KPIs Online Shoe Retailers Need to Keep an Eye on

Luna ShirleyGeneral

KPIs Online Shoe Retailers

PART I.

There are a plethora of KPIs which marketers should keep an eye on. Some of them may be prone to building a highly complex dashboard with most, if not all KPIs known to humankind. Others prefer to keep to their single primary KPI using other metrics only on an ad hoc basis to help them optimize the performance of that lone KPI.

Regardless of the style in which marketers work with their KPIs, we believe that any consistently tracked KPI needs to be:

  • Highly actionable
  • Deeply impactful

This article covers a few of these KPIs which may be overlooked by marketers in online shoe retail in favor of more traditional indicators.

Customer Value

Customer value is a metric which shockingly plays the second fiddle to the average purchase value in the minds of marketers. Our understanding as to why it happens is that correctly tracking CV may require slightly more advanced reporting and it’s harder to report than the mentioned average purchase value.

How to calculate it?

Customer Value Caculation

TIP: If you would like to go beyond CV, subtract marketing and operational costs attributed to the customer. For even deeper analysis calculate CV on discounted and full-price orders separately. Such split will help you understand the impact of discounts on sales and their effectiveness.

Actionable takeaways

Customer Value helps you to understand how valuable (shocking, we know!) your customers are in the long run.

Such insight about the cumulative revenue could help you refocus your marketing budget towards channels and activities which the most valuable customers interact with, the majority of time.

Average Customer Lifetime Value

This KPI is slightly different than the CV, because it doesn’t describe current customer value, on the other hand, it deals with the projected gross profit margin & probable orders that may occur in the future based on the historical data.

How to calculate it?

There are various ways you can calculate Customer Lifetime Value based on your business specifics. One of the frequently used equations, which is rather simple, is the following:

Lifetime Value Calculation

Actionable takeaways

Customer lifetime value gives you the insight you need to determine how much money you can afford to invest into acquiring and retaining your customers.

Furthermore, by breaking down LTV by customer segments such as NPS or acquisition channels, you may find a well of insights which could turn your perception of marketing activities upside down.

Orders from New Customers vs. Past Customers

This is a hugely impactful KPI to measure and is a distillation of customer retention cohort report into a single value.

What it tells you is how many orders were done by customers which already purchased in the past against customers who made their first purchase in the current period.

How to calculate it?

Orders from New Customers vs. Past Customers Calculation

Actionable takeaways

What makes it actionable is the insight whether you are sustainably growing or that you need to focus on retention activities.

Our experience tells us that if established fashion retailers reach less than 20 % from past customers in any single month, it’s a reason to worry.

Lapsed customers

You can imagine lapsed customers as analogical to churn in SaaS businesses. Lapsed customers are people who were your customers in the past, but stopped shopping. As a rule of thumb we recommend using 2x multiple of average order gap as an indicator for lapsed customers.

That being said, it’s a business decision whether you consider churn based on order or any interaction with your newsletters or website.

How to calculate it?

Lapsed customers Calculation

Actionable takeaways

Customers can become lapsed due to various reasons from simply forgetting about your store to having a bad customer experience. Try to analyze common threads for your lapsed customers and fix potential issues. If you won’t find obvious reasons such as low customer satisfaction, don’t be afraid to ask them directly!

Above all, treat lapsed customers as prospects for reactivation. Not everything’s lost!

Customer Growth Rate

Using this KPI you should be able to understand how fast your active customer base is growing or if you are indeed losing (churning) customers. Customer Growth Rate is basically customer retention report fitted into a single metric.

How to calculate it?

Customer Growth Rate

The first two metrics – new customers and lapsed customers should be calculated within the period which we follow, although the total number of customers is the absolute number of customers who have ever purchased from your online store. You can approach the third metric as the total number of customers within the same period as the first two metrics, but our recommended approach is more widely used.

Actionable takeaways

It’s one of the top-level KPIs which will alert you that something’s going wrong. Unfortunately, it’s impossible to determine what the right rate is that you should attain beyond saying that you should keep this metric in positive values.

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These are just a few KPIs which we think that you should consider keeping your eyes on. To make your analyses extra insightful, be sure to follow them across your various customers segments!

We will go beyond these 5 KPIs in the second part of this series which will culminate in a comprehensive e-book with TOP wins for online shoe retailers which you’ll find on this link when it launches.