Boost Your Online Store: Top 3 KPIs to Skyrocket Your Conversions

Are you an online business owner feeling overwhelmed by what metrics to track for growth? You're not alone!

Today, we're diving into the essential KPIs every business owner should monitor to ensure their business is on a growth trajectory. Neglecting to track the right metrics can hinder your progress. So, let's tackle these numbers together and make tracking a habit that fuels your business success!


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Transcript

Carrie Saunders: 1:03

As an online business owner, you may be lost and wondering what do you even track or review on your website and in your business to make sure it's growing and creating more income for you? While business owners have different KPIs or key performance indicators that align with their goals, there are some common KPIs to consider when tracking your website in your business to make sure you're always on a growth trajectory. Not tracking metrics and not tracking the right metrics can put your business behind and potentially out of business. So let's dive in to the common KPIs to consider and how to make tracking more easier and a bit of a habit. Welcome to the e-commerce made easy podcast. I'm your host, k Saunders. When we started this business, all I had was a couch, a laptop and a nine month old my main goal to help others. Now, with over 20 years in the e-commerce building industry and even more than that in web development, I have seen a lot. I love breaking down the hard tech and to easily understandable bits to help others be successful in their online business. Whether you're a seasoned e-commerce veteran or just starting out, you've come to the right place. So sit back, relax and let's dive into the world of e-commerce together.

Carrie Saunders: 2:18

Welcome back to this week's episode of the e-commerce made easy podcast. Today we're talking about dreaded KPIs. I know statistics and information and numbers. A lot of us don't like to really look and go at these things, but I know for me that it's not a very exciting topic, as I'm saying, and many times I'll procrastinate reviewing my numbers but do you know what happens when I regularly put off reviewing our numbers? Our business growth falls behind. I've seen it time and time again and the 21 plus years of us having this business, when I fall off the wagon looking at our numbers, we fall off the wagon too, and our income and our business growth stagnates and slows down. I'm sure you get it, though. It's so easy to feel like other tasks in our business are more important until you finally do look back at those numbers and realize, man, if I had been keeping an eye on it, I could have corrected things earlier and not been in the situation I'm currently in. I know I have felt that several times in our business and I always kind of like wanted to kick myself in the butt. For why did I put this off and why didn't I just do this? Because it's really not that hard once you really get a habit of it. Okay, so let's work through this together.

Carrie Saunders: 3:37

So, even though our businesses may look different mine and yours there are some very common and normal KPIs that make sense for all of us business owners to look at. So the first one we're going to talk about is conversion rate. While most think of conversion rate being related to sales metrics or monetary value, it can actually describe much more than that. So conversion rate is simply the number of conversions divided by the number of visitors and then to get to the percentage, you just multiply that result by 100 to get your conversion rate percentage. So when I said that conversion rates doesn't necessarily have to be a monetary conversion rate, what am I really talking about there and what should we track? So, while I recommend tracking your sales conversion rate, of course, for sure you need to be doing that you know how many sales are you getting versus how many visitors are you getting to your website? You also want to consider some other conversion rates that are a bit more of a long-term goal type of conversion rate.

Carrie Saunders: 4:45

So, for example, are you getting more people on your newsletter? Is it growing? Are you getting more followers on social media? Are you getting more engagement in your newsletter? Are you getting people responding back to you and are you getting good engagement in your social media? Is it growing or is it stagnating or declining? And if you're hearing some funny noises, the cats are in my office right now thinking it's a cool idea to play in the recycle bin, so I excuse any background noise you may hear. It's just life. I've got two office cats and it's kind of their witching hour. They want to have some attention. All right back to what we could be using for our conversion rates. Let me recap there. So are we getting more people on our newsletter? Are we getting more people on our social media followers and are we getting more engagement in our newsletter and social media? And then, finally, one of the final suggestions I have potentially, are you getting more people in your Facebook group? So if you utilize something like a Facebook group, are you getting more people in it than you have losing?

