Anton answers a viewer submitted question: “What are some key factors that you pay attention to when evaluating the current state of your business? How do you know what needs improvement?”
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Hello, everybody. Anton Kraly here from ecommercelifestyle.com and welcome back to the podcast. This is our bi-weekly show that is designed to help e-commerce store owners increase their revenue, automate their operations, and become the authority in their niche.
Now, in today's episode, I'm going to answer a question that was actually submitted via our YouTube community, and it's a really good one. So the question reads, "What are some key factors that you pay attention to when evaluating the current state of your business? How do you know what needs improvement?"
So again, great question. Something I think that a lot more store owners should be focusing on because it's one thing to follow a program like my Drop Ship Blueprint, build a store, get a bunch of sales, but then what do you do from there? And what you do from there, honestly, this could be a three day seminar that I teach you everything we're doing to continue to grow and to continue to improve and continue to optimize. This won't be as in-depth as everything I could share with you, but what I wanted to do in this episode specifically is give you an overview of what I personally do every week to audit my own stores to make sure I know what's working, what's not, and what can be improved.
And the beauty of drop shipping, specifically the way that we build businesses and we build stores, is that almost everything can be outsourced. The day-to-day operations, there's pretty much nothing that you need to have your hands on every day. But I will say before I share what I do to audit my own stores is that when it comes to doing what I call auditing, I do recommend that you as the business owner, I'm assuming you're the business owner if you're listening to this or watching this, you should be the one that does this, because it's too important. But it's also something where there's not much room for error and in a short window, there could be mistakes made, that's fine, but you don't want to spend three months, six months, having somebody doing this for you, and then realize that all this time passed where things fell out of line with where they should be that could have been resolved if you caught it sooner. And you probably know how I think about this and how I feel about this, but as the business owner, all of the results, including failures, fall on you so you want to be the one that is responsible for this.
So, step one in this process for how we audit our stores is to establish the baseline. Now, this is something that I really don't recommend doing until you have at least 90 days of historical data in your business because for the baseline that I look at, it's the previous, the rolling 90 days, of the business history. So let's just say you launch a new store today. What I would say is good on you, spend the next 90 days making improvements, optimizing what you have, and establishing that actual baseline. But the baseline of your business really is something that you'll learn over time. The more data you have, the more accurate it will be. And the goal always is to know what that historical 90 day baseline is and move it up. So improve on it, improve on it, improve on it. But until you know what it is, then a lot of what we're going to go through probably won't be as helpful.
With that being said, I would still recommend sticking around, because in my opinion it's always better to learn things sooner rather than later. So when the time comes, you'll be prepared. And you might be wondering like, "Okay, baseline compared to what?" What am I even getting a baseline of?" So I think the best way to explain this is to take you through what I actually audit every week and then you'll know what you should be establishing baselines for.
So the first thing that I look at, again, me personally, every single week, is our traffic overall and basically the volume of it, how much traffic is coming to our stores. Now the way that I track this all is through Google Analytics, which is amazing, which is free, which has a deep integration with Shopify, which is our e-commerce platform of choice. And of course we used enhanced e-commerce tracking so basically everything that's happening on our stores is being tracked within Google Analytics.
So the first thing I do is pull up Google Analytics, go to the default view. Look at that past week of traffic overall. Now from there, I check it by source. By source I mean basically the channel, where is the traffic coming from? So I check organic, that's the free traffic that's coming in from primarily Google. Then I check our traffic by channel, by Google Ads channel. So this includes Google shopping campaigns, Google search text campaigns, Google display ads, YouTube ads, Google discovery ads. I'm checking them all individually, again, over the past week and comparing those numbers to the baseline. Now, in addition to that, we also run Microsoft ads. So I'm checking them. We do direct ad buys where we do things like sponsored posts and blog banner ads. I'm checking those as well, the previous week compared to the previous 90 day baseline. And in addition to that, I'm checking our email marketing traffic over the past week and comparing it to that previous 90 day baseline.
