8 Shopify KPIs That You Should Track
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8 Shopify KPIs That You Should Track

12 December 2023 20 March ~ 6 min read 2081 views
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Claspo Blog 8 Shopify KPIs That You Should Track

Using built-in analytics functionality or an external service, you can track Shopify KPIs to measure the effectiveness of your business. Using these indicators is easy — the main challenge is choosing the right metrics and integrating them into an interconnected system. 

In this article, we'll explain what KPIs are, why they're so important, and what indicators you need to monitor your business performance. 

What are KPIs

KPIs on Shopify and other eCommerce platforms are key performance indicators. These quantitative metrics allow you to objectively assess the success of a company, brand, product, or even an individual employee. 

KPIs display progress toward the company's strategic goals. Their benchmark values can be set based on expert opinion, competitors' performance, industry standards, or market averages. 

KPIs often include financial metrics such as revenue, profitability, and cost-effectiveness. But you should not limit yourself to these indicators. To make analytics as productive as possible, it is also worth evaluating internal efficiency — the cost of a conversion or a lead. Indicators related to customer loyalty (engagement, lifetime value, level of satisfaction, etc.) are also of great importance. 

Why KPIs are so important

By tracking KPIs on Shopify, you can understand where your company is in a certain s.c. frame. The various KPIs can be visualized as:

  1. A progress bar, which shows the business' movement towards a goal;
  2. A bar chart showing the company's position against competitors;
  3. A line graph showing the dynamics of the company's development in comparison with industry standards. 

Shopify_KPIs

KPIs, as well as charts based on them, give an insight into the current state of the business. They allow you to identify strengths and weaknesses and are used to make data-driven decisions that help a company respond quickly to changes in the market environment. 

We can draw this analogy to understand why key performance indicators are so important: Analytics is the basis of business development, and KPIs are individual bricks.

Shopify KPIs to track

Our review will omit financial metrics like gross profit, margin, and profits. These are part of any company's standard accounting reports. Instead, we’ll focus on marketing KPIs on Shopify that will help you optimize your business.

1. Conversion rate

Сonversion rate is the share of website visitors who performed a targeted action — bought a product, ordered a service, subscribed to newsletters, etc. An indicator below the average market level means you should reconsider your marketing policy and/or conduct a site audit to diagnose problems. 

Optimizing conversion rates is one of the main goals of Claspo clients, which is easily achieved with our attractive and innovative widgets. Their use allowed Grade to increase its conversion rate by 2 times and DeepStateMap by 3.5 times.

Elevate Your Shopify Store with Claspo Widgets

2. Traffic volume

The more visitors you have, the better. Even if people don't complete their purchases, they still remember your store and its products. That's why many companies put traffic growth for the next reporting period as one of the main KPIs in Shopify. 

However, you should categorize your traffic for effective analysis. A division by source will show you how productive it is to attract additional visitors (remember that in contextual advertising, you pay for clicks). And dividing by demographic and socio-economic characteristics will help you understand whether you are attracting your target audience.

3. Ratio of mobile to desktop traffic

It is important for businesses to know which devices are used to visit online stores. This allows for choosing the best UX/UI development prospect. 

However, such a KPI requires careful interpretation. People may use computers simply because your website is not optimized for smartphones. You should also compare the share of mobile traffic with average market indicators — if you lag behind, you should refine the design of your web resource, taking into account up-to-date trends.

4. Customer lifetime value

Customer lifetime value is the total revenue or profit a customer brings over time. This KPI in Shopify comprises three elements — average purchase amount, order frequency, and engagement duration. 

You can use different marketing tools to increase each of them individually, improving financial results and reducing customer acquisition costs. Lifetime value is often used to group customers — it lets you know which of them are worth retaining through discounts, bonuses, and other product promotions. 

5. Shopping cart abandonment rate

According to Hotjar, 70% of online store visitors add items to their cart but don't complete their purchases. If your rate is higher, it's worth focusing on conversion optimization. Specify detailed shipping and payment terms, offer free shipping from a certain purchase amount, simplify the order process, and introduce a quick authorization feature. 