Carrie Saunders: 5:48

So I want you to take a moment to write down what are your goals of your business. Where do you want to grow your business? What do you want to make sure is always moving forward? Then I recommend checking the statistics weekly on these goals. Personally, I feel like checking conversion rates to six weekly is a good idea Now. You could go to every other week or monthly if that feels a little bit too heavy for you right now, and it might be a good idea to start at more of every other week or monthly if you're just first starting out and have never tracked conversion rates ever. But I want you to start making this a regular habit. How many visitors have been to your site versus how many sales have you gotten? How many people have gone to your newsletter signup page versus how many new signups did you get?

Carrie Saunders: 6:36

I really find that really looking at this is going to help you assess whether your website's being effective for you or not, and I find this to be a great task to do late in the day or when you kind of have a little bit less mental energy maybe late in the week too, and you need to be working on your business and towards your business goals, but you might not have the brain power to do something else that's more creative or might create. Need some more brain space in your head, because normally these are just recording some numbers, making, doing the division and then figuring out your percentage and recording it. I recommend you record things like this in an Excel or Google sheets. That way you can see the trends over time, and I really recommend you do this one very consistently. So whether you pick it's monthly or the pick it's weekly or every other week, make sure you always do it at about the same time every time you do it, and that's going to help you create consistency in being able to compare the numbers and making sure that you're comparing apples to apples versus apples to oranges, because if you do it, say, on a Tuesday, one day, a Tuesday morning, but then the next time you check it is like a Thursday afternoon. You're going to get different numbers based upon the days of the week, because I find for our business, our customers are very cyclical. They're not here on our website very much on Saturday and Sunday. They're mostly on our websites during the week. So if you're picking a different day of the week to check these metrics, you're not going to probably get very good comparable results to previous times that you're checking it. So make sure you're very consistent here.

Carrie Saunders: 8:15

Okay, so the next KPI metric that's very important to business growth is customer acquisition cost. So customer acquisition cost simply is how much does it cost to acquire a new customer, as basically the words imply, right? So while the definition is simple, measuring this metric can actually be kind of hard. You want to make sure that you take into account several factors when determining the cost of acquiring a new customer. So, for example, do you run any ads? Do you run ads on Facebook, instagram, linkedin, ads on Google, ads on Bing? Do you run ads? Note how much you're spending in ads over the time period that you're going to want to evaluate this.

Carrie Saunders: 8:57

What do your other marketing efforts cost? For example, do you, the business owner, do your own marketing? If so, start tracking. How much time do you spend each week or each time period that you're tracking here? How much time do you spend on marketing? What is your effective hourly rate? So you want to take your salary or what you bring home, divided by the number of hours you work in a year, and that's going to be your effective hourly rate approximately. You might wanna pad that sum depending upon whether you want growth and you wanna be able to cover your expenses and taxes. So figure out your effective hourly rate and how much time are you spending on it. That's your cost for you to do your own marketing? Or do you have staff that's helping you do your own marketing? Have them start recording how much time do they spend on marketing for you and then you can figure out their effective hourly rate. Make sure you add in their business costs too, because when you have employees especially if they're not just contractors and they're actual, true employees you're going to be at least in the United States paying part of their taxes, part of their healthcare, potentially, and things like that. So make sure you consider the fully loaded cost of your employee when you're trying to figure out how much their effective hourly rate is.

Carrie Saunders: 10:12

And then, do you have software that supports acquiring new customers? Do you have a CRM, a customer relationship manager? Do you have social tools to a customer relationship manager? Do you have social tools to help you post on social media? Look at your software there. Do you have professional services to acquire new customers? Are you paying somebody else to help you acquire these new customers? And then, is there any other overheads related to acquiring customers that we haven't discussed as options here? So this one's a bit harder to track, especially the first few times, because you really want to nail down what are these external costs or internal costs to our business to acquiring a new customer. So then, once you've figured out the cost that it takes you to acquire new customers how many customers did you get in that time period that you're currently evaluating? So then you can then figure out the cost to acquire the new customers. Take your total cost divided by the number of customers you got in that time period and you're going to get your cost of acquiring a new customer. It's kind of a tongue twister to say so.

