Hard vs. Soft KPIs in E-Commerce: What’s the Difference and Why It Matters  

We hear so much about KPIs in digital marketing today. What are your base KPIs? What are you tracking? What are you targeting?

Key Performance Indicators may be familiar, but the difference between hard and soft KPIs can be a gray area.

If you’re new to hard vs. soft KPIs, we’re here to cover what you need to know. In this blog, we’ll look at the value of KPIs for e-commerce, consider the differences between hard and soft KPIs, and identify ways to track e-commerce KPIs for better business decision-making. Let’s go!

Why Do We Track KPIs For E-commerce?

Every website and company has a different path to revenue, such as engagement or referrals. But regardless of the path taken, revenue is what matters most.

Ultimately, revenue is the primary KPI for any profit-making business with an e-commerce site. However, because tracking routes to the revenue goal can be challenging, we track a mix of hard and soft KPIs to understand the metrics that drive performance.

Together, these carefully chosen KPIs help tell the full story of our e-commerce performance. They aid better decision-making to drive better ongoing results.

What Is The Difference Between Hard KPIs and Soft KPIs?

For a simple analogy, think of the hard KPI as the end of the road, and the soft KPI leading you to that point. Let’s break it down further:

What is a Soft KPI?

A soft KPI is an indicator of success and a measure of an event that led to a hard KPI. Soft KPIs include page views, video plays, impressions, and engagement metrics, including social ‘likes’.

Soft KPIs formulate a story, share the narrative of your website’s performance, and explain where and why you achieved the hard KPIs. A soft KIP doesn’t necessarily equate to a sale in its own right, but it can move your leads from cold to hot.

Think of them as the story, the context, or the “explainer” behind the result.

What is a Hard KPI?

A hard KPI measures outcomes that move the business needle: revenue, traffic, and conversions. These measures are “hard” because they affect your bottom-line results.

The two most important hard KPIs are revenue and AOV (Average Order Value, used to understand customer purchase patterns and optimize profitability.) Ultimately, these are the measures that your e-commerce optimization efforts are designed to achieve.

The Importance Of Hard KPIs for E-commerce Sites

Hard KPIs tell us whether our e-commerce website is performing as well as it should. They are the defining performance metrics and are also easy to track.

However, because hard KPIs tell us the end of the story, rather than the stages that led to it, we need to track the soft KPIs too. In this way, soft and hard KPIs work hand in hand as well together.

Do I Need To Track All Hard And Soft KPIs?

The short answer is, no! There are endless possible KPIs, and too much data can be overwhelming. The key to success lies in selecting the business’s essential KPIs for your goals and knowing the exact purpose of each choice.

Note that these KPIs can change over time, especially your choice of soft KPIs. Your hard “three” (revenue, traffic, and conversions) will always be in place.

How To Improve Hard And Soft KPIs

There are different ways to improve KPIs for E-commerce. The data is the foundation. With it, you can map the work you have carried out on your e-commerce website and measure its results.

For example, you might interrogate the KPI data to assess the results of your social media campaign, online price promotion, or reworked landing page. You would seek to map the results to the action, asking questions such as “Was the ROI against my ad spending (or time investment) worthwhile?”

This data and analysis then allow you to decide your next steps. You might continue what you’re doing, or change your approach. By letting KPI data inform every step, you have a solid evidence base to drive your decisions.

How To Improve Soft KPIs

As an e-commerce business, we need to know whether we are getting eyeballs on our brand or advert (this applies to paid search and SEO). Soft KPIs are search results (SERP), visibility, and rankings that capture this data.

With your e-commerce website, you will use Soft KPI metrics to ask improvement questions such as:

• Is my click-through rate performing as it should?
• Are my impressions reaching the available market? Is it growing and are we growing to meet it?
• Are we ‘reaching and grabbing’ to create traffic?
• Is my Media Mix working? What does the customer journey look like? (email, paid search, display, social, etc.)
• Did our optimization efforts result in someone taking action and coming to my store?
• Once leads are on my site, are they engaging with the content? Are the CTA’s working? Is the bounce rate acceptable?

All of these questions lead us toward the business essential KPIs; sales.

Why It All Comes Down To Sales

The ultimate hard KPI is revenue. For a profit-making enterprise with an e-commerce website, the only thing that matters is whether our investment creates the desired return. Did everything that we put into our marketing result in our target revenue?

KPIs in e-commerce are relatively easy to target in this way. Did customers come into the store? What did they leave with, and what was its value? Will they return? These are ultimately the questions that matter.

Unlocking The Value Of KPIs

As a business or website owner, we must track and monitor hard vs. soft KPIs to see what is happening, and to adjust our digital strategy and tactics where necessary. Remember: KPIs for e-commerce exist to provide data for better decision-making. And ultimately, everything needs to lead to revenue.

How To Track And Monitor KPIs

Many e-commerce KPIs track both hard and soft KPIs. These include the bounce rate, conversion rate, click-through rate (CTR), traffic source, and cost per acquisition (CPA).

Various tools exist to automate how we collect and measure soft and hard KPIs for e-commerce. These KPI business tracking tools gather, measure, and analyze KPIs in real time to provide data dashboards that show trend analysis, benchmark analysis, and other vital tools to understand the numbers.

Business essential KPI data only goes so far when it’s “raw”. This data must be translated into analysis and recommendations, to provide clear actions and next steps for your website. This stage can be complex, requiring deep analysis, careful insight, and expert recommendations for your next steps.

Translating KPIs Into Action

Whether you need to look more closely at your customer journey or website visibility, simplify your shopping cart, better target your next PPC campaign, or consider your off-page engagement touchpoints, your KPI data needs to pinpoint and justify clear recommendations for your time and budget investment.

An SEO Agency can make this process easier, by providing ready-made tracking, KPI analysis, and tools such as attribution modeling (to identify which marketing touchpoints are contributing to your website conversions.) In this way, SEO agencies save you time and money, by breaking down your business KPI data and transforming it into ready-made actions.

E-Commerce Dashboards For KPI Analysis

Agencies usually simplify complex KPI data by providing a tailored E-Commerce Dashboard for each client. The e-commerce dashboard will show the business’s essential KPIs, and provide supporting business tracking data and analysis (using tools such as attribution modeling).

The e-commerce dashboard will also provide recommended actions to further optimize your e-commerce SEO, so you can prioritize actions and target improvements that will deliver a clear ROI.

Master Your Business Essential KPIs Now

Learn how to better understand and monitor your hard vs. soft KPIs by contacting an SEO agency today, and secure a partner who can make the right impact in your next campaign.