Any business worth its salt–whether a big-name brand or small online retailer–needs metrics for measuring progress. Without this process, businesses don’t know whether they’re on the right track. As Kennedy once said, “Efforts and courage are not enough without purpose and direction.”

Here we detail the importance of KPIs, their uses, and examples of critical KPIs Amazon sellers need to track and review.

The Importance of KPIs

KPIs are benchmarks businesses use to measure performance. You might think revenue is the primary benchmark, but you’d be wrong. More often than not, a business’s revenue or profits are a byproduct of managing more specific KPIs.

For instance, you might see a dip in profits and wonder about the cause. However, if you’d tracked positive reviews as one of your KPIs, you’d have noticed a downward trend. Customers might be giving feedback about a defective product – and you’d never know it by only tracking profit. Profit is the “why” of your business, but KPIs are the “how” of getting there.

The Uses of KPIs

When you measure your business according to KPIs, you get data-driven insights on how to adapt. You’ll know your strengths and weaknesses and be able to tell if new strategies are paying off. Even when things are going well, KPIs help you set goals for continued growth.

Amazon retailers benefit the most from using KPIs since they often don’t have a large team in their corner. KPIs can help sellers measure the effectiveness of marketing campaigns, for example, or notice when it’s time to change prices.

Critical KPIs for Amazon Sellers

Advertising Cost of Sales

The ACoS metric is determined by dividing your ad spend by your ad revenue, then multiplying that number by 100. The result is a measurement of how much you spend on advertising versus how much you earn from it. Tracking ACoS is vital for evaluating the strength of differ