Carrie Saunders: 11:17

Personally, I feel like this is a great idea to track a bit more on the monthly side, or maybe even a little bit longer, depending upon how your business cycles. For one, it's a harder metric to compute and track and, plus, having a whole month to average out the cost will help you focus on non-cyclical anomalies that can happen in a business, non-cyclical anomalies that can happen in a business. For example, as I mentioned earlier, we get much less traffic on a Saturday and Sunday than we do on the weekdays, so we're acquiring a lot less customers on the weekends than we would be on weekdays. Now, if you add into that the fact that holidays and vacations can happen and fall on weekdays, that could skew one week's worth of data. If, say, if you're in the United States, the 4th of July happens on a weekday, for that week you might get a lot lower customer acquisition cost for that week.

Carrie Saunders: 12:15

Also, for us we're a bit cyclical on the months as well. Our customer is a bit quieter, usually in June or July. It could be one month or the other, sometimes both, and then they tend to be a little bit quieter in January or February. I know this because of all the years of tracking things like this. I know that I shouldn't be worried if our customer acquisition costs in June or July is higher, because that's typical for our business. So once you've tracked this for a while, you can then see what your overall ebbs and flows are for your business and that can really help you project and be ready for the times that it's a bit lower or the times that it's when it's higher or the times that it's when it's higher.

Carrie Saunders: 12:58

So while doing the customer acquisition is a bit costly, there are two main ways to reduce the cost of customer acquisition, and one is knowing your ideal customer and knowing them very well. So if you're attracting the wrong people to your website, people who are not your ideal customer, then your cost of customer acquisition is going to be a lot higher because you're going to have a lot of people landing on your website, landing on your webpage, on your newsletter et cetera, that aren't your ideal customers and they're going to kind of bloat the number of people coming to you and not purchasing. So making sure you know your ideal customer well and you're speaking to them well on your website, in your advertisements, in your marketing efforts, is going to help reduce this cost. Also, engaging with your customers early is key. So whenever they do fall into your circle and into your world, make sure you're engaging with them early and effectively and very well, and that's going to help them become to know and like and trust you better and convert into a customer much faster. So those are the two main ways you can reduce customer acquisition costs. Again, that's knowing your ideal customers well and engaging with your customers early. So while getting new customers regularly is essential to having a thriving business, keeping them is a much lower cost.

Carrie Saunders: 14:26

So next we're going to go into customer lifetime value. So customer lifetime value, as it implies, is the value a customer brings to your business over the course of their working or buying from you, so they're working with you. If you're a service provider or a coach, or if you sell products instead of services, how long are they repeatedly coming back and buying from you? So having a high customer lifetime value is important as we want to keep and retain customers as long as possible. They're already familiar with you and if they like and trust you, then they're going to be coming back again and again to use your products and your services. So to calculate customer lifetime value, you want to project the average spend of a customer and multiply it by their life expected lifespan as a customer.

Carrie Saunders: 15:19

So this is something that's a little bit more of a long game to be able to project, because you need to have some history there. You need to have, you know, probably be in business for you know, say, longer than a year, for example, maybe a few more than that, to be honest with you. But even if you're just starting out in your business, getting a handle on this and knowing what to track is going to be very important. So this is a track, a metric that's pretty common to track monthly for most businesses rather than weekly, and even some businesses find that it's better to track this one over a several month time frame, so maybe quarterly or every six months or every year. They want to track this, depending upon how often a customer would be typically prompted to purchase from you again. So if you're selling products, say, let's say, cat food, and they're going to obviously want it, maybe once a month or every couple weeks, so they're going to be coming back to you more regularly. Now, if you sell services, they may only need your help and your services every few months or once a year, and so they might be coming back every year. So look at your business as a whole and how often will customers typically buy from you and use that to determine how often you're looking at this metric. You can also pick a few of your top customers and see how often they repeat buying from you to help guide you on how often to track this metric If you're not quite sure how often that they really would be ideally buying from you. So, since keeping customers and having them come back for more of your products and services is key to business success, how do we do that? How do we keep and retain those customers?

