Tip #2: Which are the Top KPIs to better understand Sales in EDD?
KPIs, or Key Performance Indicators, can be used to measure and track the sales performance of your EDD webstore. These are the metrics to understand sales and to extract factors which drive sales. So how do we find this out? Here’s the magic formula we can use:
Net Earnings = Number of Paid Orders x Average Order value
Or extended: Net Earnings = Number Total Orders x Paid Conversion % x Average Order value
Now, how can we understand and get the variables for this formula?
On the EDD Enhanced Sales Report Plugin’s dashboard interface, you can see a lot of general KPIs needed to measure and track the performance of your webstore. Below are some top KPIs we suggest you to keep an eye out more, you can see them by accessing any of the sales report on the plugin.
(1) Net Earnings – provide an accurate measure of a webstore’s financial performance. By tracking net earnings, webstore owners can identify areas where they can reduce expenses and increase profits. Knowing the amount of money, they have available after all expenses are paid, webstore owners can make informed decisions.
EDD generally use Gross Earnings which includes taxes, but for reporting purposes, we need to better understand earnings less any eventual taxes. Investors want to see a healthy net income as a sign that the business is financially stable and has potential for growth.
We basically want to use both, a) Gross earnings which can help us understand how much revenue we’re generating in general, while net earnings can help us understand how much profit we’re making after all expenses and taxes have been accounted for.
(2) Products Sold – this pertains to the number of products sold on your webstore from the selected time period. This helps us measure sale performance and determine if we are meeting our sales goals, as well as to evaluate our sales strategies and identify areas for improvement.
(3) Free to Paid Percentage – as already discussed, tracking conversion from free to paid products on your EDD webstore is an essential aspect especially if you’re both offering free and paid products. You should aim for a high paid percentage which basically means your customers loved your Free Products, that they felt the need to obtain more features which allows them to upgrade and purchase the Paid Product.
(4) Number of Paid Orders – knowing how much of the orders received are paid is an accurate measure of real webstore’s sales performance. This is also used to compare and check the conversion from free to paid orders, which is essential to know your webstore’s revenue generating capacity.
(5) Average Order Value (AOV) – generally, this metric only includes paid orders making it an accurate measure of actual order value. If the AOV is low, webstore owners can develop strategies to upsell customers or offer promotions to increase the value of each order. This can also provide insights into customer behavior and preferences. If the AOV is high, webstore owners can analyze the data to understand what is driving those higher sales and adjust their strategies accordingly. Tracking this helps webstore owners identify opportunities to increase revenue.
Overall, KPIs are an important tool for businesses to measure, track, and optimize their performance, helping them to achieve their goals and objectives in an efficient and effective way.