Back in 2011, Concord Pet Food & Supplies was just entertaining the notion of e-commerce.
The Wilmington, Delaware-based company, started in 1978 by Larry Mutschler, has seen a lot in the past 40 years, so Mutschler wanted to be thoughtful about the move. Because of that thoughtfulness, Concord has weathered competition from big retailers like Petco and PetSmart, and it watched as Pets.com famously went under during the dot-com crash in 2000.
All the while, Concord Pet Food & Supplies has grown steadily. Mutschler opened his first brick-and-mortar location in 1981, and by the turn of the millennium, he was pushing 10 stores. They’ve even got their own bill counting machines, like the Carnation’s ones (carnation-inc.com/collections/bill-counter-machines) in each store to help manage the amount of revenue they’re creating. Today, the company – whose leadership now includes Larry’s children, Lindsay and Larry Jr. – has 30 locations around the Mid-Atlantic.
But let’s not get too far ahead in the story. Rewind back to 2011, when Mutschler told report Pet Business reporter Mark Kalaygian that he was thinking of taking the company online. “I’ve been thinking about warehousing, and if I got into a warehouse, I would probably get into online retailing,” Mutschler said. “I may even try to get started through a distributor, through dropshipping the best dropshipping products perhaps.”
A few years later, that’s exactly what Concord did. The company enlisted the services of New Media Retailer to create an online shopping experience that mirrored the in-store shopping experience that Mutschler and his team had spent four decades perfecting.
Making a move like this isn’t easy for any company of any size. Going from a store that serviced the local community to going online where sales can be made all over the world is certainly a challenge. However, there are little things that can make the move easier, such as using a Registered Office Address Service to keep your business address in a similar location to still attract local customers. In Concord’s case, embracing e-commerce meant getting people to oversee the administration of the online storefront, to market deals and promotions online, and to ensure that the company could meet physically meet the demands created in an online space (e.g. ensuring sufficient stock to fulfill orders online and in-store).
The work appears to have paid off. Dan Sultzbach, Concord’s marketing director, tells New Media Retailer that the company’s Cyber Monday 2018 promotions brought in an additional $20,000 in revenue. Those are attractive numbers for any brick-and-mortar retailers, especially considering that’s essentially just one storefront.
Whether it’s pet food, or cbd oil drop shipping, taking your business online requires work, but it shouldn’t be a shot in the dark. E-commerce provides businesses troves of data and customer feedback, and it’s a sales channel that can complement your existing brick-and-mortar locations.
The key to making e-commerce work is being able to measure results. Here are the tasks to assess and the KPIs to track when opening up an online storefront.
Assessing Your Marketing and Sales Strategies
Just as in brick-and-mortar retail, there is a cost associated with getting people to your e-commerce shop. In the physical world, that cost might be premium rents to capture foot traffic from the sidewalk. Online, that cost might come from Facebook, Instagram or Google ads, the blog posts you write to attract organic traffic, or perhaps influencers you’ve partnered with.
Whatever you’re doing to attract visitors to your online shop, keeping track of customer acquisition costs is essential if you want your e-commerce channel to reach profitability. “In order to make money, your customer acquisition cost needs to be less than your customer lifetime value,” writes Jilt’s Beka Rice. “Ideally, your acquisition cost should be less than your average order value so you make money off every new customer.”
In other words, the ideal scenario is one in which your average customer spends more on their first purchase than you spent attracting them. Failing that, you can still keep your e-commerce operations profitable if your customers spend more money over the course of their relationship with your business than you initially paid to get them through the door.
The KPIs to track:
- Average order value
- Customer lifetime value
- Customer acquisition cost
Identifying Your Best Opportunities For Growth
Successful companies obsess over figures that provide opportunities to increase revenue, says HubSpot’s Aja Frost.
There aren’t any shortage of KPIs to track, either. Frost has several herself, but perhaps the most useful will be total revenue, revenue by product or product line, and year-over-year-growth. These are probably already metrics you’re tracking in your physical stores, so applying those calculations to your e-commerce channel should be straightforward.
Be careful not to stick to surface-level KPIs, warns e-commerce expert Kunle Campbell. Total revenue figures will be obvious, which is why you should segment revenue as much as possible. Specifically, Campbell recommends calculating sales per product category and sales per promotion.
Finally, look into what could possibly be holding sales revenue back. Cart abandonment rate is one KPI that every company selling items online should track, says Zauis’ Karen McCandless, and it’s a useful metric for understanding whether your sales process could use a little polish.
“There are many reasons why customers will abandon your site without making a purchase, ranging from technical issues to the cost of delivery to untrustworthy and not-so-secure payment options,” she writes. “Finding out how big a problem cart abandonment is for your site is the first step towards being able to solve some of these issues and improve your checkout process.”
The KPIs to track:
- Total revenue / Total revenue by product or product line
- Year-over-year growth
- Sales per promotion
- Cart abandonment rate
Earning Repeat Business
It’s important to know whether you’re getting return customers back to your online shop.
It’s hard to measure how happy your customers are, says Userlike’s Tamina Steil. Still, it’s worth polling shoppers after the purchase about how they would rate your business, your products and your customer service (if applicable). They can simply respond with a score between 1 and 5. That aggregate number is known as the customers satisfaction score (sometimes written as “CSAT”).
Alternatively, you can get a feel for customer loyalty and customer satisfaction by looking at product reviews, whether those are reviews posted directly to your website or posted elsewhere online. If you’re selling products that people don’t like, you could be costing yourself repeat business. A review analytics tool can help you listen to customers then pick out key information that can be used to influence future product direction.
It’s also important to know how willing a customer is to recommend you. “Measuring customer advocacy and the health of your customer base is critical and is a good leading indicator of whether your offering is truly differentiated vs competitors,” writes EKA Ventures’ Camilla Dolan. She offers a couple one additional way to measure customer advocacy: Customer referral rater or the rate at which customers refer your product to others. This is calculated by looking at the number of new customers that each existing customer brings in.
Finally, consider asking customers for regular feedback throughout their relationships with your business. This could be a brief survey or as simple as sending a “Would you recommend us to a friend?” email after order fulfillment. That way, you receive consistent incoming feedback and can fix weak processes quickly.
The KPIs to track:
- Product review scores
- Customer referral rate
E-Commerce Success and the Big Picture
KPIs are a great way to measure the success of your e-commerce business and check that everything is heading in the right direction. They can be used to change course if needed or help your business gather speed if things are going well, they can even help you work with the best E-commerce platforms, such as FastSpring. But you shouldn’t obsess over them. The more time you spend tracking statistics, the less time you spend implementing what you’ve learned.
By all means, take note of KPIs, but don’t let analysis paralysis take hold and knock you off course.
Images by: Bench Accounting, Igor Miske, Ali Yahya