Crucial Growth Goals in Ecommerce
In such a crowded, highly competitive ecommerce market, online retailers are often overwhelmed by data and can find it difficult to choose the appropriate insights and metrics that could have a positive impact on their business and bottom line.
Choosing the right key performance indicators (KPIs) and constantly monitoring their progress will help ecommerce entrepreneurs, executives and businesses identify methods to increase sales, improve marketing and deliver greater customer satisfaction.
As with any new business venture or management initiative, the first step to defining your most important KPIs is planning. So before digging through any data you have, make sure KPIs are:
- Based on business objectives
- Measuring areas that require the largest investments
- Linked with customer perceptions of your brand
- Measured against the competition
- Simple and clear
To make your life easier, we’ve also outlined three common growth areas that when linked to KPIs will help drive sales, enhance marketing efforts and raise customer retention rates.
So, what are your objectives?
Increase your sales
If your aim is to boost your sales, revenue and margins, then you should closely monitor: daily sales, average order value and site traffic.
Carefully analyse how much products sell for and how fast individual items are selling across different channels and regions. How profitable is each item? What’s the average order value? What’s selling seasonally and how can you best prepare for the next sales cycle? Try to understand what causes the trends behind the figures and adjust your stock accordingly.
Take a look at the sales data for each channel and marketplace, and focus your efforts on the most successful options. Breaking down borders and expanding to new markets could also be a great growth driver, though only after you’ve mastered domestic routes to market. At the same time, bundles and promotions can significantly increase sales and attract new customers. Maybe it’s time to think more strategically about your stock?
Make wishes come true
Shopping cart abandonment is the bane of the online retail industry. The typical shopping cart abandonment rate for online retailers varies between 60% and 80%. These are huge rates, especially for small and medium-sized online merchants.
To get a better understanding of why it happens, online retailers must constantly monitor KPIs such as: conversion rates, shopping cart abandonment rates, shipping rate trends, competitive price trends and CPC (Cost Per Click).
Any company with enough money can create a decent looking online store, populate it with great products and hope for sales. But when sales fail to materialise, how do you know what elements of your site are working and which are not?
Keep an eye on KPIs such as site traffic, traffic sources, promotional click-through rates, social shares and bounce rates. Regularly ask yourself whether your online store is presenting customers with an easy checkout process, so it is easy for them to complete a sale. Are your call-to-action buttons driving customers to take the next step? Are your competitors offering better prices? Is your payment process user-friendly? Have there been any changes to shipment rates that are discouraging customers?
In addition to these, ensure an efficiency system or technology solution is in place to constantly monitor your stock. Any oversight can have a serious impact on your business if you over commit to products that don’t perform commercially.
The strength of loyalty
Finally, understanding how to retain the customers you have spent money and time acquiring is critical for any online retailer.
Everyone knows it is usually more expensive to attract new customers than to retain existing ones so pay attention to KPIs like: overall customer satisfaction levels, customer retention rates, Net Promoter Score (NPS), average resolution time and number of active issues.
Make sure that you have a well-equipped customer service team, efficient processes in place and technologies that automate some of their workload. A staggering 61% of prospects base their purchase decisions on peer reviews so don’t miss the opportunity to drive sales using positive feedback from your existing customers.
After working through these KPIs, an experienced ecommerce team should be able to predict future revenue trends based on the data they have generated. More importantly, they can promptly flag problems and challenges – then it’s about hard work, research and dedication to reach your objectives.
KPIs can be identified for almost every operational area — from web traffic to conversions to shipping. Work with your staff to identify areas for improvement, choose your baseline KPI for each area, and set a target for improvement in a specific timeframe. You should then have a clear goal for growth and a strategy to execute for success.