At Woven, we can’t get enough of KPIs because we know how important they are in business. That’s why we’re kickstarting a series about all things KPIs - what to measure and set-up so that you can squeeze as much information out of them as possible.
Key performance indicators, better known as KPIs - most marketers and businesses know they’re an important tool to gauge your company’s progress over time. This makes them vital in terms of making strategic decisions that are informed. Prepare yourself for this next statement…
KPIs are not important on their own.
Yes, you read that line correctly. The real value in KPIs lies in the actionable insights you take away after analysing the data on-hand. You need to know how to read the data so that you can devise strategies based on the intel to drive more online sales. The insights any gifted marketer can pick-up are priceless as they help your team to understand where problems in your business may be. Being aware is the first step to counteracting these issues.
Let’s talk about KPIs specifically for sales. Some of the more popular metrics include:
Conversion rate: taken as a percentage, this is the rate at which users on your website are buying from you ecommerce store (this is appropriately called converting). It’s simple to calculate - divide the total number of visitors to a site/page/category/number of pages by the total number of conversions. Whatever that number is, that’s your conversion percentage.
Shopping cart abandonment rate: this is all about how many people are heading to your site, placing items in their shopping cart but never going through to the check out to complete their purchase.
It’s pretty obvious here that the lower the number, the better but if your abandoned cart rate is on the higher end, it may indicate that the checkout process isn’t user-friendly enough. It may be too complicated, too long… from here, it’s all about experimenting with the process and tracking the results with each change made.
New customer orders versus returning customer orders: repeat customers are great but any thriving business needs new customers as well to keep growing. This metric compares your new and return customers. Remember, customer retention is essential for a business’ long-term success as it indicates loyalty and is likely to lead to word of mouth marketing and higher total order values in the long-term.
Churn rate: this one is super important for any successful online retailer. As the name suggests, the churn rate indicates how quickly customers are leaving your business or canceling/failing to renew a subscription with your brand and what this looks like when broken down by individual customers.
Product affinity and relationship: this KPI is super handy as it shows your business which products are typically purchased together. This gives you clues as to cross-promotion strategies that are likely to give your business a good boost. Product relationship is another KPI which can and should inform potential cross-promotion strategies as this metric tells you which products are viewed consecutively.
Customer lifetime value (CLV): the CLV tells you how much a customer is worth to your business over the course of their relationship with your brand. You want to increase this number over time through strengthening relationships and focusing on customer loyalty. Obviously, this is another super important metric to measure and track in the long-term.
Here, we’ve detailed some of the most important sales KPIs but as always, every business is different so you need to determine which of the above metrics should be measured and tracked by your sales crew.
Check back next month for part two of our KPI series where we’ll explore how you can measure and gain actionable outcomes from these all-important sales KPIs.
We love helping businesses to determine the real value of their key KPIs so if you need expert advice in this area, contact us today.