It’s safe to assume that long-term growth and profitability are the goals of any new business. But how do you measure your progress towards a goal that lasts without end? You create or identify smaller goals that are actually achievable on a regular basis. The identification of these goals or metrics helps turn a vague hope into a clear and realistic plan for the future. It also helps you identify potential mistakes in the past.
What Exactly Is A SMART KPI?
Businesses today rely on something called SMART KPIs to determine how well their business is doing at any given time in relation to any specific objective. KPI stands for Key Performance Indicator and SMART is an acronym for specific, measurable, achievable, relevant, and Time-Bound. There is no end to the potential SMART KPIs that exist and these KPIs are going to vary according to the nature of your business. For example, the KPIs for an eCommerce website are not going to be the same as the KPIs for a B2B wholesale company.
A KPI is often discussed as a type of goal for a business. However, there is a fine line between a strategic business goal and a KPI. A goal can be thought of as the desired outcome while the KPIs are what you use to determine if you are on track toward achieving that goal. Thus, you need to identify clear and reasonable business goals before you can find the KPIs that you need to track.
As you can imagine, the complexity and variety of KPIs can vary greatly. What is extremely important is that the KPI always remains SMART.
1. Specific.
What exactly do you plan to achieve with the assistance of this KPI? Is your goal to increase registration on your email lists to eventually boost sales? Or would you like to reduce the bounce rate from your landing pages in hopes of increasing lead conversions? These are very specific and contained goals that will ultimately tie in with larger strategic goals of the eCommerce business.
2. Measurable
A KPI isn’t exactly useful if it can’t be quantified and measured. You need to be able to measure some metric to determine if you are making progress towards your larger goals. Luckily, we have a lot of digital tools available that allow us to measure a variety of online metrics from how long a person views a page to how many people subscribed to your newsletter this week.
3. Achievable
Creating an unrealistic KPI isn’t going to help you or your business. It’s not a powerful motivating tool and it’s not going to trick the brain into working harder. A SMART KPI simply can’t be a smart choice if the specific result you’re aiming for is unachievable.
4. Relevant
Measuring random statistics and metrics might be fun to some, but it ultimately isn’t going to benefit the company if it’s not relevant. There are hundreds of KPIs that already very popular and many of them result in more wasted time than they are worth. A few important, relevant KPIs are all that you need to keep your business on the right track.
5. Time
Judging the success of an eCommerce website is difficult because there is no time limit. The business may be good today and it may suffer tomorrow. To measure and utilize helpful KPIs they need to be gathered within a pre-determined timeline. A KPI that doesn’t have a definite deadline isn’t going to produce useful results.
Use SMART KPIs To Improve Your eCommerce Website
eCommerce business owners have been isolating and utilizing SMART KPIs for many years now. Some of the most commonly used metrics include:
1. Site traffic and source of traffic
2. PPC traffic volume
3. Social media engagement
4. Email subscriptions
5. Returning/Unique visitors
6. Website conversion rate
7. Return on Advertising Spend (ROAS)
These five metrics form the foundation for some of the most important SMART KPIs you’ll want to monitor as an eCommerce business owner. Website traffic, the source of that traffic, and how much of that traffic is paid for are crucial for any online business. Of course, identifying the important KPIs is only the beginning. It’s then time to take what you’ve learned from these measurements and use that information to move closer to your strategic business goals.
Here at infinity22 we are eCommerce Accountants helping online entrepreneurs build global businesses. If you are interested in a free strategy session to see how your business could benefit from in-depth KPI development CLICK HERE
