Online marketing copy specialist, Usha Sliva, blogs about the relevance of web metrics and social media for business owners.

As an ecommerce store owner, there are plenty of ways you measure your store’s success -the decisive measurement is probably the amount of revenue it generates. Profits are certainly your best friend, but reaching them can take you through a variety of strategies, all which need to be defined and measured.

Enter in Key performance indicators (KPI). KPI’s form an integral part of your ecommerce success strategy, whether you recognize them or not. They’re described as web metrics used to help an online publisher define and measure progress toward achieving business, marketing, and communication goals.

In other words, they are those criteria you attach to your business in order for it to succeed. They translate complex measures into a simple indicator that allow you to assess the current situation and act quickly.

KPI’s are invaluable in helping your increase your website’s conversion rates. However for them to be effective they need to be actionable –they should report on the metrics that matter the most for your organization. So what should you monitor? Traffic, visitors, and revenue –yes. But in addition, you may have a lot more categories depending on what kind of website you have and what your business objectives are.

Let’s take as examples simple objectives that would apply to any ecommerce store:

In an ecommerce store, the goal is to get visitors to buy goods and services online. Examples of these stores include Amazon, Zappos, Shopflick, and Travelocity.

1. Conversion rates: There are multiple ways to calculate conversion rates, but the two most common are the ratio of visitors to orders and the ratio of people who start checkout to orders. Advertising and marketing campaigns are used to send visitors to a website and it’s these campaigns that will help you track and measure conversion rate data.
2. Average order value: This is the ratio of revenue to order and can depend on not only the products, but also the merchandizing, making it important to showcase more expensive products and encourage visitors to purchase them.
3. Customer loyalty: The ratio of new customers to old customers, where you want to increase both.
4. Visit value: This calculates the ratio of visits to revenue and is an indicator of the quality of traffic you receive.
5. Search engine referrals: If using paid search terms, then you want to add this to the mix. It’s the ratio of referrals from search engines like Google, Yahoo and Bing to the industry average.
6. Category Performance: How much is sold in each category? This is the ratio of products sold within a category to products sold across categories. Through it, you can calculate the total number of products sold and the average order quantity for each product.
7. Time to purchase value: How long does it take for a visitor to make a purchase? This the ratio of the time the visitor spends on each page to the time he makes a purchase on the page.

Tools to Define and Track Your KPIs

The major benefit of tracking your KPI’s is that it allows everyone in the organization to work toward common goals and eliminates tasks that are not generating results. A store is more likely to increase its conversion rates if its core objectives are clearly defined, which is what KPIs can do for you.

Web analytics can be a scary concept for most marketing managers, let alone ecommerce store owners who’ve donned the marketing mantle. Yet without a good web analytical tool, it can be hard to track and measure your key performing indicators. Google analytics for example, can help you measure how well your website in doing in terms of achieving its objectives; what changes are needed; and if those changes are having the desired effect.