A lot has been written on the topic of KPI for online retail ecommerce marketing platform. True, the authors mostly confuse ecommerce marketing platform indicators that relate directly to sales and indicators that are important for an abstract site (like attendance, refusals, etc.).
If you want to expand your business on the Internet and ensure its profitability, you cannot do without key e commerce ad performance indicators of the project (KPI). First and foremost, the owner of an online store is interested in e commerce ads sales performance.
Working without an accurate indication of the most important parameters of your store’s activities is like going on a long journey by car without any devices. You can increase sales and increase profits only when you can clearly measure them and understand what ways there are for you to optimize and improve.
How to calculate: divide the amount of income received for the period you are interested in (month, quarter, half year, year) by the number of orders for the same period. The higher is the average check (the average amount of one purchase) – the higher is the efficiency of your store.
What to consider: you should not compare your average cheque with the average cheque for a segment, even if you have the same data. You can hardly include in the analysis only those stores where the price range, target audience, and assortment are exactly the same as yours.
How to increase: try to offer free shipping or an additional bonus gift if you purchase a certain amount. A good option – automated issuance of related products.
The average bill, paradoxically, increases during properly planned campaigns and discount campaigns. People are more willing to buy more goods or additional goods if discounts seem attractive to them.
Volume of sales
How to calculate: the volume of sales, or commodity circulation, is the sum of all money you receive from your customers for the goods/services provided. Planning of this indicator is the most important stage of work of any business, and the difference between the planned sales volume and the actual one over the period of time is a clear indicator of the effectiveness of your business.
What to consider: For proper planning, consider the history of previous periods, seasonality, and growth rates. Keep in mind that a lot of external factors and risks can affect your sales: supplier failures, currency fluctuations, logistics, and even legislative changes.
How to increase: Optimal – due to the simultaneous growth of the average cheque and an increase in the number of transactions. The second component is influenced by a good issuance in search engines, active work on the return of those who have already bought something from you, competent e-mail marketing.
How to calculate: take away gross costs from gross income, as well as taxes and other deductions.
What to consider: it makes sense to consider not only the total net profit for the period but also the net profit by groups of goods, taking into account the price level and the level of demand. There are products that must be “for the range”, or those whose sales you are testing. Exclude them from the overall analysis but still control the net profit: if it turns out to be below zero, it may not be scary – but you should understand that this minus is due to your gross expenses.
How to increase: you have 2 ways:
1) Margin increase is due to a price increase. In this case, you must clearly understand your position in the market and track the prices of competitors. Choose one of preferred development options:
- My price is not higher than of competitors for a similar product (service) and I focus on increasing profits through a large number of sales
- My price is higher than of competitors but my product has added value (better packaging, better service, fast delivery, long warranty or service, etc.). Because of these advantages, I am sure that the goods will be bought from me, not from a competitor.
2) Cost reduction. It is important to soberly assess what can be saved and what cannot. If cost reduction affects the quality of your work or service, this is a direct way to reduce efficiency.
At the same time, you can always cut costs through optimization: your own courier in the city can be more profitable than the services of logistics companies, buying stationery for an office from a supplier in bulk once a quarter can be more profitable than in a store across the street. There are many such examples.
Analyze all three indicators. Conclusions that you draw should be converted to goals. Regularly monitor their implementation, react flexibly to changes and earn more!