Part 6. The Key Sales Metrics You Need to Track
What Numbers Actually Matter in 2024.
If you’re running an online business in 2024, you know that success isn’t just about marketing. It’s about knowing your numbers.
You’ve probably heard the phrase "you can’t manage what you don’t measure," and it couldn’t be more true in the digital age.
Today, we’re going to dive deep into the key sales metrics that every online business owner should track.
Now, I get it—numbers can be intimidating. But trust me, once you know what to look for, these metrics will become your best friends. They tell the story of how well your business is doing, what’s working, and where you need to make improvements.
So grab a cup of coffee, and let’s break down the most important sales metrics for your online business before you change your mind and decide to skip this valuable lesson 😉
Conversion Rate - Turning Visitors into Customers
First up, let’s talk about conversion rate. This is one of the most important metrics you can track because it tells you how many of your website visitors are actually taking the action you want them to—whether that’s making a purchase, signing up for your newsletter, or booking a consultation.
Here’s the formula for calculating your conversion rate:
CR = (Number of Conversions / Number of Visitors) x 100
For example, if 1,000 people visit your site and 50 make a purchase, your conversion rate is 5%. Pretty simple, right?
But the real power of this metric is that it helps you optimize your sales funnel. If your conversion rate is low, you might need to tweak your call-to-action, improve your landing page, or make your checkout process smoother.
At THE 9 KEYS, we constantly monitor our conversion rates to see what’s working and what’s not.
And the best part? A small increase in your conversion rate can have a huge impact on your revenue...
Here’s an example of an analytical dashboard showcasing all the key sales metrics you need to know, following the use of sales funnels across various websites or landing pages, as recorded in HighLevel (for illustration purposes only). Other key metrics to pay attention to when running paid ads include ROI (Return on Investment), CPC (Cost Per Click), and CTR (Click Through Rate), which we’ll cover in a later article.
Average Order Value (AOV) - Maximizing Each Sale
Next on the list is Average Order Value (AOV). This metric tells you how much, on average, a customer spends per transaction. It’s a great way to measure the effectiveness of your pricing and upselling strategies.
Here’s how to calculate it:
AOV = Total Revenue / Number of Orders
For instance, if you generate $10,000 from 100 orders, your AOV is $100. The higher your AOV, the more revenue you’re generating per customer.
Want to boost your AOV? Upselling and cross-selling are great strategies.
Offering complementary products or bundles can encourage customers to spend more per transaction.
If you run an e-commerce site, adding either product recommendations or an exclusive time-limited offer at checkout can make a significant difference.
Using upselling techniques with exclusive special offers at checkout can quickly boost your sales and AOV. This can easily be achieved by adding a final opt-in page to your sales funnel using the CRM tool of your choice (such as HighLevel, for example).
Customer Acquisition Cost (CAC) - What Does It Cost to Get a New Customer?
Now, let’s talk about Customer Acquisition Cost (CAC)—a crucial metric if you’re spending money on marketing and advertising. CAC tells you how much it costs to acquire a new customer.
Here’s the formula:
CAC = Total Acquisition Costs / Number of New Customers
So, if you spend $1,000 on marketing in a month and acquire 50 new customers, your CAC is $20.
The goal here is to keep your CAC as low as possible while still bringing in quality leads. The lower your CAC, the more profitable your business will be.
At THE 9 KEYS, we rely heavily on this metric when running paid ad campaigns.
It’s crucial to know whether the money you’re spending on Facebook or Google ads is actually paying off in new customers before our marketing budget runs dry….
Customer Lifetime Value (CLV) - The Long-Term Profitability Metric
If you’re thinking long-term, Customer Lifetime Value (CLV) is a metric you need to keep an eye on.
CLV estimates the total revenue a customer will generate over the course of their relationship with your business, and it’s a key metric that some investors often request in quarterly financial reports to help plan for future business development.
