Congratulations! You have finally decided to move forward with a business move that you have long known is necessary. You’ve gone through the labors of running your brick-and-mortar store: stabilizing your inventory, finding reliable and affordable payment processing, and creating a customer base. Now you have put aside the never-ending minutiae for just long enough to take the next step in mobility by setting up your e-commerce site. Once it is up and running, you are certain that it will enhance the strong operational base you have already built in your physical store.
What can your e-commerce site do for you? It can bring in a whole new population of customers, and that’s just for starters. In addition, it can expand the way you sell to the loyal buyers who may not always have the time to set foot in your store to purchase the things they need.
If you are like many business owners who have been a bit shy about taking the plunge to sell products online, you probably have at least one burning question: How do you measure the success of your website once you get it up and running? Even if you are no Bill Gates and your time is limited, there are ways you can keep tabs on the success of your e-commerce operation. Here are just a few:
Anyone who goes online knows how easy it is to click on sites, often one after the other. This willy-nilly behavior is not what you are looking for in your e-commerce site. Instead, you want to first attract people and then keep their interest, either getting them to buy one of your products or at least sign a guest book or request to receive your newsletter or your latest promotions. Your conversion rate is the total number of visitors who converted into customers or newsletter subscribers divided by the total number of guests who surfed their way onto your website. Use the same strategies for your email promotions and other campaigns to get a sense of what strategies are working and which are not.
Cost Of Acquiring A Customer
This is a pretty straightforward metric that looks at how much money you need to spend to get one customer. Your goal is to make this cost as low as possible. Be sure you weigh all of the factors that go into this figure, including what you need to pay for advertisement.
Shopping Cart Abandonment
This is self-explanatory. It is the percentage of potential customers who save items to their virtual shopping carts, only to click away without making the actual purchase. As a savvy business owner, it is incumbent on you to do all you can to close that sale. Indeed, it is the virtual equivalent of the excellent customer service that you strive to provide in your physical store.
Average Order Value
This refers to the average amount paid per order in your store. For example, your average order value is $50 per order if you made $200 on four orders. If you keep careful track of this figure, you can quite accurately project how much money you will make from your present conversion and traffic rates. If your average order value is small, it is clear that you need to lure quite a few customers onto your site to buy from you. The more high-value orders you can accumulate, the easier it will be to build a steady profit. Offering free shipping or volume discounts can help you in this regard.
Think of your gross margin as your net profit, the amount of money you have in your virtual cash register after all of the bills have been paid. It is the difference between your total revenue and the cost of the goods you have sold. Keeping a careful watch on this figure can help you to figure out how much you can invest in the future growth of your online and brick-and-mortar operations.
Subscriber Growth Rate
One of the most dynamic aspects of your e-commerce operation is your email list. Whether you are sending out coupons regularly, introducing new products or simply writing a no-nonsense newsletter, email gives you a way to stay in touch with your existing customers and reach out to new ones. Your goal is to continually increase the number of people who subscribe to your communications. Each of them has the potential to bring others into your circle. Therefore, the importance of this feature cannot be overstated.
Customer Lifetime Value
Who will be your most valuable customers? Once you calculate their lifetime value, you will know which are in that top tier, the special one percent who will ultimately spend 30 times more than your average customer. It goes without saying that you will want to learn who these special customers are and treat them with extra incentives that will help them to grow into your self-fulfilling prophecy of success.
Customer Satisfaction Rate
One of the main gifts that e-commerce can furnish to your company is the wide array of information it makes available to you about your customers. By using the internal software in your website or external programs such as Google Analytics, you can track the demographics, buying patterns, psychographics and purchase histories of your customers. As they come to know you and your products, you can become very familiar with their needs and wants as well, including how they felt about their buying experience on your site and whether their needs are being met. Their wishes can then become your commands as you streamline your offerings and target them directly toward the people who want them the most.
Being a pro at e-commerce metrics can enable you to become the master of your dream. Take time to work with your technology provider to learn about the analytics tools that are available to you. Taking this step is a nearly foolproof way to catapult your new e-commerce component to the next level and make it work with store. Once you team e-commerce with walk-in sales, you can begin to appreciate the best of both worlds.