ranking is crucial for the traffic and, in e-commerce websites, also important for possible conversions.
Both values can be important KPIs for the assessment of a website since both indicators also influence the ranking.
The higher the bounce rate of a website is, the less interesting is its offer to visitors. The bounce rate is, therefore, an important KPI for SEO since it can be used to assess the success, e.g., of on-page measures.
Based on the link popularity, SEOs can determine how many incoming links or backlinks a website receives. The company Moz has, for instance, introduced the MozRank for this.
This KPI Domain Popularity has almost replaced the link popularity completely since it not only considers the number of backlinks but also their quality such as different C-class nets or how trustworthy the linked page is.
This is a very basic KPI that is solely based on the number of visitors and that can, in smaller segmentation, also shed light on the success of marketing measures or temporary actions for subpages.
Within the SEO scene, this KPI is a controversial issue since nobody can say for sure how high the influence of social signals is on a website’s ranking or value. However, mentions of strong Google+ accounts or Facebook pages can, of course, lead to increased traffic and thereby strengthen the page. In order to measure the social engagement, the principle of social return on investment can be applied.
As a KPI, organic search results are important as they show how present a website is with regard to relevant keywords.
This KPI can be used to determine the strength of the brand as well as the URL or brand name. Among others, direct hits include “direct type ins” or, depending on definition, organic search results with the brand name.
The return of investment can also be an important KPI in SEO. However, objectives and investments must be put into clear relations and precisely defined in advance.