7 Key Sales Metrics for Your Digital Business and How to Calculate Them
Learn what key sales metrics say about your business!
Which sales metrics do you use in your digital business? Sales metrics are nothing short of fundamental if you want to monitor your results and make your business grow.
If you are not sure which sales metrics you do use, or if you believe that the number of sales made by itself is a satisfactory parameter, think again. There is a lot more data you need to analyze in order to evaluate the performance of your business.
For example, creating strategies that make your online store grow – if you have one – is important. However, these actions need to be thoroughly thought-out so that you know the ROI of each action.
If you have never heard of other sales metrics, or believe that calculating them is very complicated, don’t worry. Here you’ll find the key ones and we’ll show you how to calculate them accurately. Take a look!
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The importance of analyzing sales metrics
By analyzing sales metrics for your digital products you will be able to identify what is working and what is not, and also propose short-, medium- and long-term goals.
This analysis should be tailored to your business needs. There are many figures to be observed, but knowing which are fundamental for planning actions that will guarantee your business success, is crucial. Thus, you won’t be lost in the middle of a series of calculations that will not reveal anything really relevant.
There are many tools and platforms that will make it easier to access these numbers, and this will go a long way toward making your work more efficient
Therefore, analyzing your business sales metrics helps in measuring your brand performance, and increases the predictability of actions.
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7 essential sales metrics for digital businesses
Sales metrics help and may guide many processes of a business. They’ll allow you to get to know your target audience better and figure out what their expectations are about your brand.
Take a look at some of the important metrics to assess processes:
1. Cost Per Acquisition (CPA)
Cost Per Acquisition (CPA) is the metric that sums up all amounts invested to make users get to your site, divided by the number of clients acquired.
For example: if you’ve invested USD 500.00 in media to advertise your digital product and this resulted in 1000 new customers, your CPA was USD 0.50.
A low CPA number means good strategies. But the most important is cross-checking this metric with the medium ticket result – which we will show below – to know the return your marketing actions are generating to the business.
2. Return On Investment (ROI)
The Return On Investment (ROI) is an important metric for any business. This is how to calculate it: subtract the total invested from the profit obtained. The result is divided by the total invested and multiplied by 100.
For example: suppose that you have invested USD 1,500.00 in your brand, and this investment has generated a profit of USD 10,000.00:
ROI = (10,000- 1,500) / 1,500 x 100
ROI = 567%
So for every USD 1 you invested, you received about USD 5.70 in return. Therefore, your business is generating profit and, if possible, you should increase your production and sales.
3. Conversion Rate
Conversion rate measures the number of visitors the website had who actually made a purchase or converted to the desired action. Thus, the higher the conversion rate, the better the results.
If you have a high traffic rate, but few conversions, this may imply some problems. The website may be not responsive, the purchase and payment process may be complex or the advertising may be badly segmented, thus attracting the wrong people to your website.
The calculation must be performed from the number of converted visitors divided by the total number of visitors to the website, and the result should be multiplied by 100.
If last month you had 1000 visitors to your website that generated 300 conversions, for example, the calculation would be:
(300 / 1,000) x 100 = 30%.
4. Average Ticket
The average ticket is an important metric that demonstrates the average amount spent by your customers. Many people become dazzled by a high number of sales, but this does not mean significant value if each sale does not pay your costs of acquisition (CAC), for example.
If the average ticket of your brand is low, then thinking about strategies to encourage cross and up-selling is probably feasible. The calculation results from the monthly revenue divided by the number of customers in the same period. If your revenue was USD 10,000, and the number of conversions was 300, then the average ticket of each customer is USD 34.
5. Cart abandonment rate
This sales metric is useful for assessing issues that may be occurring at the end of the purchase process. When the user reaches this stage, they are signaling their interest in the product, but there is a problem — for example, the shipping cost or the payment forms available are limited
This is how you calculate it: the number of visitors that have abandoned the cart/number of users that have initiated the transaction, multiplied by 100.
For example: 500 users started the checkout process and only 300 completed the purchase. Then, the cart abandonment rate is 40%.
6. Monthly growth
The monthly growth calculation must be measured, thus allowing an annual evaluation and the proposal of long-term goals. The amount may be obtained by subtracting the previous month’s revenue from the current month’s revenue. The result must be divided by the previous month’s revenue and multiplied by 100.
Then: this month, your brand’s total revenue was USD 10,000 and, in the previous month, your revenue was USD 7,000. So your growth was 42%.
(10,000 – 7,000) / 7,000 x 100 = 42
Whether or not this figure is good depends on analyzing the growth data of your industry or doing research for a few months to find parameters to define a good standard.
7. Net Promoter Score (NPS)
The level of satisfaction of customers (NPS) allows identifying consumers that really liked your product. Unlike a qualitative satisfaction survey, NPS assesses customer satisfaction in numbers.
It is, then, possible to identify customers with negative opinions that rate lower than 6, neutral customers that rate from 6 to 8, and promoter customers that score the brand with grades 9 and 10.
This kind of survey must be built with questions like: “from 0 to 10, how would you rate our product/service?” or “from 0 to 10, how likely are you to recommend this brand to someone”?
This kind of survey can be submitted after purchase by email or done through a website plug-in, for example.
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Transforming metrics into actions
Analyzing and capturing sales metrics demand a lot of time. It is then necessary to document them and create effective systems that really help and transform numbers into practical ideas.
In the beginning, the entire process may seem a little complex, but, as time goes by, extracting relevant information from the data will become easier.
Download our free Spreadsheet: key metrics for the success of a digital product and automatically calculate your business results!