Hi, how’s it going? Ready for the next lesson?
Last time, we looked at creating benchmarks for your business using the industry’s and your own historical data.
Now we’re going to use this data to make our first data-driven decision and set targets for each KPI.
Setting targets for your business is something you’re probably already doing.
If you don’t set targets, how else are you supposed to know what’s successful and what’s not? We set targets so that we can properly identify how well the business is performing.
But how often have you set a target for your team based on a hunch?
Sure, you might have reached this target, but did you understand why? And now that you know your KPIs, were they even targets that improved your bottom line?
Using the data you gathered while creating your benchmarks and by speaking to key decision-makers in the business, you should now be able to make a data-driven target for each of your KPIs.
Let’s look at Bob’s store again.
Let’s look at his goal to make profit, for which he set the KPI of Average Order Value.
He wants to take advantage of his existing client base and increase the value of each customer who purchases from him.
He identified that his average order value is £20 over the year, and after some competitor research, has identified that the average for his industry is £30.
Using this data, Bob decides to set his KPI at £25 and believes he can achieve this with a number of changes to his site.
Bob knows that the holiday season will increase his AOV due to increased consumer demand; however, he is also aware that other times of the year may be slower, so he sticks with £25 and notes that he may increase this KPI throughout the year.
This KPI allows Bob to identify whether any changes that have been implemented have had the desired effect. This could be a new paid advertising campaign or an online promotion, e.g., free shipping over £30.
If he wanted to get even more granular, Bob could also look at setting targets for each segmentation of his KPI, such as £30 from PPC sales because of the extra costs involved.
Pretty straightforward, yeah?
Setting targets isn’t rocket science. The process of gathering your data together might actually be more complicated than choosing how high or low to set your target.
However, once you’ve done the hard work the first time around, it’ll become much easier and second nature to do so the next time.
Next: How to use your data properly without overwhelming yourself.
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