How to Better Monitor and Measure Your Ecommerce Store's Performance - 3 Often Overlooked Metrics
Dropshippers nowadays are often bombarded with different types of metrics when learning how to manage their business, such as return on investment (ROI), conversion rate, and cart abandonment rate. As a result, many experienced ecommerce store owners tend to overlook the less-often mentioned ones, which are equally important to their successes. In this article, we will introduce 3 examples of such metrics and provide some recommendations on how you can improve them.
1. Product Research Rate (PRR)
Winning products are undoubtedly among the most, if not the most, crucial elements of a dropshipping business. No winning products means you do not have a consistent cash inflow to keep your store running at a healthy level, and the more winning products you have, the more sustainable your growth is. Generally speaking, the more products you launch and test, the more likely you find winning products.
Therefore, you should create and utilise a system to monitor your PRR. As a reference point, we will propose a general framework and simplified system below. Depending on your strategic visions and priorities, you could modify and adapt it to your business, such as including more factors that you deem important.
Firstly, you should create a Google/Excel sheet, which contains one tab for every month. This would help you manage your progress over time. Each tab should consist of the criteria below, and you should have a KPI for each of them to motivate your team and ensure that you are growing instead of staying still or slacking off.
Number of researched products (a specific number, e.g. 500)
If your product research team cannot reach this goal, it might indicate that there are some internal issues that need to be solved in order for the research process to become more efficient.
Number of qualified products (a percentage, e.g. 20% of researched products)
If the number is too low, you might want to discuss with your team and find ways to optimise the product research criteria such as pricing, quality, and functionality level.
Number of launched products (a percentage, e.g. 50% of researched products)
Whether you can achieve this goal depends on your team’s abilities to generate quality copywriting and creative collaterals, marketing skills and techniques, as well as capabilities on inventory management. If it is too much to handle on your own, you could seek help from a reliable dropshipping agent on back-end matters, such as inventory stocking, warehousing, and order fulfillment.
In some cases, you might struggle meeting all of the goals above. This might be a sign that you are not scale ready. For more details, you could read more on one of our blog posts that discuss the reasons behind why you cannot achieve sustainable growth and how you can cope with it.
2. Unique Product Ratio (UPR)
As mentioned above, a higher number of winning products means a higher likelihood of success for your ecommerce store, and more testing means higher chance of discovering winning products. Hence, experienced dropshippers tend to dedicate much of their resources to build a strong product research team so that they can push out as many items as possible. However, duplicate products is a common issue faced by many product research teams. A high percentage of duplicate products means a high opportunity cost for your business (i.e. more time spent on researching the same products instead of multiple unique ones).
If you are struggling with this, you can try to implement our suggestion below. Here, there are two keywords that you should take note of.
You should create ‘niches’ within your research team, where each group is dedicated to specific types of goods. For instance, if your store sells sports and fitness goods, some criteria that help divide the researchers could be athletic apparel & shoes, workout accessories, and exercise equipment. This would make the research scope of each team clearer and prevent them from wasting time on exploring other groups’ niches.
Your team should compile all the researched products in ONE system. With that being said, each niche could have their own sheet or document, but all of the work done by the research team should be contained in a centralised system. This would benefit your team by minimising the chance of each niche’s members researching the same products as their teammates. Moreover, this makes it easier for the entire product research department to find, cross-reference, and update information as well as renders the decision making process more efficient. At the end of the month, you should also update this figure to the system used to monitor PRR as introduced above.
3. Customer Support Response Rate (CSRR)
As the dropshipping industry becomes more crowded, businesses need to find ways to differentiate themselves from other market players. These could include fast and free shipping, unbeatable deals, and customer service is definitely among the top factors. At the very least, you should aim to reply to your customers within 2 business days or faster if your resources and capabilities allow. If you don’t have the answer, you should inform the shoppers that you have received their requests and promise to get back to them as soon as you have a clear picture of the situation. Even better, you can give customers an approximate time that it would take so that they can better manage their expectations. Providing good customer support would help you build stronger customers’ loyalty. A high retention rate, in turn, would bring you more income in the long run. Moreover, if buyers are impressed with your professionality and dedication, they are more likely to help you promote brand awareness and refer your store to their families and friends.
There are multiple ways that you can improve your customer service. For example, you can train an in-house customer service team or outsource virtual assistants (VAs) to help you handle customers’ queries. To make the process of responding to shoppers more efficient (i.e. speed up CSRR), you can create some standardised response template and framework, especially for the common questions and concerns that people might have about your store and products. Essentially, it saves them effort in drafting the messages because all they need to do is to ‘fill in the blanks’. Moreover, you can also integrate automation into the process, such as using a chatbot. This not only saves your customer support team from tedious labor work but also boosts customer satisfaction because the system works 24/7 and replies to your buyers instantly.
If you are planning to scale your dropshipping business, besides monitoring the metrics above, which mostly has to do with front-end development, you are also encouraged to work with a reliable dropshipping agent who helps you handle back-end issues. They usually provide a wide range of services from product & supplier sourcing to warehouse storage and ecommerce order fulfillment, or branded packaging & private labelling to quality inspection & product certification. With 30+ years of experience in logistics industry and 5+ years in dropshipping sector, Xianchao Logistics could help to bring your ecommerce store to a new horizon. Contact us today to find out more!
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