The mention of measuring metrics will snap an eComm business owner out of biz bliss as quick as budgets and bills will wake newlyweds from their honeymoon slumber.
I get it…
Measuring metrics isn’t the most “romantic” topic to discuss as an entrepreneur… BUT it’s necessary.
It’s impossible to make informed business decisions that will grow and scale your business without this data.
Here’s the deal…
If you don’t measure it, you can’t improve it.
I have the privilege of having countless conversations with some incredibly intelligent entrepreneurs. Their ability to create, design, and produce amazing products is mind blowing.
Yet, when I pry beyond the surface of their product(s) and begin discussing numbers, financials, and metrics, it’s as if I’m exposing them to the greatest horror movie ever known to man.
It’s funny (not the haha kind of funny, more like the “I don’t know what to say, so I’ll laugh” kind of funny) when I counsel business owners who openly admit numbers aren’t their thing.
They get super nervous and squirmy uncomfortable as I begin to evaluate their business from a KPI (Key Performance Indicators) perspective. (more on KPI in a couple of scrolls)
I’ll go out on a limb and say that’s an accurate description of most eComm business owners. Many don’t consider themselves business savvy and, unfortunately, haven’t had much experience or training in regards to measuring metrics, let alone know what they should be measuring.
And that’s OK! You don’t know what you don’t know, right?
It can be extremely overwhelming trying to understand what to measure and how to measure it.
- What am I supposed to be measuring?
- How do I measure it?
- How can I tell if I’m performing well against those measurements?
- What do I do with all of this information?
At the risk of sounding so cliche, if this is you, know that you’re not alone.
I’m assuming you could use some help in this area or you wouldn’t have consulted Google with the following – “How do I grow and scale my eComm business?” (or something similar). Or, perhaps you clicked on this link via another platform.
Regardless of how you landed here, I’m so glad you did. I want to help you understand how to grow your business from the inside out by consistently measuring and evaluating three key performance indicators (KPI).
Measuring metrics in your eComm business shouldn’t be something that freaks you out or an element of your business you ignore.
It should be something that you, as the business owner, gets excited about because it empowers you to make the best business decisions possible.
I want to share three simple KPI’s (indicators that tell you whether or not you’re making progress toward a particular result) you should be measuring to leverage your business for success.
3 Simple KPIs Every eComm Business Owner Should Be Measuring
I know what you’re thinking… “Ummm, duh, that’s a no-brainer, Dawn.” However, you’d be surprised at the number of business owners I talk to on a regular basis who don’t know what their gross revenue is for the month, let alone for the quarter.
We’re all working hard (myself included) to make money by growing and scaling our businesses. But if you don’t know and understand what your revenue is, then it’s impossible to make good business decisions.
Sure, there are other things that influence this KPI (returns, discounts, refunds, etc.), but for the sake of simplicity, we’ll leave it at that.
If you’re using Shopify as your eComm platform, they make it really simple to access and track your total sales. Access your admin section from your Shopify dashboard. Then, locate your sales via the analytics section and compare a variety of metrics (i.e. by year, quarter, month, day, etc.). It takes only seconds to do this.
Ideally, you would keep track of your sales metrics using accounting software (topic for another time). But if you don’t already have an accounting tool set up or someone helping you with your bookkeeping, you should at least be keeping track of your sales data in a spreadsheet (Google or Excel).
Keeping track of and understanding your expenses is another incredibly important metric you need in order to make solid business decisions. Your expenses include everything you need to produce and sell your product. If you don’t know what your expenses are, then the first thing you need to do is identify them.
Some examples of expenses you might have are cost of goods sold (COGS), fulfillment and shipping fees, returns and refunds, payroll for team members, rent, utilities, platform and technology subscriptions, etc. – basically every penny you pay.
As with sales, you should measure and keep track of your expenses on a consistent basis (monthly is ideal) and record them in your accounting software. If you aren’t set up with an accounting tool, I encourage you to keep track of this data in a spreadsheet, preferably in a profit and loss format.
If you need help identifying and/or tracking your expenses, I would love to chat with you. Request a FREE consultation by contacting me here. Or, feel free to reach out to me on social media. Facebook, Instagram, LinkedIn.
Obviously, this metric is particularly important for a product based eComm business. And unfortunately, most business owners don’t have a good system for tracking their inventory.
There are some pretty boujee (and pricey) inventory tracking systems on the market. But you can also manually track your product inventory on a spreadsheet… and it’s FREEEEEEEE. Gotta like free, right?
The best inventory tracking tool for you to use really depends on how many SKUs you have, how big and complex your business is, etc. At the end of the day, it doesn’t really matter how you track and measure your inventory. What matters is that you do.
You can’t assess the health of your business if you don’t have an accurate and consistent process for monitoring your inventory.
If you’ve been measuring these 3 metrics since the day your store went live, then good on you! Give yourself a high-five. But don’t overlook the reality that there’s always room for review and always room for improvement.
If you haven’t, then now you know why you should, where to start, and how to do it.
Knowing how to measure these 3 simple metrics and understanding how to interpret them will empower you to make responsible business decisions as you successfully grow and scale your eComm business.
If you enjoyed this article, check out the eComm Profit Podcast for more insight on this topic.
Join my FREE Facebook group, Six Figure + eComm Success Strategies, to connect with a community of like-minded entrepreneurs who are growing their businesses and sharing ideas. I’ll see you there.
Dawn Sinkule, the Founder of Digital Dawn, is an MBA graduate, Strategy and Business Growth Consultant as well as a Certified Online Business Manager with more than 16 years of corporate experience working for a Fortune 50 company. Dawn and her team work with passionate six figure business owners who want to grow, expand, and explode their businesses. Dawn and the DD team provide your choice of self-implementation or fully done for you solutions, and both include detailed business strategies, automation, systems, and most importantly the satisfaction of knowing your business is heading the right direction. Her clients get not only the experience of a Fortune 50 leader, but also a personalized and customized strategy as well as an implementation team: AKA your secret weapon for success.