Carrie Saunders: 17:05

Now we have a few podcasts as episodes already on customer trust and customer loyalty, so I highly recommend that you listen to those. We'll link to those in the show notes. But in general, what you want to do is improve your initial impressions on the customer. So whenever they first purchase with you, whether it's a product or a service how are you giving them good customer support and kindness in that first stage of their first purchase? You want to make sure your first impressions are great. You also want to deliver outstanding support. If they have questions, whether it's before buying or after buying, make sure you're very responsive and very attentive to them. And you can hear all the cat spells. Apparently they're itching themselves. They got a little scratch going on, so hopefully you hear the little bell going on. All right, so we wanted this back to where we were. You want to deliver outstanding customer support.

Carrie Saunders: 17:59

Like I said, quick responses, attentive responses, making sure you're fully understanding and answering their questions. I find a lot of places that I need customer support from Assume what I'm asking rather than getting clarifying questions sometimes when they need it. Although today I needed to contact a pretty big company for some customer support and, wow, I was impressed by them. They were very concise, understood my questions and came back with more questions and answers to help me out and they were just phenomenal. So, really, how you have your people trained to help support or whether you are the one doing the support, making sure you're very thorough and kind when you're doing your support is super important.

Carrie Saunders: 18:45

Also, surprise your customers and show your gratitude. We've talked about this a few times on the podcast, but nothing is better than a thank you email or, even better, a thank you note in the mail, whether it's a simple postcard or a little letter saying, hey, thanks for your support. I really appreciate it. Now, I'm not saying you have to do this to every single customer or client, but you know what Doing that occasionally when you can, is a really great way to show your gratitude and support. Or giving people a shout out on social media and thanking them when it's appropriate for your product or service.

Carrie Saunders: 19:20

All right, so let's recap the three main KPIs we discussed today. First off, conversion rate. So not only look at your monetary conversion rate. How many visitors are you bringing to your site versus how many sales you're getting? Also, look at those longer game conversion rates. It's going to bring and build your business up in the long term, like newsletter subscriptions, social media followers, engagement and all those areas.

Carrie Saunders: 19:47

So look at several different conversion rates that are important to you and your business and write those down and make sure that you're measuring these ideally weekly, if not bi-weekly or monthly. Then look at the harder one, which is the customer acquisition cost. Make sure you're fully figuring out your actual cost for your marketing efforts and your advertising efforts and then figuring how much it you, how many customers you get from that effort. And then, last but not least, the customer lifetime value. How much is your customer worth over the time period that they are with you? And figure out how can you improve this. How can you make the customer spend a bit higher? How can you make the number of people coming back to you buying again higher? Both of those are going to help your customer lifetime value metric for you to measure, all right.

Carrie Saunders: 20:39

So I want to know do you have other KPIs that you track? We want to hear from you. So drop us an email at podcast at bcsengineeringcom, or send us a direct message on social. Again, our email is podcast at bcsengineeringcom. Myself and one of my staff members personally review and read every single one of those emails you guys send in. All right, so thank you for joining me for this week's episode of the e-commerce made easy podcast. Be sure to visit our show notes and other episodes on e-commerce made easy podcastcom and if you're watching on the YouTube channel, make sure you hit that subscribe button. And if you're listening on the podcast, hit the follow button wherever you're listening. And if you're loving our e-commerce made easy podcast, I'd be thrilled if you could rate and review the show on Apple podcasts. Your ratings and reviews help me reach more listeners and empower more people like you to thrive in their online business world. Thank you again for listening and we will see you next week.