B2B ecommerce has become increasingly efficient in recent years due to the technical and intellectual progress the market has experienced. But in order to measure the success of a B2B ecommerce business, it is important to track certain key performance indicators (KPIs) and metrics. In this article, we will discuss some of the most important KPIs and metrics for B2B ecommerce and how to use them to optimize your business.
1: Sales and Revenue
Sales and revenue are perhaps the most obvious KPI for any business, and B2B ecommerce is no exception. These metrics allow you to measure the total amount of money your business is bringing in from the sale of products. It is important to track both overall sales and revenue, as well as sales and revenue by product, in order to identify any trends or areas of improvement in your B2B ecommerce strategy.
In addition to tracking overall sales and revenue, it is also helpful to track the average order value (AOV). This metric measures the average amount of money spent per order. A high AOV is generally a good sign, as it indicates that customers are willing to spend more money on your products.
2: Conversion Rate
Conversion rate is the percentage of visitors to your website who complete a desired action, such as making a purchase or filling out a form. A high conversion rate is generally a good sign, as it means that a large percentage of your website visitors are taking the desired action. In order to improve your conversion rate, it is important to identify any bottlenecks or obstacles that may be preventing visitors from converting. This could include poor website design, confusing navigation, or a lack of trust in your business.
There are a few different ways to measure conversion rate. One common method is to divide the number of conversions by the number of website visitors and multiply by 100 to get the percentage. For example, if you had 1000 website visitors and 100 of them made a purchase, your conversion rate would be 10%. Another way to measure conversion rate is to divide the number of conversions by the number of leads and multiply by 100. A lead is a potential customer who has expressed interest in your business, such as by filling out a form or signing up for your email list.
3: Customer Lifetime Value (CLV)
Customer lifetime value (CLV) is a metric that measures the total amount of money a customer is expected to spend on your products over the course of their relationship with your business. This metric is important because it allows you to determine the value of a customer and make informed decisions about how to allocate marketing resources.
There are a few different methods for calculating CLV, but the most common method is to multiply the average purchase value by the average number of purchases per year and the average customer lifespan. For example, if the average purchase value is $100, the average number of purchases per year is 2, and the average customer lifespan is 5 years, the CLV would be $1000.
It is important to note that CLV is an estimate, as it is based on assumptions about future customer behavior. However, it is still a useful metric for understanding the value of a customer and making informed business decisions.
4: Customer Acquisition Cost (CAC)
Customer acquisition cost (CAC) is a metric that measures the cost of acquiring a new customer. This includes all marketing and sales expenses, such as advertising, promotions, and sales commissions. CAC is important because it allows you to understand how much it costs to acquire a new customer and compare it to the lifetime value of that customer.
In order to calculate CAC, you will need to add up all of your marketing and sales expenses for a given period of time and divide that by the number of new customers acquired during that same period. For example, if you spent $10,000 on marketing and sales expenses and acquired 100 new customers, your CAC would be $100.
It is important to track CAC in order to understand the efficiency of your marketing and sales efforts. A high CAC could indicate that you are spending too much to acquire new customers, while a low CAC could indicate that your marketing and sales efforts are effective and efficient.
5: Customer Retention Rate
Customer retention rate is the percentage of customers who continue to do business with your company over a given period of time. This metric is important because it allows you to understand the loyalty of your customer base and identify any issues that may be causing customers to leave.
There are a few different ways to calculate customer retention rate, but the most common method is to divide the number of customers at the end of a given period by the number of customers at the beginning of that period, and multiply by 100. For example, if you had 100 customers at the beginning of the year and 90 customers at the end of the year, your customer retention rate would be 90%.
It is important to track customer retention rate in order to identify any issues that may be causing customers to leave and take steps to address them. This could include improving the quality of your products, offering better customer support, or providing more value to customers.
In conclusion, B2B ecommerce KPIs and metrics are important tools for measuring the success of your business and identifying areas for improvement. By tracking metrics such as sales and revenue, conversion rate, customer lifetime value, customer acquisition cost, and customer retention rate, you can gain a better understanding of your business and make informed decisions about how to optimize it – whether for your marketing channels or ecommerce branding strategy. By monitoring these metrics regularly and using them to guide your business strategy, you can ensure that your B2B ecommerce business is successful and sustainable in the long term.
How our team of ecommerce experts can help
It is not always easy to identify the metrics to focus on and the KPIs that need improvement. That is where our team of ecommerce B2B experts can help. Our team at Human After All has the knowledge and experience to help you identify the specific metrics and KPIs that are most important for your ecommerce business, and develop a plan to improve them. Get in touch today and we can provide you with a preview of what we’re capable of doing for your business.