Steering your business through a sudden period of growth is a satisfying experience, however sustaining commercial success over a longer period of time can be more challenging. Growth might occur for a number of reasons – identifying the right product at the right time, market demand successfully aligning with business strategy or even an element of intangible good fortune.
Whatever the reason, it is important to assess why growth has occurred and to set clear goals to build on progress. Growth KPIs (key performance indicators) are an effective way of measuring past and present performance. These milestones will enable you to identify trends, anticipate potential issues and highlight what decisions need to be made to advance your business further.
By analysing the data you have available against your KPIs, you should gain an understanding of how your business is progressing towards its core objectives. Often, the most difficult place to start is knowing what to measure, so we’ve outlined four common growth indicators that will help drive sales, enhance marketing efforts and improve customer service.
When aiming to increase sales, you want to track daily sales orders, average order value and website traffic. These are critical for reporting on past performance and identifying recurrent trends, potential loyal customers and future opportunities.
The pace of sales across different channels, marketplaces and regions can present a specific persona of certain buyers. This approach should help highlight seasonal sales, so you can prepare from a stock management perspective, and it might even spark ideas for new promotions or bundled offers.
When cross-referenced against the profitability of each item and its average order value, you can begin to measure what products are worth investing in and what to potentially scale back. This also applies to the marketplaces you are committed to. A multi-channel sales strategy is necessary in the modern era of ecommerce, but spreading the business too quickly over multiple channels can have a negative effect.
Convert the masses
Obviously, the above KPIs assume that you have strong sales each day, however every business goes through periods where conversions slump and people appear to be buying less. The first step is to assess why this is happening. Have your conversion rates dropped and shopping cart abandonment levels risen? Why? There are many reasons– an overly complex sales funnel or a complicated user experience are two of the most common scenarios.
General costs have an influence as well – for example, are you tracking competitive price trends? Has a competitor started to undercut you or if you’re trading on Amazon or eBay, has an increase in shipping costs had an impact?
Monitoring stock levels accurately is also crucial to converting buyers. Ideally, no business wants to run out of stock nor does it want to overcommit to a product that does not perform commercially, but if the former scenario occurs it can lead to poorer conversion rates. Consider implementing ‘a traffic light notification system’ where items are listed as green, amber or red with set rules when stock levels change.
This maintains healthy stock levels and ensures when you market to your customers, a product is available when they choose to convert. KPIs that relate to customer acquisition – i.e. email marketing, social media campaigns and loyalty schemes – include online traffic, visitor sources, promotional click-through rates (CTRs), and bounce rates. These are common digital marketing metrics and are essential for any business selling online.
Welcoming back your customers
Finally, any successful business will ensure its customers are being cared for. Repeat business can be a strong growth driver and therefore it is a critical aspect to measure accurately. Associated KPIs are overall customer satisfaction levels, retention rates, resolution times and number of active issues.
This is important to measure because customer service is mostly a cost centre, rather than a profit generator. The more people employed in a customer service department, the greater the pressure on margins. But under-resourced team will result in slower response times, unhappy customers and poorer ratings.
One option is to invest in technologies that automate repetitive aspects of customer service. This will free employees to focus on more complex requests and community management activities that can drive sales. Beneficial initiatives can include improving the quality of product information to reduce repeat questions, collating common requests into a FAQ or implementing a response time policy. You can then be assured that customers are attended to quickly.
Whatever the size of your business, it is imperative to measure, analyse and assess what factors underpin growth and what initiatives are necessary to continue driving the upward trend.
By Dan Burnham, Head of Customer Success, Volo Commerce