As a business owner, you are always thinking of ways to improve and innovate your business so you can ultimately make more money. Whether it’s diversifying your product range, updating your website, or trying new marketing tactics, you always need to make an informed decision. After all, a wrong move can negatively impact your business. This is especially detrimental if you’re still starting your own ecommerce business.
Obviously, you can’t make snap decisions without being aware of what’s going on in your business. Even if your company is still small or new, having some data to consult is better than nothing. However, with everything you need to look at, it can be overwhelming.
The good news is that there are metrics that need to be closely monitored because they are more telling of how your business is faring. Here are a few of the metrics you definitely want on your radar:
1. Conversion Rates.
One thing you need to remember when you want to start your own ecommerce business is that your business will thrive on sales. You need to be making a significant amount of profit in order to stay afloat, and that means a lot of your leads are being converted to customers.
You can easily find your sales conversion rate by dividing the number of purchases by the number of people who visit your online store. You would ideally want a conversion rate of at least 1-5%. Increasing this number is a continuous process for entrepreneurs, with many willing to pay top dollar for it. This is a metric that you definitely want to keep an eye on.
2. Average Margin.
This is basically the portion of the retail price that’s your profit. It can be calculated by subtracting how much you spent supplying a product from the item’s selling price, then multiplying the result with the item price. The percentile of the previous result shows your average margin for a particular product. After all, you could be making a lot from sales but if your supply costs are still high, you really aren’t profiting as much as you think.
You should be looking at the margins of each product or service category you have as well as your overall margin too. Keep your margins as high as possible by either increasing your prices or by paying less for your supplies. Before doing anything though, it’s good to find out if your customers are more concerned with price or quality.
3. Email opt-ins.
There is no denying the fact that email marketing is still a good way to get repeat customers. It doesn’t require you to spend too much on outreach and yields a higher ROI. You don’t need to rely on other platforms as much when you have an extensive email list as well.
While some people on your list might not buy your products right away, tracking your email opt-ins (both total opt-ins and opt-ins by source) gives you an idea of how many people are interested in what you have to offer. Eventually, you may be able to convert more people on your email list into paying customers too.
4. Customer lifetime value.
Otherwise known as CLV, this is the total metric of how much you can potentially earn from a customer in their entire lifetime. It’s a way for you to gauge your customer acquisition and customer retention costs. You can obtain this information by observing the behavior of your customers who spend a lot on your products.
The goal is to try and understand why they’re loyal to your business and to see if the same tactics will convert other customers as well. While this will require a bit of effort for you, building long-term relationships with return customers can and will do wonders for your business.
5. Shopping cart abandonment rate.
As terrifying as it sounds, around 68% of people abandon their carts—but some of that lost income can be recovered. While you can’t possibly convince everyone who adds a product to their cart to go through with their purchase, you can make the experience easier to convince more people to do so.
You can streamline the checkout process (reduce hidden costs, let people check out as guests, etc.) or send out emails to remind customers to complete their purchase. After all, the fewer people abandon cart, the more sales you make. Watch this metric closely. Starting your own ecommerce business can be daunting, especially when you’re unsure of your next move. However, with the right data and strategy, you can definitely manage a new company that’s popular and lucrative!