🎉  Varos just raised $4.3m! Click here to find out more  🚀
Tracking key performance indicators is critical for ecommerce businesses of all sizes. Comparing your KPIs to industry benchmarks highlights your strengths and improvement areas. This helps you set goals, optimize strategies, and outperform competitors.
First, we must understand the difference between KPIs and benchmarks. KPIs are performance metrics - think revenue, traffic, and conversion rate. Ecommerce benchmarks are standards for comparison, with common ones being industry averages and metrics from top performers.
Together, KPIs and benchmarks add meaning to performance data. Comparing your KPIs to industry benchmarks shows where your ecommerce shop excels or needs work. Checking KPIs over time against internal benchmarks tracks progress.Â
Ecommerce managers can benchmark in a few ways:
In short, benchmarking gives KPIs more context. It transforms raw metrics into clear performance indicators. This visibility helps focus your strategy on priority improvement areas.
Ecommerce businesses can track a wide variety of KPI benchmarks to measure performance in key areas like sales, customer engagement, marketing effectiveness, and more. Here are some of the most useful ecommerce KPIs to monitor against industry benchmarks:
AOV measures the average dollar amount of each online order. It is a useful metric for estimating revenue, and you can use it to identify opportunities to increase purchase sizes. Top-performing ecommerce sites benchmark against competitors and aim to increase AOV by a set percentage each month.
Here, you’ll find the percentage of website visitors that take a desired action. That could be anything from making a purchase to signing up for a newsletter. Average ecommerce conversion rates range from 2-3%, but top performers strive for 5% or higher. Improving the conversion rate has a direct impact on revenue.
CLV calculates the total revenue generated from a customer throughout the entire relationship. High CLV indicates loyalty and repeat business. It’s best to monitor CLV trends over time and per customer segment, with the goal being to maximize the value of each customer.
Measures the average cost of acquiring a new customer. Lower CAC indicates more efficient marketing. Compare your CAC against industry averages for your business model and aim to reduce it through targeted campaigns.
CVRs benchmark the percentage of users that “convert” during key processes like email signups, checkout, newsletter subscriptions, etc. Each stage of the conversion funnel should be optimized to minimize drop-offs.
Net profit margin essentially gives you a snapshot of bottom-line profitability. While maximizing gross revenue is important, net profit is key for long-term viability. Benchmark against competitors in your ecommerce niche and aim for year-over-year gains.
Calculates the percentage of visitors that leave your site after viewing only one page. A high bounce rate indicates the content is ineffective at engaging users. Leading ecommerce sites benchmark against a bounce rate KPI of less than 40%.
Any time a visitor comes to your online store, it counts as website traffic. The goal is to benchmark traffic channels like organic search vs. paid ads. It will illuminate where these leads are coming from, and you can set goals to increase total site traffic month-over-month. Higher traffic enables more conversions.
The percentage of users who add items to their cart but don't complete the purchase. Identify and fix obstacles in the checkout process to reduce abandonment.
Benchmarking provides valuable insights, but acting on them is key to driving growth. Here are tips for transforming KPI insights into performance improvements:
Carefully analyze where your KPIs diverge most significantly from your benchmarks. Examine performance over time to spot downward trends. Identify one or two priority areas where addressing benchmark gaps can lead to quick wins and the biggest impact. You may need to have stakeholders align on the most critical areas to focus improvement efforts for maximum results.
For each priority area, develop a plan to address the performance gap revealed by benchmarking. This may involve adjusting strategy, campaigns, website design, product selection, promotions, and more. Set specific objectives you aim to achieve. Secure any necessary resources and budgets. Then, execute changes to optimize the priority area based on your data-driven insights.
Keep measuring your KPIs on an ongoing basis and comparing them against updated benchmarks. Ensure that the changes positively impact performance. Be prepared to tweak your approach based on the latest data. Also, be on the lookout for new priority areas that emerge over time. Continuous monitoring ensures you respond to new opportunities.
As you improve performance in priority areas, use the latest benchmark data to set ambitious new goals. If you've closed the gap with an industry benchmark, exceed it. Outpace competitor improvements. Set specific metric targets based on your benchmarks to keep stretching performance.Â
The insights from benchmarking ecommerce KPIs equip you to make smart, data-driven decisions. But you have to be prepared to turn those insights into meaningful action to actually move the needle on performance. Continual improvement based on the latest benchmark comparisons will propel your ecommerce business forward.
In summary, benchmarking supercharges your ecommerce KPI analysis with deeper performance insights. Comparing your metrics to well-chosen industry, competitor, and internal benchmarks turns data points into actionable opportunities.
Just having performance data isn't enough. Ecommerce leaders constantly analyze KPIs against meaningful benchmarks. This helps them identify improvements, optimize strategies, set targets, and track progress.
However, finding the right ecommerce benchmarks requires thorough research and statistics. Custom benchmarks tailored to your business model and goals give you a competitive edge.Â
Our platform at Varos leverages millions of data points and proprietary algorithms to uncover the benchmarks that will boost your ecommerce growth. Let us show you how benchmarking can help you use data to outperform.
‍
About the Author
Sarah Clowes-WalkerÂ
Head of Marketing at Varos
