Key Performance Indicators, also known as KPI are quantifiable measurements that help decision makers define and measure progress toward organizational goals.An example is checkout abandonment, when shoppers exit before completing an order. This KPI should be monitored closely by all e-commerce businesses. If it is typically 10 percent and suddenly goes to 15 percent, that may be an indicator that something is broken on your website, like your SSL, your shipping estimator, or your credit card authorization. By monitoring that KPI daily, you will mitigate the risk of losing business if something breaks.
KPIs vary drastically from one industry to the next. Examples may include load factor and fuel consumption per passenger for airlines and dropped call percentage and customer acquisition cost for wireless carriers. For this reason, KPIs are defined by business users and may be unique to each business.
For strategic and operational planning, KPIs are also used for SMART goals — Specific, Measurable, Achievable, Realistic, Time-bound. As an example, you may want to set a goal to improve your checkout abandonment from 10 to 7 percent in six months. Or, you may want to set customer service goals to reduce the average number of open cases from 10 to 5 in three months.
I'd like to talk more about the KPI by taking Amazon as the example.
Amazon is such a world famous name to all people having access to internet.Amazon.com, Inc. is an American multinational electronic commerce company with headquarters in Seattle, Washington, United States. It is the world's largest online retailer. Amazon.com started as an online bookstore, but soon diversified, selling DVDs, CDs, MP3 downloads, software, video games, electronics, apparel, furniture, food, toys, and jewelry. The company also produces consumer electronics—notably the Amazon Kindle e-book reader and the Kindle Fire tablet computer—and is a major provider of cloud computing services.
To be successful, e-commerce sites should be able to convert visitors into buyers and get them to come back for repeat purchases. For these reasons, e-commerce KPIs should be centered on online conversion and retention strategies. Some of the most popular KPIs within commerce sites include average selling price, visit value, new vs. repeat customer breakdown, average selling price by new vs. repeat customers, and conversion rates. In the e-commerce industry, there are roughly 21 main KPI's to monitor.
Total orders per day, week, month
Customer service open cases
Pay-per-click cost per acquisition
Pay-per-click total conversions
Facebook “talking about this” and new Likes
Twitter retweets and new followers
Amazon ratings, response and order turnaround time, and open cases
Email open, click, and conversion rates
Referral sources: percent from search, direct, email, pay-per-click, other
Among the indicators above, the Facebook and Twitter staffs are more like social media KPI, while the others are all the digital KPI's. And these are all what Amazon cares a lot. But as a thumb in this industry, Amazon has its own secretary in KPI's. The perfect order percentage and late shipment rate help guarantee the quality of both the products and the service, which later bring Amazon the high satisfaction of consumers and by the end the great success in this industry.
http://www.knotice.com/whitepapers/forrester-adapting-measurement/pdf/Adapting_Measurement_For_Digital_Intelligence.pdf
http://practicalanalytics.wordpress.com/2011/08/03/big-data-analytics-and-kpis-in-e-commerce-and-retail-industry/
http://www.digitalanalyticsassociation.org/blogpost/533997/Best-Practices
http://dauofu.blogspot.com/2013/01/5-kpis-for-e-commerce-website.html