When it comes to mastering e-commerce and running a successful online store, there are a few key metrics you need to keep an eye on. Enter KPIs (Key Performance Indicators) – your secret weapon for turning your online business dreams into reality. I know, talking about numbers might not be everyone’s cup of tea, but trust me, understanding these KPIs is like having your favorite supplement to supercharge your e-commerce success!
Some of you might be wondering, “What’s the big deal with KPIs?” or maybe you’re not entirely sure what they even are. Well, they’re like x-rays for your business, revealing the story behind the numbers and helping you make more informed decisions. Without them, you’d be relying on gut feelings and wild guesses, which isn’t ideal for business success. I want to help you understand some of the most valuable KPI’s for your online store and how you can utilize them!
Keep in mind there are a LOT of KPI’s your store can track but I rounded up what I find to be the top 8 most important and a few tips to keep those numbers where you want them:
Average Order Value (AOV)
First off, your AOV, this tells you how much money your customers are spending on one order. It’s like understanding how big your customers’ shopping carts are! Encourage higher AOV by offering product bundles or discounts for larger purchases. Create attractive upselling and cross-selling opportunities on your product pages. For instance, if a customer adds a supplement to their cart, suggest related products that complement their purchase. By enticing customers to add more items to their carts, you’ll increase the overall value of each order and boost your revenue.
This bad boy shows you how much profit you’re making after subtracting production and distribution costs. You always want to try to keep a close eye on your production and distribution costs. Cost of products and fulfillment vs what you are selling it for should be a fairly steady percentage. Boosting your gross profit means having more cash to invest in growing your business. Smart moves, big gains!
Conversion Rate (CR)
CR tells you how many visitors are turning into paying customers. If it’s low, time to get creative and optimize your website. What do I mean by that? You want to create a seamless user experience. Ensure your website is mobile-friendly, loads quickly, and has an intuitive navigation system. Would you enjoy shopping in your store or are there some annoying things in the way?? Improve product descriptions, ensure high quality images/video, and show off your customer reviews to build trust and influence purchasing decisions. Offer clear calls-to-action (CTAs) and a secure checkout process to instill confidence in your customers.
Shopping Cart Abandonment Rate (CAR)
This KPI reveals how many people are adding products to their carts but leave without purchasing. To make sure your customers are hitting that “pay now” button you want to first simplify the checkout process to reduce cart abandonment. Minimize the number of steps required for customers to complete their purchases. Offer a guest checkout option to avoid unnecessary barriers if people don’t want to commit to creating an account with you just yet. Consider implementing an abandoned cart recovery strategy, such as sending personalized follow-up emails to remind customers of their pending purchase. Don’t worry, almost every online story does it, your customer’s won’t be annoyed with you! They will likely appreciate the reminder.
Shopping Cart Conversion Rate (CCR)
Opposite of the above KPI, your CCR shows you how many visitors complete the checkout process and make a purchase. You want to analyze the checkout flow and identify any friction points. In addition to the solutions above, you also want to keep the information required from customers during checkout to a minimum in order for it to be as seamless and simple as possible. You can also look into implementing progress indicators to let customers know how far they are in the process and it’s a good idea to offer multiple payment options to cater to diverse customer preferences.
Cost of Goods Sold (COGS)
This is like peeking behind the curtain to see how much it costs you to sell your products. You (of course) want to keep those costs in check to maximize profits. Regularly review your supply chain and production costs. Look for opportunities to negotiate better rates with suppliers or explore alternative suppliers to reduce expenses (similar to your gross profit). Conduct a thorough analysis of your product manufacturing process to identify areas where you can optimize costs without compromising quality (you never want to compromise quality!).
Customer Lifetime Value (CLV) (Customer’s Annual Profit Contribution x Average Number of Year as Customer)
CLV gives you insight into the value of each customer for your business. Remember to focus on building strong customer relationships to enhance CLV. Offer personalized experiences through tailored marketing messages and product recommendations. Implement a loyalty program that rewards repeat purchases and encourages customer retention. In addition, continue to provide exceptional customer support to address any concerns promptly and leave a lasting positive impression. You know how important that 5 start customer service is, this is where it will pay off!
The churn rate in an online business indicates how quickly customers are leaving your brand or canceling their subscriptions. Keep an eye on this to retain customers. In addition to maintaining your 5 star customer service, think about conducting customer surveys and feedback analysis to understand reasons for churn. Identify common pain points and address them proactively to prevent customers from leaving. Engage with customers through targeted marketing campaigns and promotions to re-engage those who have previously churned.
So there you have it, the top 8 KPIs you need to be monitoring to master your e-commerce store! Don’t let these numbers scare you away. Embrace them, use them, and let them guide you to make smart, data-driven decisions. I hope you’re feeling empowered to conquer the online business world. Understanding the above KPIs will not only boost your revenue but will also help you better serve your community. You’ve got this!
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