How to Pick KPIs That Matter in a World with More (and More) Data

Can marketers and e-commerce pros have too much data?

By default, e-commerce generates a ton of ones and zeros. Specifically, there are now at least 2.5 quintillion bytes of data created every single day. (That’s 2.5 with 18 zeros after it.) That data is then funneled into bite-sized nibs that businesses love to look at, even though some of the information doesn’t provide insights they can act on.

To improve your e-commerce strategy, the challenge isn’t getting data—it’s identifying the insights that are relevant and will get you where you want to go.

Particularly in the last few years, businesses have positively binged on data. Like so many plates of turkey over Thanksgiving weekend, businesses have helped themselves to seconds, thirds and fourths of all the data available at their fingertips.

Not all that data is useful, however, which is why successful businesses rally behind KPIs (or key performance indicators). This saves them from overindulging and keeps the data they do look at more functional.

Picking the right KPIs is the first step. For e-commerce, here’s how it’s done.

Boon or Befuddlement?

There’s almost 16 times the volume of data produced annually today as the data produced ten years ago (in 2011). At first, this data explosion seems like a boon to marketers and sales teams trying to get a competitive edge.

Everyone has access to that data, though. Collecting more data doesn’t make any brand more competitive automatically, because everyone can do it. Only the brands that pick out the important data and then deciphered what it means come out ahead.

Really, it’s admirable that businesses have rallied behind data. They want to understand their customers better and constantly improve product performance.

No matter their good intentions, though, the overwhelming complexity of that data rolls over them like an angry stormfront.

Data analytics and AI-powered e-commerce solutions have been the market’s answer. Even so, many of those solutions come with their own pre-determined KPIs baked in.

For example, as soon as you create a Facebook page for your brand, the platform collects and organizes page activity into KPIs like “engagement” and “impressions.” These are core KPIs, it’s true, but e-commerce brands owe it to themselves to decide on their own KPIs that fuel the growth they want to see.

The Three Pillars of (Worthwhile) KPIs

Collecting data is vital, but measuring business performance requires comparing that data to the specific metrics you aim to improve.

When it comes to e-commerce, most of the KPIs that matter are those that help brands understand online buyer behavior. You need to know where your buyers come from and why. You need to see what they see and feel what they feel. You also need to understand what drives that click of the “buy” button.

KPIs around buyer behavior are organized by the type of insights they produce. Select the right data and metrics, and you gain insights into these three pillars of success:

1. Consumer awareness (and perception) of your brand

This includes quantitative measurements of how aware buyers are of your brand (as well as what their perception of your brand is). These insights are always relative to the competition because all numbers are meaningless without relativity.

2. Buyer journey

What is the process your buyers take from the first interaction with your brand down to the moment they click “buy?” At least one of your KPIs in e-commerce has to generate insights into this key pillar of analytics.

3. Buyer pressures

This does not refer to pressure you apply to a buyer, because shopping should not be done under duress. Instead, this refers to the pressures that drive consumers to look at your solution (for example, pain points and desires). At least one KPI needs to reflect how well your products alleviate these pressures.

Try identifying one KPI for each pillar. With KPIs, just like data, the trick is not to have more—it’s to gain the real insight you can act on from the smallest volume of numbers possible.

You can’t improve everything at once, so focus on KPIs that are connected directly to your profitability.

For example:

• You can build a customer lifetime value (CLV) metric on the “customer awareness” pillar. This metric directly reflects how the recognition (and relatability) of your brand translate into brand loyalty.
• Then, you can build a customer acquisition cost metric on the “buyer journey” pillar. That way, you know how well (or not) your buyer journey is shuffling consumers along based on how much you pay to move them from start to finish.
• Finally, you can build a conversion rate metric on the “buyer pressures” pillar. If you’re hitting the right notes with your target customers, they’ll see your product as a “must-have” to satisfy a need.

Cookie-Cutter KPIs Equal Cookie-Cutter Results

The above three examples of KPIs are metrics you could leverage, but the KPIs that each brand prioritizes will ultimately depend on what that brand’s goals are. Ask yourself:

• Is your brand just launching to e-commerce for the first time, or reinvesting in it after sales dropped or stagnated?
• Are you selling on your own e-commerce website or across multiple e-marketplaces?

Your answers to those questions point to KPIs that are more relevant (and expose some that aren’t). Pick the KPIs that reflect what you want to improve from each of the three pillars above.

To avoid cookie-cutter results, avoid the cookie-cutter KPIs.

There will be common KPIs between e-commerce brands, and of course, you’ll want to let platforms like Facebook and Amazon organize data into the KPIs they’ve identified for you.

Your focus should be on the KPIs that specifically meet your brand’s unique goals.

Meaningful KPIs won’t be found under the hood of your competitor’s car, either. You’ve travelled different roads and have different destinations. Think of your KPIs as the map that helps you get there.

Your KPIs might change over time. Your brand will have to be flexible to adjust just as fast as, say, consumer expectations change. (By the way, that’s pretty fast.)

What No One Seems to Mention

Organizations that meet and beat their goals don’t keep KPIs in the dark. They shout them from the rooftops so everyone on their team understands them in a deep way.

To get a team fully rallied behind KPIs, those organizations also train everyone on how to analyze and leverage the data themselves.

In-depth KPI training empowers a team to do more than shout “rah-rah” when leadership reports a positive gain in metrics. The team should be aware of the ebb and flow of those metrics on a regular basis. The team should also have the training to recognize trends (and know what they mean) before that next all-staff call.

Start training staff by sharing an article like this one. Then, with your KPIs selected, go through examples of what a change in one direction or the other could mean for each metric. Teach them what you learn as you learn it and give staff every opportunity to improve their own powers of analysis.

A Final Precaution

Right when you’ve built momentum, we tell you to put on the brakes. We promise it’s important.

Once you’ve selected your KPIs and trained the team, that moment is sort of like passing your driver’s exam. You passed the written test and the driving exam, and golly, they gave you a license!

Now, you have to fuel up with good data.

Making sure your data is good data (i.e., accurate) is important for all data, from marketing metrics to the accuracy of your product data. All of it must be good for your KPIs to mean anything at all.

“Good data” requires accuracy, completeness, and timely access. Just like the product information management (PIM) software we built, whatever solution you use to store and track your KPI data has to actively find errors, organize datasets, and store it in the cloud where everyone who needs it has access.

Ready to figure out your own KPIs? Start a list of the metrics that matter and share it with your colleagues today!