2020 was pretty much a dumpster fire for many industries--except for ecommerce.
According to experts, COVID-19 accelerated online retail’s growth by 3-5 years in the span of a few months. This has led to a lot of ecommerce entrepreneurs scrambling to keep up. Brands had to quickly adapt to the situation in order to fulfill orders, obtain stock, and even process refunds in a timely manner. Brands whose products tanked during the pandemic had to shift their product offerings in order to stay afloat.
There was growth alright, but it was the fast, unstructured growth that results from adjusting your tactics on the fly. As a result, your company may have grown in unpredictable directions - for better or worse.
2021 is your chance to reestablish control over your business’ growth and the best way to do this is by setting goals for your business.
Why should I set goals for my ecommerce business?
Because you want your business to improve! Seriously though; goals offer tangible benefits to your ecommerce brand. Namely:
Remember how most business owners felt lost and helpless when COVID-19 affected their businesses? That’s because their businesses were going in unexpected (and undesirable) directions.
Setting a goal and putting efforts towards that goal helps you reestablish control over where your business is going. You’re putting your store back on track.
At times like these, you need to be certain every person on your team is performing -especially you. Setting up goals and OKRs will help you identify which parts of your organization are performing well and which need extra assistance.
Having a target to shoot for increases the chances that you’ll succeed. Once you have that goal, you have a vision to work toward and you push yourself to get those results. If you don’t reach your target, you can still benefit because you’ll have more data you can use to isolate why you missed the goal, and how you can improve things.
How do I create effective goals?
Not all goals are created equal. If you shoot for the wrong goals, or goals that haven’t been thought through properly, then this can be even worse than having no goal at all.
An effective goal will have the following qualities:
A narrow focus
Don’t just say “Sell a lot of products.” Narrow your focus to something specific and detailed. Saying “sell 20,000 units” helps you get a better idea of what you’re trying to achieve.
You can even take that a bit further and add a time component to your goal. For example: “Sell 20,000 units by year-end.”
There’s ambitious, and there’s unrealistic. Achievable goals increase morale, but unrealistic goals reduce morale.
Think about it: why will people be excited to achieve a goal that they know they’ll never be able to meet? There’s no chance of success, so why bother trying?
Don’t let that happen to you. Set goals that push the envelope, but are possible within your current means.
Create goals that are relevant to what you want to achieve. Prioritize goals that cover weaknesses in your operations, heighten your strengths, or that directly benefit the customer.
Ignore “vanity” or “secondary” goals that don’t directly impact your bottom line.
More than goals - define results
Objectives and Key Results, also known as OKR's, are a goal management framework becoming popular in larger tech organizations. These are similar to goals, except with more definition and can be broken down into multiple Key Results. For example, a standard goal would be “Improve customer LTV by 20%”. Normally, that would be it.
But if you decide to take that one more level, you can break that down into Objective and Key Results. So you would get:
Objective: Improve Customer LTV
Key Result: LTV improves by 20%
Where the real value of an OKR comes in is that you can include multiple Key Results that support the objective and give you additional areas of improvement. Consider this:
Objective: Improve Customer LTV
Key Result 1: Increase average order value (AOV) by 15%
Key Result 2: Increase purchase frequency by 10%
Key Result 3: Add 3 new customer touchpoints via marketing
All of the key results mentioned above combine to improve customer LTV. There are multiple paths to success. If one key result isn’t met, there are still other key results to fall back on.
Kinds of goals
But what kinds of goals should I set for the business? How do I know what KPI’s i should use if I can’t decide on what improvements to make?
We can help with that, too. Below are a list of ecommerce business goal categories and the most common objectives for each.
You want to make money, and you want your online store to be better at making money. Examples of financial goals include:
- Increase profits
- Reduce costs
- Increase revenue
A lot of financial OKRs mix well with other goal categories, simply because everything boils down to dollars and cents.
This is everything related to customers. The effect may lead to more/less money, but the primary consideration is the customer and how you handle them.
- Increase number of net new customers
- Increase number of repeat customers
- Increase frequency of customer reviews
Operations goals cover the nuts and bolts of how your business runs. Objectives can be improvements to your process, or upgrades to your facilities, or how you manage your employees.
- Expand/update product line
- Hire more employees
- Decrease shipping times/costs
- Add more sq ft. of warehouse space
Goals and objectives are a must-have if you want to grow your ecommerce business in 2021 and Cart.com is here to help. Creating the proper goals can help you create sustainable business growth, narrow your focus, and motivate you to achieve more.
If you need some ideas or inspiration for potential goals, let us know in the comments!