Follow your dreams…. and NUMBERS!
Do you have a clear idea of how big your online store is, where to expand, and what your revenue goal is from day to day? Depending on the store and business, some aim for colossal franchises and becoming a market leader with hundreds of employees. Others want to act within their means and are quite happy staying at a medium-size, dealing with the ups and downs of a small-scale online store, and are quite comfortable where they are. No matter which category you find yourself in, the great equalizer when it comes to eCommerce is numbers: specifically, the metrics involved with production, marketing, and customers.
You always need to know what is happening and why. Let’s look at three possible scenarios that are likely to confront an eCommerce entrepreneur:
1) Your Business Or Brand Is Currently Growing
- Revenue: your revenue is growing, so always be sure to compare your monthly revenue with the same month last year to give you an idea of percentage. This comparison is crucial because the seasonal fluctuations are usually the same every year, so you can easily track whether or not growth indicators are related to predictable patterns (which can give you a false reading) or if your business is really expanding.
- Transactions: it’s not only about raising the number of orders, it’s also about increasing the average order value. This metric will help you figure out where your campaigns are succeeding or failing, and give you hints as how to improve the transaction process.
- Customers: this isn’t only the number of customers, but also indicated the percentage of returning customers which is important because loyal customers tend to buy on average 90% more frequently and spend 60% more per transaction.
In this scenario we need to answer the following questions: How much am I growing? Is my company/employees able to handle that? Am I ready to expand and is it something that I want? Do I have enough employees, appropriate stock, inventory, infrastructure, and other potential weak links to handle this growth?
In many cases either you or the company is not ready for such quick growth, and this can lead to disappointing your customers due to services that are stretched too thin or through difficult in making timely deliveries. If you’re not sure whether or not you’re ready for the next leap in terms of expanding your business, go back to your metrics — they can indicate areas where you might need to revisit your strategy. For example, sticking to items that bring in the most revenue without having to expand your business plan, investing your money into the most successful campaigns, and keeping the most profitable activities while cutting out the ones that don’t bring in revenue.
If, on the other hand, you are ready to grow and you aren’t thinking about cutting down on your product portfolio or anything else, you will still need to track the stats to have a clearer overview of what activities are attractive for your customers, what campaigns are the most profitable, and what products are in demand. In simple terms, for any business at the crossroads of becoming larger, it’s all about figuring out how to benefit the company while cutting your losses wherever you can.
2) Your Company Is Stagnating
- Revenue: metrics may indicate your revenue is stagnating, but again be sure you are comparing your monthly revenue with the same month last year as well, to avoid seasonal fluctuation misunderstanding. Apps like MonkeyData will also help you organize sources of revenue, so you can track where and when you’re losing money.
- Transactions: in this scenario, you can expect that the average order value will be the same over a long period of time.
- Customers, Visitors: additionally, a company that is stagnating will see fewer and fewer returning customers on top of a dearth of new visitors to your site.
If you are still at the same point and you want to move forward, then something about your business model needs to change. Very often it is a method of trial and error, feeling things out and looking for a new approach — but even after you find a strategy that works, it can be hard to tell whether or not it will pay off in the long run. This is where analytics and numbers come back into play, and can help you decide whether or not your changes are working for you.
For example, you may try to offer new products. Launch a small campaign to promote them and look at the results. How many customers are interested in buying your product? What is the revenue of the new products? Would it be more profitable to get rid off some of the old items or stock and replace them with the new ones? Be creative in finding new solutions to enliven your business but remember to keep on eye on each new plan with the use of statistics to see if it is really benefiting your business.
3) Your Company Is Losing Revenue
- Revenue: in this scenario, you can expect your revenue across the board will be lower than the year before.
- Transactions : the number of orders isn’t rising and the average order value is lower from a long-term perspective.
- Customers: your customers are not coming back and you aren’t experiencing any new traffic to your website or online store.
In this hypothetical situation, it’s vital to look at the reasons for why your company is failing — and again, analysis of the metrics can point out not only the why but also give you an idea of how to fix the problems. For example, when did your company begin to decline? Is it only seasonal decrease? How well did sales go last year this time? Have you been doing something differently? Take your time, go through all the possible reasons (from customer satisfaction, product deficiency, to social proof), and check your competitor’s behavior. Address each problem, one at a time, until you’ve figured out which contributing factors have led to your decline.
Almost every business has its ups and downs, peaks and valleys. However, it’s essential to know if you are still on the track in terms of making yearly, monthly, and even daily quotas. One useful app is MonkeyData which can help track the most important numbers easily and save you a lot of time that can be devoted to other tasks. The earlier you are alerted to changes in your online business, and the sooner you can pinpoint the problems, the sooner you will be able to formulate solutions and bring your goals to fruition.
So don’t forget to follow your dreams & numbers and as Nelson Mandela once said: “Remember to celebrate milestones as you prepare for the road ahead.”
