Online Success is Measurable – Indicators of Success
What are the most important indicators and key numbers that can be
used to measure the success or failure of internet-based sales?
These are important
questions that you will be faced with if you want lasting success with an
online sales model. In the end you will want to know if your company is
successful or not in selling online. Unfortunately, many business people are
still judging the efficiency of their online store on the basis of subjective
estimates. In doing so, the success of eCommerce sites is often overestimated –
or incorrectly underestimated. Simply being online is no guarantee of success
when there are millions of other stores. And the sheer numbers of visitors to
your site says just as little about the success of your store.
A mistake that is often made is to think that appearance is more important than usability or capability. We have seen online businesses fail because of the store owners subjective opinion versus the objective view of the visitor.
For this reason, an internet-based sales system
always includes efficient and transparent measurements
which make it possible to objectively judge success based on reliable
information.
The following rule of thumb applies:
The
higher the net margin, ratio of regular customers, the turnover per customer
and the conversion rate is and the lower the acquisition costs for new
customers are, the more efficient your online business is.
We recommend a web analytics and reporting system be used to
track results. This could be Google Analytics or our own Wagtail Analytics as examples or any tool which
allows you to keep an eye on the most important key figures and can measure and
judge the performance of your store at any time – all relevant data is
generated and clearly displayed at the click of a button.
The following overview shows the key indicators
of success that you should regularly retrieve and continually evaluate for your
online sales activities:
Good
performance
|
Poor
performance
|
|
Ratio of regular customers
|
High
|
Low
|
Turnover per customer
|
High
|
Low
|
Conversion rate
|
High
|
Low
|
Costs for new customer acquisition
|
Low
|
High
|
Net margin
|
High
|
Low
|
Uncompleted orders
|
Few
|
Many
|
Customer satisfaction
|
High
|
Low
|
These “hard”, distinctly measurable indicators of success
can be used to clearly differentiate successful online stores from less
successful ones. You should always keep an eye on these key figures if you want
long-term and lasting success.
Many potential customers use the internet to help themselves
make a purchasing decision and then don’t buy “online”, but “offline” in a
bricks and mortar store instead. This
“offline” turnover induced by the eCommerce site is often not assessed by
companies with both a virtual and physical presence. The “offline purchases”
generated by the eCommerce store should always be taken into account when
assessing online operations because in the end it really does not matter where
your customer made the purchase.
Another key indicator of success is the increase in customer satisfaction through improved
service and special offers for regular customers. In the long-term, this
increase in customer satisfaction will also be noticeable by improved customer
relations and ultimately by rising turnover per customer. The regular
assessment of customer satisfaction, e.g. through surveys or customer feedback
forms is thus a must for every online merchant.
It is very easy to ask a customer who just bought from you what they thought of the process and what would make them buy again. Most people that buy from you will truly appreciate that you reached our and asked for their opinion.
Remember you can always improve. Often it is the small things that make the big differences.
I wish you success selling online.
John
