Скачать или смотреть Ecom Data Cooler Talk episode 3: What is KPI (measure performance for data-driven growth)

What is KPI and why it matters for ecommerce?
KPI stands for Key Performance Indicator and is a set of metrics that measures business performance against its objectives and a measure of overall health. KPIs such as AOV and ARPU are important to understand the unit economics of your store's performance, and it's crucial to make sure the right data goes in the calculations of KPIs. Are you using the right data and tracking the right KPIs for your store?

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Full transcript:
What are KPIs?
KPI which stands for Key Performance Indicator is just a set of metrics that measures business performance against its goal and its overall health. Why is that important? As Peter Drucker, the father of modern business management once said, “you can’t improve what you don’t measure”.
It’s also very important to not focus on the wrong metrics, the vanity metrics, things that look good but are meaningless in the process..

Why do KPIs matter? Why should I care?
Without KPIs, a business can’t really know how well it’s doing or how terrible it is doing, it needs to find areas to improve and have accountability into its operations, so you can actually know what to focus on. In this hyper-competitive internet marketplace we have today, there are low barriers to entry and if something is worth doing, someone is probably doing it somewhere already. Every one of us is facing competition, and only by constantly measuring and improving upon your business operations and metrics, can you increase your chances of coming out on top. And it’s not just about tracking and measuring everything, it’s really about measuring the right business metrics and those ones that you focus on and know how to move them.

Why can KPIs do for me?
First up, you have AOV, AOPU, and ARPU. They stand for avg. order value, avg. order per user, and avg. revenue per user. This tells you how much on average each customer is spending on each order, and how much revenue they are bringing in. The higher the better; and it speaks to the foundational performance of your store at the unit economics level, and tell you how profitable you are per order and per user.
It’s very important to pay attention to how these metrics are calculated... it might skew the results higher and that can really affect your results.

Next up, we have Repurchase Rate, which we define as the number of repeat customers divided by overall customers in the same time period. This tells you how well you’re doing and how much business you are doing from repeat customers. It’s important because you’ve already spent all the money upfront to acquire a user so the more purchases you can induce from the same customers, usually the better off you will be.
Last but not least we have three metrics you might be less familiar with, and they are CLV, ADP, and ACR. CLV stands for customer lifetime value. As the name suggests, it tries to measure the potential spend over a customer’s lifetime with your store. CLV is important because, in breakeven analysis, you want to make sure you are accounting for the overall profitability or revenue from a user potentially, against your other expenses such as marketing expenses and overhead.
Next up is ADP, which is avg. days between purchases. Every customer will shop slightly differently and your store will be different from the other person’s store. So If you are still using static business rule timing on every single purchase, then you really should be looking at purchase cycles between each purchase, for your own customers and store. And the last one is ACR, acquisition to churn rate. This is sometimes known as the leaky bucket rate, and what it’s trying to tell you is is your new customers [acqusition] relative to your churning customers.

Ok, today we talked about the importance of tracking and reviewing your KPIs for business performance. Remember to always ask your analytics provider how they’re calculating their metrics and make sure that it is accurate. You can’t improve what you don’t measure so always be measuring. In this hyper-competitive marketplace that we have today, the best way to win is to understand your customers, and the best way to understand your customers is through data. If you need more detailed definitions about any of the metrics we covered today, follow this link below and we have it all listed.