Key Indicators That You Should Be Looking to Improve a Specific Growth Metric in Your Business
With all the tools available to support entrepreneurs these days, you probably have a wealth of data at your fingertips. That however, while it may seem like a good thing, can lead to paralysis if you don’t know where to focus.
The top line rule for business metrics - a key performance indicator (KPI) should be just that - it should tell you at a high level how your business is trending over time and thus should be tracked on a regular and specific basis. A level below that are other data points that help you to troubleshoot problem areas within those KPI trends.
Each business is unique, but in general the metrics that help you understand if your eCommerce Subscription business is healthy and growing on the topline have to do with 3 things - how many new customers are coming in, how many existing customers are sticking around, and how engaged your customers are with your business.
You might need to improve your conversion rate if:
Why Conversion Rate Matters:
For some portion of the new traffic driven to your website - you are paying for that traffic. Ideally, 40% or more of your traffic is organic/non-paid (but that can be tough if you have aggressive growth goals), 25% or more is from referrals, and the remainder is from paid traffic. In simplest terms, you want as many of these new visitors to complete your sign-up as possible - not just because that means more customers, but in order to have a lower CAC. Your CAC is calculated by dividing what it cost you to acquire customers in a certain time period divided by all customers acquired in that same time period. You are distributing your acquisition spend across those customers that were essentially free as well as those from paid channels to track this metric. The lower your CAC - the less time you need to break even on that spend; and the longer the revenue from that customer has to contribute so that it can be reinvested into your business’ growth. You need to ensure, no matter where the traffic comes from, that they feel comfortable understanding your product/service and buying from you.
You might need to improve your retention rate if:
Why Retention Rate Matters:
As we’ve discussed in previous posts - losing customers is expensive for a variety of reasons, but number one is the exponential impact that losing customers has on your top and bottom line revenue. Much like a retirement investment benefits by starting earlier, so does the retention of customers. Your investment in customers can’t grow to its full potential when those customers are falling out early and you are constantly chasing new customers to replace them. As noted related to conversion rate - each consecutive order the repeat customer places helps your business toward profitability. By looking at all of the factors that cause your customers to cancel and understanding the typical lifecycle of various cohorts (groups) of your customers you can find programs that will help to keep each of these cohorts to be better engaged. You will understand their problems and solve them at each point of their journey with you which will make them stickier and give them reasons logical and psychological for having a sense of loyalty to you.
You might need to improve your customer engagement metrics if:
Why Customer Engagement Metrics Matters:
Customer engagement doesn’t simply refer to your social media following or email rates - it has do with every touchpoint your customer experiences including how much they are willing to vote with their wallet. Depending on your business - how much customers spend on each order, if they are able to increase or add on to their subscription and how often they purchase from you matters as much as how often they read your blog, emails, enter contests, or share content with you. Most people have heard of customer personas when talking about your target market - but what is your brand persona - who are you to your customer? A friend, a mentor, an expert, a liason, a comedian… This matters because it’s how customers see you in solving their problem and how excited they get about hearing from you or telling friends about you. When you reach out to them regularly - do they care?
Are you seeing areas that could use improvement in your business? Do you know how to address them? If not - it might be a good idea to get help from an expert in customer experience.
Stay tuned for our next blog: "How to increase your customer engagement metrics"
For an evaluation of your current customer experience/retention strategies and where to focus, fill in our Customer Insights & Action Plan request. There are often two or three quick wins you can implement within a few weeks to reduce churn or start winning back lost customers immediately. Let’s get started finding some revenue opportunities for you.