Key Performance Indicators. KPIs. Just by name, they can be intimidating. Which ones should you track, which KPIs give the best overview of the current state of your business? Sometimes, it's just a matter of not having the time to really stop and analyze the situation.
However, knowing these key numbers will make you a better wholesaler. Metrics and KPIs are an important indication of the state of your business - where you’ve been and where you’re going.
We’ve been talking about moving to wholesaling online a lot, and why B2B eCommerce is the future of the industry. What we haven’t touched on is yet another aspect of your operations that will get easier and more accurate when you move online: metrics, KPIs, and measuring performance.
As a successful wholesaler, you probably have already developed several metrics and KPIs that you use often to measure the state of your operations and overall success. These metrics usually fall into one of three categories: quality, service, and business operations.
Here are a few sample metrics that are especially relevant to wholesalers:
This is a quality metric that measures the timeliness of how quickly you fill the order and ship it, as promised.
A quality metric from the customer’s perspective, a measure of the accuracy of shipping/order fulfillment.
A service metric, OTIF measures, from the customer’s perspective, if you were able to deliver on time, in terms of the product itself and quantities ordered.
Service metrics that encompass calculations that measure the way you use your assets and liabilities and if you’re using them in the most efficient manner. This includes sales to inventory ratios, fixed asset turnover, and liability repayment.
A business operations metric, ROE measures profitability, as a percentage of the equity of shareholders.
Another business operations metric, ROA measures how efficiently you use your assets to generate profit.
Of all the metrics and KPIs a wholesale business can track, there are two in particular that stand out. They are very important to your operations, a good indicator of some key aspects of your workflows, and are pretty easy to improve by moving your store and operations online. These two metrics are:
This is the total value a customer will bring to your business over the course of their lifetime, which is while they are your customer.
This measure is significant, because it helps you see not only what customers buy the first time, but whether you are able to get them to return, multiple times.
Going online can increase the LTV because you will be simplifying the order process, making it easier for customers to order from you and making it easier to research your product. They will be more likely to return if they find a quick and easy ordering process.
According to a report by Accenture, in which they surveyed companies that moved to B2B eCommerce, the data backs up this likely increase in LTV.
And 100%* of those who were wholesaling online and responded in this survey had quick and easy access to the data that helped them reach these conclusions.
*ok we’re assuming on this one, but the likelihood is severely high.
This is the time it takes from the point that your customer first considers placing an order to the time that order reaches your fulfillment center.
With a B2B eCommerce store, this metric will improve a lot: placing the order itself is simply faster, and the overall sales process is streamlined. With customers able to access details for research and place their order at any time, the visit to order should also decrease.
With a shorter visit to order time, you can also increase a customer’s lifetime value, and overall profits.
Measuring the state of your operations will become easier when you move online, especially if you’re using an online platform like TradeGecko. For example, we have a sales intelligence section that helps you access data about the overall state of your business in a few clicks.
TradeGecko sales intelligence generates reports that let you see overall profit, potential profit, and Cost of Goods sold for any given time period. It also lets you break sales down by customer and track their behavior - allowing you to understand your customer behavior better.
Understanding that behavior gives you insights that can be turned into actionable steps that will improve the metrics mentioned above such as Customer Lifetime Value.
Moving online not only gives you access to this data quickly. You can be sure that the data you’re working from is up-to-date and realistic, giving you more accurate calculations with much less time spent on them.
Moreover, being able to simply find sales data in a certain time period helps you spot-check the state of your business, without having to take a lot of time out of your day to do manual calculations and updates. Tracking these numbers immediately becomes quicker, easier and more efficient.
Moving online will take a process like measuring and calculating metrics and KPIs and simplify it, making it more accurate and relevant to your day-to-day operations, but that’s not all. The insights you find will also help strategic decisions simpler too: marketing, pricing, increasing that all-important LTV, and more.