Getting to Know Your Data
In other words, how to make the acquaintance of higher profits
By Parag Mamnani, Webgility Founder and CEO
In the e-commerce industry, we talk a lot about how SMBs need to be data driven to get ahead, but sometimes trying to make that shift can feel cumbersome. Often, small businesses don’t know which data matters or they don’t necessarily have insight or time to analyze the numbers. But I believe becoming data-focused doesn’t have to be so complicated. Here are a few simple ways to embrace useful data for the good of your online retail business.
From the beginning, it’s crucial to create a data-focused culture within your organization. As a business owner, if you’re committed to making decisions based on data, the habits that you follow are going to set the tone for your employees. If you send a clear message from the top, everyone else will likely follow suit. But creating a data-focused culture doesn’t have to be a painful, complex exercise — it really comes down to knowing and tracking a few simple numbers.
Distill your business and the actions you take on a daily, weekly, or monthly basis down to five to 10 key metrics that inform you about the health of your company. Depending on the phase of your business, decide what metrics matter and make sure you’re taking actions to improve them. Let’s say you’re in a growth stage and you want expand into a new sales channel, here are some metrics to consider:
- Traffic going to the new sales channel
- Total revenue coming from that channel
- Percentage of your traffic that is converting to a paying customer and how that percentage compares to other channels
- The cost of acquiring a new customer from that channel
- Average order volume and value
- Average order value different between sales channels
- Type of customer by order value, demographic, etc.
- Number of sales from repeat customers each month (hint: your repeat customer percentage can tell you whether you’re building a brand loyalty or not)
Even though analytics seems like a complex topic, simplifying the key performance indicators (KPIs) and bringing everything down to a manageable point means that even the smallest e-commerce retail business can turn to data for the good of the business.
Parag Mamnani is Founder and CEO of Webgility, Inc., the leading software solutions company for multi-channel e-commerce enterprise companies and SMBs.
