How Knowing Key Retail Metrics & KPIs Can Influence Your Marketing Campaigns
KPIs (Key Performance Indicators) and metrics are the driving force behind your retail business to ensure you can achieve maximum growth, revenue, customer satisfaction, and ultimately, success.
There are a number of important KPIs you should track within your business, from revenue-based metrics, to operational KPIs. But when specifically focusing on your marketing campaigns, you’ll definitely need to be on top of these KPIs and metrics.
Cost per Lead (CPL)
Total Advertising Spend / Number of Leads
When it comes to actually getting your customers to your website, or through your shop doors, there are a whole host of marketing activities you can embark upon, such as email campaigns, social media, organic search, paid search, radio advertising, TV advertising, the list goes on. Which methods you use depend on both your niche and your target audience, as well as the costs involved. In other words, what is your Cost per Lead?
There’s little use in a paid social media campaign if your target audience don’t use social media very much, or if the costs involved are much higher than the revenue you’re bringing in. This is why Cost per Lead should also be tracked closely alongside Average Order Value (AOV).
Average Order Value (AOV)
Total Sales / Total Transactions
Your Average Order Value (AOV) tracks how much your customers spend with you per order, which of course directly influences your revenue and profit margin.
When looking to improve your AOV for an ecommerce website, you should be using simple but effective calls-to-action (CTAs) so as not to confuse your visitors over what they’re expected to do. You can also use strategic promotions such as ‘Spend over £30 to receive free shipping’ or ‘Spend over £40 to receive a 15% discount’, as well as implementing upsell and cross-sell widgets throughout your product pages.
But your AOV efforts shouldn’t start and end with your ecommerce website. What about in store? You can still offer a discount for spending over a certain amount, and it’s just as important for your sales staff to understand the value of cross-sell and upsell opportunities.
Sales Conversion Rate
Total Sales / Number of Visitors x 100
It should go without saying that you want the majority (if not all) of your website visitors to buy from you. But if you find your conversion rate is lower than what you’d expect, then this could be a sign that your website is not working hard enough for you.
There a number of things you can do to improve conversions, including:
- Use simple and clear CTAs. Check that they only have one ask to avoid confusion.
- Ensure your product listings contain all necessary information about your products including expected shipping costs. Do you need an FAQ page?
- Invest in high quality product images, videos and 360 degree shots of your products.
- Make the ‘Add to cart’ process as quick and easy as you can. Remember: you need to remove as many barriers as possible.
- Retarget your website visitors to bring them back to your site. You could offer them a discount or other promotion to encourage them to purchase something next time.
Cart Abandonment Rate
(Total Completed Purchases / Total Shopping Carts Created) x 100
With over two thirds of shoppers bailing before buying, it can seem tough to keep your shopping cart abandonment rate down. But there are things you can do to help turn things around.
Tools such as Rejoiner and Jilt can be used to automatically send emails to any of your browsers who have given up with their purchase part-way through the checkout, also known as email remarketing. It’s important to use these emails to remove any customer doubt that may have caused the abandoned cart in the first place. An existing testimonial or review score would be good to mention here, with a link to take the customer back to their abandoned cart. This could be all you need to make a sale, which can help increase your AOV but at the same time, you will also need to recalculate your CPL as a result of using email remarketing.
However, if you find that your abandonment rates are consistently high, then there is some more groundwork you will need to do to prevent this in future. Take a look at your product listings, shipping fees, FAQ pages and returns policies. Are you positive all consumer questions are being answered within those? If not, it sounds like they could do with a rewrite.
As always, we suggest that you test as much as possible to see what works for your ecommerce business when it comes to email remarketing.
Gross Profit Margin
(Total Revenue – Total Cost of Goods Sold) / Total Revenue x 100
It should come as no surprise that an article on retail KPIs and metrics will include Gross Profit Margin.
But we’re going to try to change your thinking slightly.
When retailers think about improving profit, many will start looking for ways in which they can increase sales. They might try to upsell to previous customers via email, text message or via retargeting, or improve their social media reach to find new customers.
These are all important marketing activities and definitely shouldn’t be stopped.
But are you doing all of this as well as improving your existing product margins? Finding the balance between marketing strategies and product prices is really the key to success.
We’re not just talking about increasing prices though.
You should be tracking your true cost of sales and using this data to ensure your product prices are set at the best price for you and your business. When thinking about true product costs, it’s important to think about the landed costs, such as freight charges, shipping fees, product insurance, marketplace fees and import duty.
So whilst knowing retail KPIs and metrics will (and should) influence your marketing campaigns directly, you mustn’t forget about the underpinning product margins when measuring the success of your business.
Justine Cross is the Content Marketing Executive at Brightpearl - the #1 retail management system for omnichannel retailers and wholesalers. Brightpearl allows you to provide a truly omnichannel experience for your customers, whilst unifying all of your sales channels, inventory, accounting, CRM, suppliers, fulfillment, warehouse management, reporting and POS in one single system.