Identifying Opportunities For Shopify Growth With Benchmarking
How To Measure Your Performance Against Best Practices To Increase Your Vegan Shopify Store Revenue
How Is Your Vegan Shopify Store Performing?
The Pareto Principle dictates that 20% of our efforts determine 80% of our results.
That means we could work 10 weeks a year and still get 80% of our revenue.
But instead we end up spending most of the year working on things that just don’t drive results.
And if we don’t know what 20% we should focus on, then we’re going to waste a lot of time, money and effort.
Measuring What Matters
By measuring the performance metrics of our Shopify store and comparing them to others, we can identify where the biggest opportunities lie.
This is called benchmarking.
And it just means you compare your performance metrics (and processes) against the best practice of your industry.
This will quickly reveal what areas of your business have the most potential for improvement (and what you don’t need to focus on right now because it’s “good enough”).
Step 1 - Determine What’s Important
There are a lot of metrics available in the digital age, so the first thing is figuring out what actually drives your revenue.
Hint: it’s not social media likes.
In my example below, this Shopify store drives most of its traffic from Facebook ads and so I need a way to determine if they’re effective.
So I’m going to start with:
- Facebook Ad Outbound Click Through Rate (CTR)
- Shopify Store Conversion Rate
- Email Marketing Revenue
Step 2 - Collect Benchmarking Data
If we can, we want to find data that is as close to our business as possible.
So if you have a vegan supplement Shopify store, then you’d try to find benchmarks on that.
Next, you might have to look at supplement Shopify stores (if you can’t find enough vegan ones).
And finally you can just rely on general Shopify metrics if needed.
For our example:
- Facebook Ad Outbound CTR: 1.20% (Source: Wordstream - Food & Drink)
- Shopify Store Conversion Rate: 2.5% to 3% (Source: Shopify)
- Email Marketing Revenue: 30% (Source: RevLevers)
Step 3 - Improve The Biggest Area Of Opportunity
Here is how our hypothetical Shopify store is performing:
- Facebook Ad Outbound CTR: 0.89%
- Shopify Store Conversion Rate: 2.1%
- Email Marketing Revenue: 5%
And so this is where our judgment comes in.
I’m going to say that our Shopify Store Conversion Rate is ok for now and that the Email Marketing Revenue is the quickest and easiest way we’re going to increase revenue.
However we’ve also identified that our Facebook Ad Outbound CTR is low and at that figure I’m not sure we’re making money (the benchmark we use here is 2.0% as well).
So I would be checking our Customer Acquisition Cost (CAC) and probably testing a lot more Facebook creatives as well.
Focusing On The Right Revenue Levers
The important thing is we’ve now identified two massive areas of opportunity, and can stop putting in lots of time and effort trying to make our Shopify store perfect right now.
So you can focus your time and energy on what will really drive your revenue growth right now, then continue to benchmark your business to determine when to move on to the next step.
This stops you going down the rabbit hole or only focusing on what you “enjoy”...
Which is a common business trap for most entrepreneurs.