For every Ecommerce business, financial metrics is where the rubber hits the road. You can create a nice website & do marketing campaigns. But financial metrics tell you the real story.
They tell you which customers are most valuable, which products are in demand, how your marketing campaigns are working, etc. Here are 9 useful financial metrics and KPIs for your Ecommerce business.
9 useful financial metrics for Ecommerce
- Total gross revenues – This is the total sale made by your business. You can also track net revenue in case there are any negative payments like refunds.
- Gross & net Profit
- Gross Margin by product type – This financial metric gives you an idea of the most profitable and loss making products. Accordingly, you can create marketing campaigns to promote the top sellers.
- Avg. revenue per customer – This gives a fair idea about how valuable each customer is. Accordingly, you can allocate the marketing budget for each customer.
- Avg. cost per customer – This is basically the average cost incurred to acquire a customer. This needs to be tracked separately for a new customer and for existing customers. The former is a one time cost per customer. The latter will be a recurring cost.
- Avg. profit per customer
- Revenue by product line – This tells you how each product line/brand is doing. You can add/remove product lines based on revenue trends. It is a good indication of brand preference of users.
- Revenue by product – This financial metric tells you how each product is doing. It is a good indication of what users like/dislike. You can add/remove products based on revenue trends. You may also see some periodicity in this. So you may need to bring in/take out products from catalog during some parts of the year.
You can set monthly goals for each of these financial metrics and KPIs to improve revenues & profits. Tracking them daily, taking action based on periodic review will get you there over time.
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