Beginner's guide to business analytics
As a business owner, you are expected to be the jack of all trades, juggling many things that may involve overseeing every aspect personally. As a result, you may assume that you know precisely where your venture stands.
While that could be true to some extent, you need access to key business metrics to see the entire picture.
For a print on demand business whose entire model thrives on personalization that you can offer customers, it is necessary to know what tools you can use to your advantage to understand your customers better, gain insights into their spending habits, make educated decisions that improve your sales, and keep ahead of the trends.
There's no need to run for the hills just because numbers and data are involved. Business analytics ensures you take advantage of opportunities to increase your revenues, which is why we have made it easier to track your business’s progress. Just download the Gelato App and log into your account to crunch the numbers!
Here's a simplified beginner's guide to business metrics that will aid you in understanding what they are and how they offer clear insights into your next steps.
Business analytics 101
Simply put, business analytics measures how a business performs. The data is usually presented in numbers but isn't always technical. They can range from average order value to best-selling products. Whichever they are, the end goal is to pinpoint where your business stands and, if you can interpret it correctly, where the room for improvement is.
How do I know which business analytics are most important?
There's no one size fits all approach where business analytics are concerned. It all depends on your ability to understand, interpret, and then use the data to your advantage. However, the following are some of the most critical data to track and assess:
Average Order Value (AOV) - This is the average amount of money spent each time by a customer in your store. It is calculated by dividing the total revenue by the number of orders in a definite period. AOV helps you gauge the customer's purchasing habits. To improve AOV, try upselling, cross-selling, discounts, and coupons.
Revenue - The total amount of money earned by a business before any deductions is called revenue. With this metric, you know how much you are bringing in and decide on what measures you can take to improve, including increasing the number of transactions, customers, and AOV and raising products' prices.
Profit - This is the money you actually get in hand. When you deduct expenses and costs from revenue, you get profit. With this, you can see what's eating into your revenue and how profitable your business is. To improve, consider cutting production costs, selling higher-margin products, reducing expenses, or increasing overall revenue by upping the price of your products and by offering additional services.
Profit Margin - Calculated by dividing profit by revenue and converting it into %, it shows how much of your revenue is being converted into profit and determines if there are ways to improve your margins. You can use the same tips to improve your margins, as mentioned to increase profits.
Total Cost - This is the total amount of money (direct or indirect) being expended to achieve the current revenue. You will be able to see how much your costs are and where to cut corners.
Telling them apart - revenue vs. profit
Yes, revenue and profit are different and cannot be used interchangeably. Revenue is total income, while profit is what's left of that income after deducting all the related expenses incurred to earn that income. A venture can have revenue but a negative profit figure because costs > revenue.
How can your business benefit from the analytics?
Business metrics focus on reporting on the issues that matter the most and help you identify challenges and potential solutions.
Here's why ecommerce analytics are essential for your business:
Staying ahead of the trends
Integrating your store with Gelato forms an interconnected system that helps you uncover shopping and interest patterns and trends. The data offers insight into how your business is performing right now, what the customer is loving and what's starting to generate interest, and how you can improve.
The bane of many sinking businesses is their inability to move and adapt to rapidly shifting trends.
Make informed decisions
Running a business always seems like a race against limited resources. The ones that win are owners who know how to strategize and devote resources only where necessary.
With business analytics, you can quickly see what's working, what's not, and what needs more effort. With this information, you can easily make better decisions to help grow your business.
Use customer data
Thousands may visit your store daily, but can you tell me what products they are most interested in? With analytics, it is possible. You can gain insight into customer interactions with your business. With this knowledge, devising a sound marketing and advertising strategy becomes easy because you know what and who you need to target.
Pricing optimization
You don't need us to tell you how important pricing is. It could make or break your profitability. When you know the average order value, i.e., the average amount a customer spends on your store, you can then tinker around with the price.
Provide deals and discounts
There's not a single customer who doesn't like a freebie or deals. With sales and revenue analytics, you can manipulate the percentage of discounts you need to offer, free shipping, and free gifts to your advantage.
How to track all this data?
If you are filled with dread of having to maintain a complicated spreadsheet, then relax. All the analytics mentioned in this blog are available on the Gelato App. As long as your store is integrated, these metrics will be pre-filled and displayed. However, this isn't all; you also get information through helpful charts and can view data about your other stores - all in one place.
The Gelato App is a powerful and user-friendly POD app that can help you manage your business and its performance and keep track of key metrics. You can also easily create and sell custom-printed products and make informed decisions to grow your business.
You put your business a league apart when you smartly use all the tools available. Download and visit the Gelato App to check how you are faring and what your customers love!
Key metrics shown by Gelato's App
Top-selling products.
Comparison between two time periods to see if there are recurring spikes in sales or seasonal demands.
Region-based figures so you can determine which regions are the most profitable and which can use more resources for improvement.
Gross revenue (retail price you charge your customers, including taxes)
Net profit (revenue - total cost)
The average order value for a definite period (gross revenue/total number of orders)
Total costs (the amount you pay to Gelato for fulfilment and delivery of POD orders)