Another good idea is to add a Claspo widget that appears when visitors try to leave the site. This solution, backed by your winning final offer, can revive over 10% of abandoned carts.

Widget_1

6. Customer acquisition cost

This is the average marketing expenditure per new customer. This figure should be compared to industry standards, which range from tens to thousands of dollars per customer. On the one hand, high costs indicate the need to optimize marketing strategy. On the other hand, they suggest retaining your current customer base is easier than investing in expanding it. 

7. Churn rate

Churn rate is the number of customers who abandoned cooperation with the company during the reporting period. This metric should be analyzed in dynamics. It will help to identify problems in advertising campaigns, UI updates, and pricing and assortment policies. If people stop cooperating with you, it remains only to determine what has changed recently. At the same time, you need to track internal and external changes, i.e., market events.

8. Pricing policy

This term refers to the ratio of the cost of a product in your store to the market indicators. You can compare it to the minimum, maximum, and average values or choose specific competitors depending on your current goals. It's also effective to tie pricing to other KPIs on Shopify. For example, if your prices are higher than market prices, but sales are growing steadily, this indicates effective marketing.

Key Performance Indicator Templates

We have mentioned already that KPIs should be used in interconnected systems. The exact set of these metrics will depend on the goals set by the business. To demonstrate this, here are some examples of KPI templates on Shopify.

1. Sales increase

Goal: Increase sales by 5% in the next quarter. 

What metrics to track:

  • traffic volume
  • conversion rate
  • customer lifetime value

Multiply the traffic level by the conversion rate to get the number of purchases. From the lifetime value of a customer, you can take the average sale, although the frequency of purchases and duration of the relationship will also matter. To increase sales, you can:

  1. Perform SEO optimization of the website to get more organic traffic. 
  2. Optimize the UX/UI, removing barriers to conversion. 
  3. Run promotions on cross-selling and up-selling mechanics.

Using Claspo pop-ups is a proven way to draw attention to your promotions and motivate site visitors to take advantage of them. They can be located on different pages, appear at the right time, and be shown to selected audience segments.

2. Conversion Optimization

Goal: Reduce cart abandonment by 20%. 

What metrics to track:

  • Conversion rates on a page-by-page or product-by-product basis
  • pricing policy compared to competitors and market averages
  • Lifetime value of specific customer groups 

Understanding what makes customers interrupt the shopping process is of crucial importance. Though you will never reduce the number of abandoned baskets to zero, a certain percentage of customers can be brought back. 

One proven method is offering free shipping, as its cost causes 48% of shoppers to abandon their carts. You can notify site visitors about free shipping using the Claspo widget. Place it on the homepage or checkout page and clear their doubts before purchasing.

Widgets_free_shipping

3. Increase profitability

Goal: Increase average product margins by 2% in the next month.

What metrics to track:

  • customer acquisition cost
  • pricing policy over time and compared to sales
  • percentage of abandoned baskets by product group

Customer acquisition costs directly affect expenditures and, through them, the company's profit. By studying the pricing policy, you can determine the elasticity of demand — it is quite possible that the business will not lose customers if the cost of the product increases. And the study of abandoned baskets will allow you to understand which products need additional promotion to increase sales efficiency. 

Shopify's KPIs can be affected to improve profitability as follows:

  1. Select alternative advertising channels.
  2. Optimize prices based on the elasticity of demand for specific products. 
  3. Use non-price bonuses to reduce shopping cart abandonment.

Conclusions

The built-in analytics system allows you to calculate most of Shopify's KPIs without additional tools. Thanks to this, even small online stores created with the help of this CMS can compete with the giants in their industries. Knowing your company's current situation, you can choose the best development path, increasing business efficiency and avoiding common mistakes. 

If you are looking for a simple and effective tool to improve your company's KPIs, try Claspo widgets! You can create them in our intuitive builder without designers and add them to your website without programmers. Claspo offers a free subscription and a variety of pricing plans to fit businesses of any scale!

Shopify Reinvented: Elevate Your Shop with Claspo Widgets!

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