Whether you are running an office or s business you need to know if it is going in the right direction. Everything may seem good but you will not know it for sure unless you look at a few metrics. There are a lot of businesses that are out there and you cannot measure the success of each business using the same metrics. This is because each business is different from the other and depending on the sector the metrics differ. So you have to be very careful when you are choosing metrics that indicate the performance of your business. If you use the wrong metrics then it might give you a completely wrong picture. You might be doing really bad but the metrics you choose may indicate that you are doing great.
So you have to make sure you choose the right metrics and regularly monitor things like revenue, accounting reports, payables, receivables, etc. Physical products are easier to monitor compared to services. This is because you will easily know how many products you have sold in a day if you use an accounting system. You will know the gross profit of that day. In this article, you will learn about KPIs which is short for key performance indicators. Mind that these key performance indicators are only for online businesses. This will let you know if your business is heading in the right direction. Using these metrics you can find out if your business is actually successful.
Here are some of the most important key performance indicators to determine the success of your online business.
This is probably the most obvious key performance indicator not only for online businesses but for any business for that matter. It does not require high-level expertise to know that the good sales are the indicator of a successful business. You have to keep track of your sales throughout the year. Keeping track of monthly sales, quarterly sales and annual sales will give an idea of the number of products you are selling. By doing this you will know what kind of products you are selling the most during a particular time of the year. Not only that but it also allows you to know the geographical locations where your products are doing well. This will allow you to focus more one some regions and develop new strategies to increase sales in others.
Conversion rates are also very important to know if the strategies you are using are working or not. This will allow you to understand how effective your landing pages, as well as call to action buttons, are. Conversion rates are great in knowing what’s working. They will let you know about the percentage of people visiting your website and how many of them are actually taking action. Conversion rates make it clear if your webpages are effective enough to make the visitors to actions or not. If your website is getting a lot of traffic but less conversion rate then you have to understand that you have to make some changes. The best thing about this is you don’t have to do much. Just small and simple changes can improve the conversion rates drastically.
Cost of customer acquisition
Customer acquisition cost indicates on average how much money you are spending to acquire one customer. But the acquisition cost can vary depending upon the type of products you are selling. If you are selling laptops or gaming consoles then you have to spend a lot of money as the customer will be paying a relatively big amount to acquire. So there is nothing wrong with spending big bucks. But if you are selling bags or hats then you have to make sure that you are spending low because the profit margin on these products is not big. So if you are spending too much on acquiring customers then you are not in a good position.
Average order value
Average order will tell you on an average how much a customer is spending on each order. If the average order is increasing then you are headed in the right direction. It will also tell you how much more a customer is spending for every new order they place. To know the average order value all you have to do is divide your total revenue by the total number of orders received.
Not many people think about this but this is actually an important metric. Because email marketing is one of the most powerful marketing strategies to increase sales especially for small businesses. Sending emails is not an important thing but making the customers read and making them take action is more important. There are a few tips you can follow to increase email open rate.
SEO is short for search engine optimization. Using SEO you can make your website visible on the first page of the search engine. But it is not going to stay there forever unless more and more people are clicking on it. If you are not getting organic traffic that means either the site is not impressive or you have to work on your keywords. If the later is the reason then you have to make sure you use the right keywords and perform SEO to yield better results.
Number of new users every day
This is another simple but important key performance indicator that will tell if your business is a success or not. So you have set yourself a goal that you should acquire this number of customers by the end of the year. See how many new users you have to gain each to reach your goal. If you are getting the number of new users that you desire then you are doing great.
Interaction on social media
This is also necessary to understand the level of success of your business. Social media campaigns are used to improve user engagement. So if you are interacting with your customer and getting feedback then it means that they are keen on using your services further. You can even use some kind of software to track your social media marketing.
Cart abandonment rate
The cart abandonment rate will let you know how many people are adding the products to their cart but not buying them. This doesn’t mean that they are always abandoning the product because they don’t want to buy it. It can also mean that they have added to the cart and forgot about it. To ensure that you can notify your customers through an email that they have added something to the cart. Even then if they don’t buy the product then it means they don’t want the product. If the cart abandonment rate is high then it means that more and more people are declining your product.
This might come across as a surprise but customer service also gives an idea about the success of your business. No business is perfect. So if you are running an online business you will definitely have queries from the customers. If you have far too many queries and complaints then it is a problem. But if it is not the case then don’t have to worry. Not only that but registering the queries as soon as possible, solving them, and providing quality customer service is equally important when you are looking at customer service as a metric.
These are some of the most important key performance indicators if you are running an online business. Use them today to know if your online business is successful or not. If not you will know where you are going wrong. This will help you in developing strategies to improve your online business. Check out our other articles if you want to learn various ways to earn money.