4 things B2B CEOs should know about e-commerce
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In my experience, e-commerce is still a bit of mystery to some B2B CEOs. They understand that it is important to their business growth, but may not know how to decode eCommerce jargon to determine what can and should be done to maximize the opportunity. This post will attempt to describe four areas I believe every CEO should know about e-commerce, identify common problems companies experience, and offer solutions which should help many businesses thrive in the digital age.
1. Since you run an e-commerce business, know where your revenue comes from.
Problem: Do you know which are your strongest pipelines for website traffic and conversion? A CEO serious about e-commerce and overall business growth should.
Traffic to websites comes from many channels, and some traffic is more valuable than others. We call high-value traffic “qualified,” which means the traffic came into the site primed for purchase because the link they clicked (or other marketing they read) told them exactly what to expect and what they could purchase when they got there.
Solution: Your web team should be able to show you where the highest traffic comes from, which channels result in the best conversion, and which drive the most revenue, giving you the opportunity spend budget wisely and plan for growth from those channels. If they cannot do this, you have an improvement opportunity.
2. Your e-commerce business should be built for growth and profit.
Problem: Many B2B businesses do not track sales, leads, and conversions as tightly or as frequently as they should. This problem makes it difficult to measure the effectiveness of one’s website and marketing investment and even more frustrating when trying to decide where to invest for future growth.
Solution: Track sales, leads, and conversions with daily reporting against a forecast or projected plan. I typically build a Gross Sales, Expense, and ROI plan to track sales growth and return on investment, then break that down into quarterly, monthly, weekly, and daily targets. This strategy gives the marketing team their main mission – produce marketing that drives enough traffic and conversion to hit the plan every day. Your e-commerce team should be reporting results daily. Rinse and repeat every day of the year.
3. How to measure performance – Key Performance Indicators (KPIs).
Problem: There is a lot of data that can be processed in e-commerce. Deciding which metrics are most important to your business will make measurement and investment more defensible. For instance, if you simply concentrate on driving new traffic, you can spend a ton of money for little return if the traffic does not lead to sales. Alternatively, you can spend much less on traffic if your conversion rate is better. It’s all interconnected and chasing one metric without acknowledging others will ultimately lead to underperformance in your business.
Solution: Track the key metrics and understand their interconnectedness. Here are the main ones:
- Financial KPIs: Demand Sales, Gross Sales, Net Sales, Gross Margin dollars (GM$), Gross Margin percentage (GM%), and ROI.
- E-commerce KPIs: Traffic, Conversion Rate (CR%), Average Order Value (AOV), Units Per Transaction (UPT), and Transactions (Orders).
4. It’s 24/7/365 – Run your store like you mean it.
Problem: I recently spent a week looking for a home security company. My Google searches brought results from all over the country and featured many of the names you know. I checked each website, the product mix offered by each, the monthly price, whether there was installation fee, and the services provided. Eventually, I found one I thought provided the best value. The website offered a free quote function on the website, so I filled out the form and assumed I would hear from somebody shortly. Two days went by. Then one week. Then three weeks.
I realized nobody at this national security company was paying attention. I could tell by the site design that they had spent big dollars managing a national website, paying Google good bucks to promote the site in search, had invested in photography and copywriting and SEO, and were even running national TV spots to reach new prospects. But they apparently had no function on the backend to respond to prospective customers who inquired about their services via the website.
So, despite the headlines on their site touting “award-winning security” and “over 500,000 homes protected,” they did not get my business. Not because I didn’t want them to have it, but because they failed to follow up to my inquiry. My feeling was, if I cannot get your attention by waving my money at you, how can I expect you to respond to my home emergency?
Solution: I’d like to tell you that this lack of follow up was an anomaly, but I’ve seen often with B2B companies. They did the work of creating a great website, but failed to support the business channel with personnel and internal processes designed to convert inquiries into sales.
Commit to running your website 24/7/365, or you are likely losing sales and growth. You’ve made the investment – now support that business with salespeople who respond quickly and consistently to prospects. There is no hotter prospect than one who did the work of contacting you. It may be the easiest sale you’ve ever done, so why squander the opportunity?