April 21, 2020
KPIs, also known as Key Performance Indicators, are ways to track how well a business is doing. Tracking KPIs will help you to determine whether your business is hitting the performance targets that have been set forth. This can range from a variety of aspects such as measuring profit, sales growth and employee retention.
KPIs are the result of your annual goals. So, before determining which KPIs are best for your company, you will need to set some business goals. Deciding what direction you inevitably want your company to take will help to best determine what the company prioritizes. This will then shape your profit and growth plans.
While metrics are used to measure things, KPIs are a method of monitoring the most important aspects of your business. Therefore, KPIs can be created as a combination of different metrics. For example, website traffic and number of sales, result in a conversion rate KPI.
Using KPIs to their full potential means that you need to best interpret the data and determine actions from these insights that will help you to improve your business.
Effective KPIs should consist of the following 4 characteristics:
Ultimately, you want to know what KPIs are the most effective for your Shopify-based business. Looking at sessions (also known as traffic), conversion rate and average order value are the best ways to determine how your monthly sales are being affected. Simply put, if one or more of these factors increase, so too will your sales. The same is true of the reverse, decreasing one or more will also cause sales to decline.