You’ve set up an online business and are currently enjoying a reasonable sales rate. You’re marketing your venture on social media and are hoping for increased sales as the year progresses. When friends and family ask how your new business is progressing, you tell them it’s great but have a tiny voice in the back of your head questioning your assertions. Unless you’re tracking key performance indicators, you can’t know for sure if your business is progressing as hoped. To ensure your online company is successful over the long-haul, it is imperative you track the following five KPIs:
– Knowing your year-over-year growth rate is essential if you want to run a profitable venture. Understanding not only your yearly sales, but your YoY growth percentage will help you determine whether your business is on the decline. If you also track your month-over-month growth percentage you can double-down on sales-building initiatives at the first sign of slowing sales.
– Savvy online business owners also track their cart abandonment rates. This is critical if you hope to optimize your site for conversions. Knowing where customers are abandoning their purchases is crucial if you hope to fix the problem.
– Speaking of conversions, tracking your site’s conversion rate is also vital for business health. Knowing which offerings aren’t performing well can help you to cut waste from your site and increase your efforts to move your strong sellers. Conversion rate analysis can also help you to develop new products and services by understanding what resonates with your customer base.
– Monitoring customer cost of acquisition is crucial for profit-oriented business owners. If your customer acquisition cost is higher than their customer lifetime value, you might want to rethink your marketing strategy. Whether you’re using targeted Facebook advertising or Google AdWords, understanding the viability of your marketing spend is critical for long-term business sustainability.
– If you plan to build a long-lasting online business venture, you absolutely must track your return on investment on an ongoing basis. The basic rules of accounting demand that your revenues be higher than your expenses. This same theory applies to running a successful online business. If you’re investing more in your company than you’re getting out of it over an extended period of time, it might be time to reconsider whether you’re in the right business. If you’re not monitoring your ROI, how will you know when trends have changed or markets have gone in a different direction?
Having a firm grasp on your KPIs is vital if you hope to run a profitable venture. Failure to do so could lead to premature business failure. Are you currently tracking all of the above-listed KPIs?