Tracking the performance of an online business is essential. It ensures that you're on the right path and doing what needs to be done to achieve the set goals.
However, measuring the performance of your business is easier said than done. A common mistake made by most businesses is that they pursue vanity metrics rather than the indicators that align with the vision of the company.
Therefore, it's important that you identify the right indicators that help you monitor your performance and see if your efforts are paying off.
Here are the nine KPIs you should track to see if you're on the right track:
Website traffic is one of the most commonly used indicators by businesses worldwide to assess their performance.
It helps you determine if your message reaches the right audience and is efficient enough to make them want to know more about you.
Traffic represents people who visit your site to consume the content published and explore the solutions you offer.
So, the indicator has a significant impact on your likelihood of generating revenue. Hence, it's important to expect an upward trend in traffic at all times.
2. New Visitors
Tracking the traffic to your website is an excellent indicator of your performance. However, it may not give you a clear picture if you don't keep an eye on the new visitors.
Your website traffic encompasses new and recurring visitors you were able to attract. So, just assessing traffic to measure your growth won't be enough.
You should monitor both indicators simultaneously to get a more holistic view of the traction you were able to generate.
Engagement is an important indicator that depicts the performance of the content you create and share with your target audience.
It shows how likely your audience is to interact with the content you share with them and consider the action you intend to drive through it.
Engagement helps you cultivate trust and foster thought leadership in your respective industry. It makes you stand out from your competition and paves the way for you to be a relatable brand.
Another important KPI you should be tracking to assess your performance is leads. The end goal of running an online business is to grow conversions, and your lead generation capability has a significant impact on that.
The frequency of quality leads generated shows how efficient you are at inspiring your potential customers to consider you as a viable solution among other alternatives.
It helps you gauge the effectiveness of your workflows and makes it possible for you to incorporate changes that ensure optimal performance.
5. Conversion Rate
The conversion rate is the most important indicator an online business should track. It represents a percentage of your visitors who purchased the solutions offered by your company.
At times, your website may have a large volume of traffic but a very low conversion rate. This means the majority of traffic that you attract is not relevant, and you need to work either on your message or your targeting strategy.
It's essential that you tailor your content marketing strategy as per the needs and preferences of the right audience in order to attract relevant visitors to your site. This will boost your conversion rate and make it easier for you to keep the needle moving.
Plus, your conversion rate also tells you about the performance of your marketing channels. So, it maximizes your efficiency and helps you promote your solutions through the right platforms to get the best results.
6. Customer Lifetime Value
Did you know that the cost of attracting new customers is 5x higher than retaining the ones you have?
Your relationship with your customers doesn't end as soon as they've purchased the solutions you offer. As a matter of fact, it starts from there.
That's why customer lifetime value is an important indicator that you should be tracking to assess the performance of your business.
Customer lifetime value represents the revenue a business generates from its customers throughout their stay with the company.
It's an important performance indicator because it helps you improve your retention and ensure a lasting relationship with your customers.
7. Customer Acquisition Cost
Customer acquisition cost, also known as CAC, encompasses the amount your business spends to acquire a new customer. It's an important KPI that you should track along with CLV in order to assess your performance in an overall better way.
CAC has a direct association with the scalability of your business. The higher your CAC, the more difficult it will be for you to scale your business.
Therefore, keeping an eye on the indicator may help you come up with viable strategies that significantly reduce your cost and help you utilize your resources to their fullest.
It also helps you determine the best-suited marketing channels for your business. The goal here is to promote your solutions through a channel that has a low customer acquisition cost but yields a high customer lifetime value.
8. Return on Investment
Return on investment is a key performance indicator that helps online businesses track the performance and gauge the effectiveness of their deployed strategies.
Running a business requires an investment. This investment encompasses your time, effort, and other resources, whether in a specific marketing campaign or in the company's entire workflow.
The indicator helps you see if your investment is paying off and helps you get results that meet your expectations.
9. Gross Profit
To calculate the gross profit of your business, you have to subtract the cost incurred in operations from the revenue you generated in a specific period of time.
This is a very important indicator that helps you determine the financial stability of your business and see if your efforts are paying off. It helps you improve your processes and ensure that you get the optimal yield.
The ultimate objective of running an online business is to make a decent profit. So, the indicator allows you to see how you're doing and improvise accordingly.
It's a Wrap
There you have it: the 9 KPIs you should track to assess the performance of your online business.
Whether you're an established venture or have just gotten started, to hack growth, it's important that you track the recommended indicators. The KPIs give you access to relevant insights that you need to devise fitting strategies that help you achieve the set goals.