The smell of your morning coffee still lingers in the air as your daily task list looms.
Gotta answer those customer questions…
Better update those old product descriptions…
What about that new Instagram photo challenge?
Oh and making some beautiful things. You know – the whole reason your shop exists.
Thank goodness for that coffee!
It’s hard work running a small business, especially when your online shop needs so much marketing and promotion to keep making sales. Sometimes it feels like you do more “business” than “making”.
So what I’m about to suggest might sound a little scary. We’re going to go even deeper into “business”.
The level of strategy and KPIs.
Key performance indicators? Really??!
Don’t worry, these aren’t the “awkward closed-door meetings with your boss” kind of KPI. These are the kind that focus how you measure your shop’s performance and tell you when to have a celebratory drink.
If you don’t know what success should look like, how will you know when you get there? How will you know when to crack that champagne?!
You need to figure out what your “success metrics” are, first.
How’s the business going?
When I say, “How do you measure success in business?” what’s the first thing that comes to mind?
Money! Money! Money!
After all, business is all about financial success.
But measurement isn’t just about observing your current situation. It’s about understanding how you got there and where you will (or can) go next.
So while every single ecommerce shop could just use “profit margin” and “net revenue” to measure their success—and they would technically get an answer—there’s no major benefit in knowing that you had a 30% profit margin if you’ve only had 5 sales.
That doesn’t tell you whether you’re likely to get a 6th, 7th or 100th sale. (Because I think most of you would agree that 5 sales is satisfying but not success.)
Side note: it’s actually great to know that you pulled off a 30% profit margin on 5 sales, because it tells you that your pricing system is working! But it doesn’t tell you that your business is working.
Instead, choose a handful of metrics to watch or calculate on a regular basis, that give you the wider picture of your business:
- finances
- growth
- customers & customer satisfaction
- your own satisfaction (yes, you’ve actually got to enjoy this thing!).
Choose metrics that suit your situation
Shops in different situations need different metrics to show their whole picture of success.
Different shops have different goals. These goals depend on the stage of your shop, the type of products you sell, the way your visitors like to buy and even your personal lifestyle goals.
Here are some examples to start you thinking about what might be best for your business.
Just starting out
If your shop is brand spankin’ new, there’s no point wasting your time calculating difficult financial metrics. Instead, focus on visitor growth and watch where they come from.
Raw visitor numbers
Segment by marketing channel
Full time ecommerce shop
Running a full time online shop is the same as running any business, so it’s time to be your own Chief Financial Officer! Focus on how well you’re converting visitors into sales, whether you’re earning enough money to be sustainable and growing your profit margin.
Conversion rates
Revenue
Profitability
Segment by customer types / target audiences
Selling wedding rings (long research phase)
If you sell big ticket items or products that customers spend a lot of time researching or comparing, then you shouldn’t necessarily expect a high conversion rate. Instead, focus on showing repeat visits and good visitor engagement, which indicates you’re performing well in their pre-purchase phase.
Engagement rates
Visitor frequency
Consider just showing your best performing/most popular marketing channels and/or products. This isn’t cheating! It’s focusing on what’s important to your business and avoiding “noise” that might impact the averages.
Plenty of free time & want a part-time creative business
If you have the time to spend on growing your online shop slowly & steadily, then track metrics that reflect consistent growth in visitors and money coming through the door. You have time to improve things like conversion rates and profit margins without rating your business as “less successful” for you.
Increases in visitors over time
Revenue
Segment by customer types and marketing channels
Already have a full-time job & need to make ecommerce worthwhile before going “full time”
Plenty of people are in this boat! This is the tricky stage where your shop doesn’t bring in quite enough money to quit your day job, but you need more time to grow your business to get there. How on earth will you fit everything in!??
Here you need to focus on efficiency and making the most of what you already have. Maximise the value of the time you spend marketing by increasing conversion rates and how much buyers purchase in one go.
Conversion rates
Avg. transaction values
Segment by marketing channels
Profitability
Segment by customer types and marketing channels
Whoa! How do I measure these money metrics on Etsy??
If you’re paying attention, you’ll notice that I’ve got a lot of hard hitting business metrics in there – dropping terms like average transaction value and profitability. And you’ll know that those can be hard to measure in Google Analytics, for an Etsy shop. But that highlights an important part of this “success defining” process: it’s not about the tool, it’s about your business!
Define the metrics that really matter. Work out how to measure them later. (Even if that means doing it by hand.)
Put it all together & watch your progress
BONUS WORKSHEET: Grab a free worksheet for the 6 steps below as part of my free Google Analytics course. Get started now!
1. Write it down
List your success metrics on a piece of paper (TIP: go landscape!).
2. Decide on your frequency
How often will you check in? Weekly, monthly, quarterly, 6 monthly or annually? Can you automate some of these numbers in a dashboard or report so you can check more often? Write the dates across the top of the page (or do it as you go if you’re checking weekly).
TIP: The bigger your shop, the more frequently you should check your success metrics.
3. Check your benchmarks
For each metric, work out your number for today, based on how often you’ll be checking that metric. If you’ve decided that it’s a monthly metric, then record the value for the past month. Write the date and the values down the page.
4. Set targets
At the far side of the paper, set a 12-month target against every metric. If you have no idea, make a guess (you can change it later). A wild guess is better than no target at all!
5. Record your progress
At your decided check-in dates, record the value of each of your metrics. How has it changed from last time? Is it better or worse? Calculate a percentage change if you like.
If the change is significant or nowhere near where you expected, that’s when you jump into your detailed reports to find out why and what to do about it.
6. Change with the times
The metrics you focus on WILL change over time! As your shop moves through the stages of growth, you switch up your product lines or discover new types of customers, then your ideal success metrics will also change.
Don’t forget to review and renew them at least annually.
You can change your targets too. If they’re completely unrealistic or way too easy, set new ones. Just remember to leave yourself a challenge 😉
Is this all I need to measure?
No!
These “success metrics” are not the only numbers to look at! They’re just the numbers that give you the best picture of your business success (and potential success) at any point in time. You should absolutely look at a whole range of metrics on a regular basis to make day-to-day decisions and make sure your business is on the right track.
(I’ve made you some dashboards for that.)
When I say, “Don’t measure your success by your revenue or profit” when you’re just starting out, that does NOT mean you shouldn’t pay attention to your revenue and profit at all! Just don’t judge your progress by it right now.
Find your success metrics
Figuring out what success should look like for you is an important part to running your ecommerce shop like a real business. Because it is. And the more business-like you make it, the more efficient and successful you have the chance to be, leaving you more time to do what’s really important…
Making beautiful things.
I’d love to know what you think your success metrics are, including your targets if you’d like to share them below!