Do you want to scale your business? If you answered yes, there are numbers you need to know and be measuring so you can be strategic in your sales and marketing decisions.
You can not manage what you do not measure. You have to know your numbers. Today we are talking all about KPIs, what they are why you need them. You can watch here or read below.
If you can't measure something you have very little chance of improving it. To grow your business you need to focus on two areas. The first one is setting the right key performance indicators, also known as KPIs, and then tracking those metrics. The second is, make sure that you have an analytic system in place to measure all of those metrics as accurately as possible.
So let me give you some examples of KPIs. The first thing that is important for you to track is your sales.
What are your sales daily, weekly, monthly, quarterly, and yearly? You need to know those numbers. Why do you need to know your sales numbers? You need to know them so that you can plan and forecast for the coming years.
For example, in my business, the J months were slow, January, June, and July. I knew that based on tracking all my KPIs. I would plan promotions around the J months that would help those sales increase.
You also want to know, are you trending up or are you trending down? I also measured my sales by channel.
For example, are my sales coming from eCommerce, retail, Amazon or wholesale? Whatever your channels of business are, you want to know how much of your sales are coming from each one of those channels.
You can promote and work to grow the channels that are successful if you know your numbers. You also want to be able to know if you've got a channel that's slipping so you can turn it around.
I also track what products are selling. I like to know the number of units of each product SKU that I have. You want to know that for a couple of reasons. If there are products that are selling you want to be able to promote them and sell more. Also, are there any losers that you need to discontinue? You don't want to keep dead inventory in stock either because that ties up your money.
I want to know how many orders shipped each day. Are we staying on top of shipping? Are we getting behind in comparison to orders? Knowing your shipping numbers and your turnaround time based on the number of orders that are coming in on a daily basis is important for good customer service.
The other area I track is average order size per customer. If you know your average order size by month, you can be more aggressive with promotions in the slower months. I know order sizes will be larger than average for Valentines, Mother's Day and Christmas based on previous sales data. However, the months that are smaller order size, I can come up with creative promotions to try and raise the order size. A gift with purchase is a perfect way to raise an order. If you are not measuring order size, you need to start doing it so you can more strategic with your promotions.
What do I track in marketing? I want to know the cost per click. How much is it costing me to get a visitor to my website? What is my cost per order? And what is my cart abandon rate? Those are the areas I like to track in marketing really closely.
Email marketing metrics I track first is my list size, Is my list growing? Is it shrinking? I want to know, what is the percentage of people that are opening my email versus the percentage that I sent? Your open rate is an important metric to track as is the bounce rate.
Email marketing and list building are critical elements for online shops to continue to show growth.
Another metric I track is traffic. Where is my traffic coming from? It is important that you have Google Analytics in place because it will tell you where your traffic is coming from. Is it coming from social media? Is it coming from advertising? Is it coming from any particular channel? You want to know where your traffic is coming from so that you can do more of what works and less of what doesn't work. You need to know where your traffic's coming from to increase it.
I also track how many people are hitting my website in addition to how many new people are visiting my site. If new people are coming, that means you're growing your email list.
Another metric that I track is social media. I track what platforms are performing the best. I want to know how much of my traffic is coming from social media and better yet, how many conversions do I get from social media.
As a business owner, you have to make smart sales and marketing decisions. Without sales and marketing, you don't have a business. You can't manage what you don't major, and if you're being really intentional and strategic about the campaigns that you're putting in place for sales and marketing based on your numbers, you have a better chance of scaling your business.