Everyone who wants to have a profitable online store needs to “count” their business.
Even if the online store is already running, it is never too late to start analyzing statistics and use them to improve work processes. Then working with your business will be even easier than finding betting odds in Kenya. Here are the metrics you can work with in the online store, where to look at them and how to use them to analyze the performance of the business.
Online Store Income: Expense Accounting and Profit Calculation
To improve something, you first need to measure it. Let’s start to get acquainted with the metrics by correctly calculating the income of an online store.
Everyone knows that it is important to consider expenses when calculating profits. But costs are not only about buying goods. There are inconspicuous, sometimes insignificant costs that are easy to overlook or deliberately leave out. This will cause money to “leak out” all the time, distorting your profitability picture. And, as a consequence, you won’t be able to make an adequate income forecast for the future.
To get an idea of the total financial burden on your business, do the math:
- Office maintenance costs (rent, electricity, cleaning, consumables in the form of paper, cartridges, etc.).
- The payroll of your employees (managers, assemblers, packers, etc.).
- The cost of new merchandise.
- Advertising and promotion costs.
- Related costs (packaging, printing, etc.).
- Losses from returns (how much you spend for each returned order).
- Losses if the product expires (if your product has an expiration date).
Your list may be different. But it’s important to compile it, taking into account all, even the smallest of expenses. By understanding how much and what you spend, you can find out the net profit of your online store. The net profit should be more than the cost of maintaining the business.
Net profit is the company’s profit, cleared of expenses, taxes, and other mandatory deductions to the budget.
By understanding the entire list of expense items, you can understand where it “hurts” and what requires optimization in the first place. For example, to remove free shipping and no longer work in deficit. Or throw all your efforts into the fight against returns, if this cost item eats up too many resources.
We’ve counted the total costs and revenues; now let’s look at the metrics you can gather for each customer and their orders.
Sales Strategy: Customers, Their Orders, and LTV
Your store is up and running, receiving orders and collecting customer data. This data needs to be analyzed. These metrics can be collected by customer:
- Number of orders (how many orders a customer has placed in your online store).
- Frequency of orders (if there are several orders, what kind of orders they are: regular or not.
- Lifetime: how long the customer is with you).
- LTV (Lifetime Value). This is the revenue generated from all orders of one customer.
This data will help you understand how your customers buy and what they have in common. Based on these metrics, you’ll be able to segment your customer base and think about actions that can lead to improvements based on real data. For example, you can select a pool of customers who buy little, analyze their behavior and characteristics, find commonalities and formulate hypotheses on how to motivate them to buy more.
The more and more consistently they buy from you, the more confident the business feels. That’s why it’s important to transform every new customer into a repeat customer. Metrics will help you work in this direction more specifically and consciously.
Sales Tactics: Number and Composition of Orders, Average Check
The next set of metrics is for working with orders. The principle remains the same: we count, look and analyze. Based on the data we decide how and what can be improved.
To begin with, count:
- How many items per order on average: how many items are usually purchased: a lot/small amount? You’ll see if there’s potential to offer customers more. Maybe it’s time to expand your assortment or add a “This item is being bought with” feature to add more to the order. For example, if you sell books, an additional item could be notebooks, stationery, bookmarks, postcards and posters with quotes or favorite characters. Even if a person wasn’t planning to buy an item right away, he may change his mind at the last moment. Sometimes just offering is enough; think of candy and gum in front of the cash register-the principle is the same.
- Average check: to find out, divide the total amount of purchases by the number of orders. You can find out the average check for all orders in the store or just for a specific customer segment. For example, to increase the average bill, you can offer in the shopping cart or on the product cards additional or related products so that visitors will add them to the order “for company”. Then the amount of the order will increase, and as a result, the average check will go up as well.
- How many abandoned carts: This number will show how many visitors started but didn’t finish ordering. You can also collect data on how many items the cart is abandoned most often. Estimate the ratio of the number of abandoned carts to the number of orders. How to deal with abandoned carts.
All of these metrics can be influenced: come up with strategies, implement them, record changes and repeat the ones that work well. For example, the number of orders can be increased by advertising and improving the quality of the site. Increase repeat orders with targeting, email marketing, SMM and affiliate programs. Cross-selling and up-selling can help increase the number of items in an order and the average bill.
Conversion of Visitors Into Customers: Significant Usability Metrics for Your Site
Let’s get acquainted with the metrics that will show how visitors interact with your site: whether people are comfortable using the built-in tools, which features are necessary and which are useless. If visitors are dropping their filled carts, see at what point this happens. From all of these metrics, you can see which parts of the site need improvement first and which are working well.
Here’s what you can learn about your site visitors:
- Research the amount and sources of traffic.
- See how traffic behaves on the site
- Gather data on important pages.
From this data, you can draw an important conclusion – people behave either generally the same or very differently. If it’s the same, it’s likely that something isn’t working or is awkwardly arranged – you can figure out what’s wrong and fix it promptly. If visitors behave differently, you’ll have to make improvements more delicately, monitoring reactions at each step of the change.
You can use metrics to get a rough idea of the percentage of incomplete orders you receive – by who and when leaves your site without completing an order. If you are quick to notice and correct inconvenient places for users on the site, then the number of orders is likely to increase. To do this, you need to count the conversion rate at each stage of the sales funnel.
Attracting Customers: Metrics for Advertising and Promotion
Any advertising campaign has roughly the same evaluation structure:
- How much money was spent.
- How many visitors the ad was able to attract.
- How many of those visitors bought (or took other targeted actions the ad was aimed at).
- How people then interact with your online store: whether they come back for more purchases or forget about you.
Knowing these values for your business, you can choose the most successful advertising channels according to the cost-conversion ratio.
