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“What gets measured gets managed.” This is a famous Peter Drucker quote that is just as true today as it was 30 years ago. You can’t (and shouldn’t) measure everything and there are some things that are hard to measure that you still have to manage (i.e – employee development) but picking your most important numbers and creating a scorecard is key for growing your business.

How do you choose which numbers to capture? Start by thinking about which metrics keep you up at night worrying about them. If a few one-star reviews can threaten the viability of a product, tracking reviews pretty carefully is critical for you. If holding your team accountable for auditing all of your listings regularly matters to you then put it on the scorecard.

How to Select the Right Metrics

Four or five key metrics may have already jumped into your mind but if you need help brainstorming helpful metrics you may choose to split your scorecard into the following categories.

  • 1-2 Big Bottom Line Goals What are your company’s most important goals for the year?
    • Ex – Reach $1M in annual revenue by 12/31/18 OR Open 2 warehouses OR launch at least 2 new channels by the end of the year.
  • 2-3 Sales and Marketing metrics – What numbers show you the health of your sales engine?
    • Ex – Units Sold, YOY Revenue growth, ACOS, ROAS
  • 3-5 Operational Metrics – What numbers help you keep a finger on the pulse of your operations?
    • Ex – Seller Feedback prior 12 mths, New 4-5 star reviews, new 1-3 star reviews, Inventory Performance Score, FBA fees as a % of sales
  • 2-3 Financial Metrics – What are your most important profitability metrics?
    • Ex – Gross margin, COGS ratio, overhead ratio, Inv/Cash Ratio

There is no one right answer

Each of us needs different metrics to run our unique business properly. Pick the most important numbers for you and use these tips to help you dial in the right metrics for your customized scorecard.

  • Don’t pick too many metrics! As e-commerce sellers, we have access to almost unlimited data and it can be tempting to measure so many things that the scorecard is worthless. You shouldn’t have more than 10-15 total metrics.
  • Support your goals! Pick Sales, Ops and Finance numbers that if improved would help you hit your important annual goals. Don’t be afraid to pepper in actionable “lead-measure” goals. For instance, if writing new blog posts tends to drive sales for your company then track the number of new posts per week. Pick an area of your business that you are struggling with and capture metrics related to that area.
  • Don’t create a fulltime job – Your scorecard should only take a few minutes to update each week either for you or for your VA unless the value of the information is extremely high. If you have employees they should be responsible for finding and bringing their updated number to your staff meeting instead of you having to chase it down for them.

Don’t over complicate things!

If you already have a good financial dashboard then eliminate that category and focus on using the scorecard to drive sales and operational efficiency. The key is to have useful information at your fingertips that will allow you to make better decisions. The easier to visually see, the easier to update and the easier to integrate into your existing meeting rhythm the better. 

Developing a rhythm for your scorecard is important.

You want to balance having a real-time dashboard where you can make adjustments very quickly with the reality that some data is hard to get to or doesn’t change much in 24 hours or even a week. In my healthcare services company, it made sense to update the scorecard every week at our staff meeting. But for Amazon sellers, some metrics are just easier to measure every 2 weeks when Amazon released a completed settlement statement.

Pick a rhythm that works for your business and stick with it! This scorecard will become a very powerful decision-making tool once you fill it out for a few months. But if you fail to include the scorecard in your weekly and monthly rhythms it won’t help you.

You got this!

Pick the hand full of metrics that are most important to your business and track them over time using a consistent rhythm and you will smoke out issues more quickly, see increased engagement in your team and your company will perform better.

Let Seller Accountant know if you get stuck and need help learning how to implement your scorecard.

PS….

Two books that will be very helpful for you in setting up your scorecard properly are:

  1. Traction: Wickman
  2. 4 Disciplines of Execution: Covey

I’d love to hear some of your success and failure stories related to creating a usable and sustainable scorecard for your e-commerce shop. How has this worked for you?

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