Do you wish to understand better what the main sales KPIs are and how to measure each one of them? Continue reading!
One of the main reasons for success in the e-commerce market is the possibility of measuring in detail all the results involved in the business, allowing for the evaluation of which actions have obtained a good return and also those that need to be improved to yield better results.
However, not all the figures are important to your company, and it is necessary to determine the ones that are really relevant to the business. To that end, there are the sales KPIs (Key Performance Indicator) — indicators that are used to measure certain actions according to the goals set.
Do you wish to understand better what the main sales KPIs are and how to measure each one of them? Continue reading!
Contents
Difference between sales KPIs and metrics
First of all, we need to explain that, contrary to what many people think, KPIs are not the same thing as metrics. In fact, metrics are just something that should be measured whilst sales KPIs, as mentioned earlier in the post, are important indicators of a goal. This means that if a metric is relevant to your strategy, it should be viewed as a “key indicator”.
Therefore, keeping a long list of indicators that must be measured and analysed is a waste of time since much of the information is not relevant to strategies and results.
Well, now that you have understood that part, we are going to show the KPIs that generally have a direct influence on sales goals.
Average ticket
Basically, the average ticket shows the average that each customer spends on a purchase so that you can also understand the consumer behaviour. That way, it is easier to find and correct possible flaws and create new strategies to enhance the results of this metric, such as increasing the product mix or encouraging the customer to buy more items related to the one they are already buying.
To measure the average ticket is very simple: you just have to divide the total invoicing by the number of orders made over a period of time. For example: in one day, the sales volume of your business was 475 euros that represented the sales to 100 customers in total. If we divide 475 euros by the 100 customers, we will have the amount of 4.75 euros. This means that the average amount that each customer spent on that day was 4.75 euros.
Conversion rate
The conversion rate is one of the most important sales KPIs since it shows the efficiency of your team and the strategies planned, that is, it relates the number of opportunities generated and what has actually been converted into sales resulting from those actions.
This way, you can visualize the best solutions to increase the conversion rate, such as having a more interactive page and an attractive layout, improving the photos, entering more precise product information, etc.
To calculate this indicator, you must divide the number of orders made by the number of opportunities generated, multiplying by 100.
Leads generated
Leads are prospects, that is, the ones that took an interest in the products or services presented by your service in such a way that, after, they must be converted into customers. This indicator is important mainly to show the results of the marketing actions and strategies since it is the sector responsible for generating opportunities to attract new leads.
In order to analyse the number of leads generated, it is necessary to search for data from prospects obtained in specific actions, such as, for example, the subscription of a newsletter. With this, you will have a list of the information and the total number of leads obtained in a given period.
Customer acquisition cost (CAC)
The customer acquisition cost (CAC) shows all the investment that is made for a consumer to become a customer. Thus, it is possible to evaluate whether a certain action is worth it or not, because sometimes you may be investing a high amount to get a customer compared to what they are spending on the purchase.
In order to get that information, you must analyse all the investment made, such as marketing strategies and other expenses with the sale. After that, it is necessary to confirm how many customers were won in the given period and then divide the total investment by the number of new customers.
Let us suppose that in 12 months you invested 1,184 euros and generated 50 new customers. The calculation is as follows: 2,368/50=23.68. That is, each new customer costs your business 23.68 euros.
Recommendations
One of the cheapest ways to attract more consumers is through recommendations. If you are getting new customers through recommendations that means a good part of your customers are satisfied with your products and service.
To measure that index, you must ask (and record) for each new customer how they got to your company. This research can be done at the time of the purchase or after the purchase is completed. Thus, you are able to evaluate after-sale results and which actions are responsible for customer loyalty or even which processes may be damaging the sales and need to be improved.
Average service time
The service has a direct impact on sales, especially in terms of time. Nowadays, the consumer wants to be served as quickly as possible. And that makes all the difference to customer loyalty and future recommendations to other people, as seen in the previous topic.
Because of this, it is crucial to estimate, based on all the services provided by your business, what is the average time spent with each one, taking into account the problem resolution. This indicator should be analysed in terms of the service provided before the purchase, such as the case of a doubt on the consumer’s part and in the after-sale, in case, for example, there is a problem with the item purchased.
As you can see, sales KPIs must be chosen according to your company’s reality and goals. This way, your team will obtain exactly the information it needs, optimizing the work of measuring results without wasting time on irrelevant information. Remember that evaluating and understanding this data is fundamental to improving your e-commerce process, strategies and, consequently, sales.
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