Score Your Ecommerce Business Performance Now!

Posted on Monday, 30. September 2019 in category e-commerce. 2 min read • Written by

Andraž Štalec

Before you start thinking about the future and creating your ecommerce strategy you need to know where you are today. Even if you’ve already written down your strategy and created your Vivid Vision , evaluating your current state is an important, if not a necessary, step in measuring your performance against your long-term strategy.

Your evaluation process doesn’t need to be a complex one. It should take 15 minutes of your time, at most.

Most of the time managers tend to evaluate business performance on financial metrics such as:

  • Turnover;
  • Net profit;
  • Gross and net margin;
  • Cash flow, etc.

While these metrics are great, they are only a measurement of your past performance and may have nothing to do with the future performance of your business.

Of course, a poor financial performance limits your ability to act in the future. You need money to stay (and excel) in business. But what really matters goes far beyond your financials.

Today, we are introducing a Red Orbit Ecommerce Scorecard, a simple framework that can be used to assess all your ecommerce business’s vital signs — including your:

  1. Customers;
  2. Digital assets;
  3. Customer experience;
  4. Marketing;
  5. Product sales;
  6. Operations;
  7. Finance.

These additional areas of business are influencing your future performance much more than finance. If you are losing your loyal customers, your customer experience is terrible or your internal processes are inefficient, you will very likely have problems keeping up the same pace of growth.

How to Evaluate Your Ecommerce Business?

Use the Red Orbit Ecommerce Scorecard and give yourself a score from 0 to 10 for each of the areas covered by the scorecard:

  1. Customers
    1. Customer segments;
    2. Customer retention;
    3. Customer growth;
    4. Customer lifetime value;
    5. Customer profitability;
    6. Purchase frequency.
  2. Digital assets
    1. Digital assets used;
    2. Digital channels utilization;
    3. Paid vs owned channels traffic ratio;
    4. Website performance;
    5. CRM utilization.
  3. Customer experience
    1. NPS;
    2. Complaint rate;
    3. Cross-device experience;
    4. Cross-platform experience;
    5. Post-purchase experience;
    6. Order completion rate.
  4. Marketing
    1. Advertising spend;
    2. Marketing effectiveness;
    3. CAC;
    4. Market position;
    5. Brand perception.
  5. Product sales
    1. Category management;
    2. Market shares by category;
    3. Market reach;
    4. Shopping funnel performance;
    5. Revenue distribution;
    6. COGS;
    7. Price competitiveness;
    8. Share of products sold at a loss.
  6. Operations
    1. Team agility;
    2. Time to market;
    3. Staff training;
    4. Output per person;
    5. Performance advantage.
  7. Finance
    1. Turnover/revenue;
    2. Gross profit margin;
    3. Net profit;
    4. Return on capital;
    5. Cash flow;
    6. Cash in bank;
    7. Cash conversion cycle;
    8. Days sales outstanding.

What do the scores mean?

Scores from 0 to 4 suggest something is seriously wrong. 
Scores from 4 to 6 suggest mediocrity.
Scores from 8 to 10 suggest you’re doing great.

When Should You Score Yourself?

Score your ecommerce business each month. Invite your senior management to submit their scores and then have an open discussion about it.

Challenge each other regarding the scores:

  1. Can you justify the scores?
  2. What’s the trend behind each score?
  3. What needs to be done to advance and get a higher score?

Identify your weaknesses. Any score below 5 needs your special attention. These are the most problematic areas of your business.

The Red Orbit Ecommerce Scorecard gives you a much more balanced view of how your ecommerce business is performing. Now that you know where you stand, you can start thinking about where you are headed and how you will get there.

 

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