Vocab for Marketers: What is a KPI?

Definition 

KPI stands for “key performance indicator” and is a metric commonly used in business reporting. It describes a set of quantifiable, measurable values businesses use to evaluate and assess specific objectives and overall long-term performance.

How eCommerce Brands Use KPIs 

For eCommerce brands, KPIs fall under certain categories depending on the business goals at hand. Here are a few examples of these different categories and what they measure: 

Customer KPIs measure your business relationship with your customers, which can include customer retention, average response time, customer satisfaction rate, and customer churn.

Financial KPIs measure the company’s profitability or financial health, including profit/contribution margins, return on investment, monthly recurring revenue, revenue growth, and more.

Operational KPIs measure how satisfied employees are working for their company, which can include employee turnover rate, employee satisfaction rate, time to hire, cost per hire, and others.

Marketing KPIs measure how marketing objectives are performing within specific channels. Metrics can include marketing qualified leads, monthly website traffic, conversion rate, social media engagement, and others. 

Sales KPIs measure the performance and effectiveness of a sales team’s efforts, including win rate, lead conversion rate, average deal size, customer acquisition cost, and others.

Additional Resources

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