Here’s how to calculate CLV:
CLV = (Average Purchase Value) x (Average Purchase Frequency) x (Customer Lifespan)
For example, if your average customer spends $100 per purchase, makes three purchases a year, and stays with you for five years, their CLV is $1,500.
Understanding your CLV can then help you make smarter decisions about how much you’re willing to spend on customer acquisition.
At THE 9 KEYS, one of our strategy focuses on increasing CLV by nurturing customer relationships. Whether it’s through personalized email campaigns or exceptional customer service, we know that building long-term relationships naturally pays off in the form of repeat business.
Imagine being able to hand over your fully-automated customer service 'team' to AI, whether through your custom-built chatbot on your website or an AI-driven conversation manager using CRM tools like HighLevel. The best part? All outputs are based on your initial inputs, like a parent teaching their child to walk—saving you time while maintaining the critical control you need.
Churn Rate - Keeping Customers Coming Back
Another metric you should be tracking is churn rate, especially if you’re running a subscription-based business.
Churn rate measures the percentage of customers who stop doing business with you over a certain period of time.
The formula looks like this:
Churn Rate = (Number of Customers Lost / Total Number of Customers) x 100
If you lose 20 customers out of 200 in a month, your churn rate is 10%. A high churn rate indicates that you might have a problem with customer retention, which can seriously impact your bottom line.
Hence, to keep your churn rate low, focus on delivering value, staying engaged with your customers, and offering incentives for them to stick around.
Reactivating old customers through targeted email campaigns (your newsletter is a great place to start) can help reduce churn. Tools available online, like the all-in-one CRM tool we rely on, simplify this process significantly, i.e. HighLevel.
HighLevel integrates all the tools that any small to medium-sized business (including marketing agencies) needs to drive their online marketing efforts and grow their customer base. We highly encourage you to spend just 5 minutes exploring what this AI-powered all-in-one CRM tool can do for you—it could genuinely transform the future of your business, just as it did for ours.
A Few Tools to Track These Metrics
Now that you know what to track, let’s talk about how to track it.
Luckily, there are tons of tools out there that make it easy to monitor these key metrics.
Google Analytics: The tool for tracking conversion rates, bounce rates, and user behavior.
A CRM Software (like HighLevel): An all-in-one solution for running your e-marketing activities, from tracking customer interactions, your sales performance and retention metrics.
E-commerce Platforms: Most come with already built-in analytics that track things like AOV, CLV, and CAC.
Email Marketing Tools: Platforms like HighLevel also allow you to track the performance of your email campaigns, including open rates, click-through rates, and conversions.
Case Study - Optimizing Sales Metrics at THE 9 KEYS
At THE 9 KEYS, we have become obsessed with tracking these metrics on a daily basis because they give us the insights we need into what’s working and what needs improvement.
For example, by tracking conversion rates (CR), we were able to identify quite early that our email sign-up form wasn’t as effective as it could be.
A few tweaks later, like simplifying the form and adding a more compelling image combined with with a clearer Call-To-Action (CTA) - helped at boosting our conversion rate by 15% very quickly!
We are also currently working towards increasing our Average Order Value (AOV) by adding product bundles and personalized upsell recommendations during checkout (coming soon).
And lastly, by closely monitoring our Customer Lifetime Value (CLV), we’ve shifted our focus to customer retention strategies, which has resulted in the form of increased sales.
TAKE-AWAY
Alright, it’s time to recap again!
The first key sales metrics you need to be tracking in 2024 are Conversion Rate, AOV, CAC, CLV, and Churn Rate.
These metrics will help you measure the effectiveness of your sales funnel, optimize your marketing efforts, and ultimately, grow your revenue.
But don’t let the numbers intimidate you - because once you get the hang of it, tracking these metrics will become second nature, just like when you first learned to walk or ride a bicycle!
And trust me, the insights you gain from monitoring these numbers will quickly take your online business to the next level.