Now, the reason I start here and I check these all every single week is because I want to see if something changed. And occasionally what you'll see is maybe organic is perfect, Google Ads is perfect, Microsoft Ads is perfect, email is perfect, meaning in line or better than the previous baseline, but then maybe you'll see direct ad buys totally dipped. And it went from maybe 100 visitors a day tracked in Google Analytics down to 20. What happened? Maybe we had a sponsored post that we were paying for where our deal expired and our link was removed. Or maybe we see that Google Ads took a dip from 200 visits a day, and now it's at 150. Well, what happened? Let's dive into Google Ads deeper. Maybe one of our Google Discovery ad campaigns stopped spending or an ad in there got rejected, that caused numbers to dip off or for one of our campaigns to die out. So that's pretty much the step two of this process. Step one is just that high level overview traffic by source in Google Analytics, make sure everything is consistent with the baseline, or growing, but if something is off, then it's time to dig deeper.
So let's just say it was with organic traffic. We saw a dip in our free organic traffic. What I would first do is go into Google Search Console and see if anything is wrong with my site maps, see if anything got flagged, see if there's any errors, just look for something that can be resolved right away. And the reason, again I do this every week, is because let's just say I did it, I don't know, once a month. For the size of our businesses if I let an issue like that go for a month, you might not notice it day-to-day, but over time, it's going to lead to a lot of money lost. So that's the next step. See if everything's good, if everything's good, then nothing else to do. But if it's off, start diving deeper. Again, if it's Google Ads that we see the traffic dip in, then I'm going to go into Google Ads. I'm going to go into our campaigns. I'm going to dig deeper. I'm going to go into our ad groups. I'm going to go into our ads. I'm going to look for whatever the issue may be and I'm going to fix it.
Let's say it's our email marketing results that dipped. Well, I'm going to go into Klayvio. I'm going to check how many emails we sent that previous week. I'm going to see how many were opened. I'm going to see how many were clicked. And I'm going to just identify basically the error. What made us deviate in a negative way from the baseline? Now on the same hand, or the other hand I should say, if we see that one of our traffic sources in our traffic channels picked up, then I'm going to go in and I'm going to see what picked up. And I'm going to try to add more fuel to that fire and I'm going to try to have it pick up even more.
Now, after I do all these checks, once everything is either confirmed to be at baseline or above, then we're good. If something's wrong, then I'm going to fix it. The next thing I check every week is our revenue by channel. So all of those channels I just mentioned where I first check traffic, I'm checking our conversions. So I want to see, did we make the same amounts or close to the same amounts from organic and from Google and from Microsoft and from direct ad buys and from email marketing? And I will say here, I do give our companies more leniency. I've done an episode of the podcast in the past called accept the randomness. I'll post the link to that into the description. I think everybody should hear that, but especially with traffic sources where traffic isn't that high, there's a lot of randomness that can occur and you basically don't want to start changing things that don't need to be changed. So check that out.
But basically what I'm checking here is our conversion rate by channel and making sure that, again, nothing is broken. And what you might identify here, if you do this for yourself, is let's say you see Google Ads your conversion rate is normally 2% for your previous baseline and this week it's 0.5. Again, did some of your best ads turn off? Is some of the traffic going to different landing pages on your store that don't convert as well? That's what you want to identify in this stage. And that's what I identify when I'm looking at gross revenue by channel, week over week.
Now the third thing, again at a high level that every single week I audit, is our actual profit expressed as a net margin percent per order. So for me, I use a tool called Xero, X-E-R-O. I've been using that now for a few years, but for my first almost decade in business, I first used Microsoft Excel, then I used Google Sheets and just had order by order, each order that came in, the price the customer paid, our product cost, our shipping cost and any other expenses associated. And what I check is how much as a percentage are we making per order? And for us, we want our net profit to be about 25% on average. I will say this varies from supplier to supplier, from product to product, but what I'm looking at when I'm auditing this part of the business is that net margin percentage and if anything was outside of KPI.
So let's just say, for example, I see two orders from the previous week that only had a 10% profit margin, or I saw one where we lost 5% somehow. Well, those are things that I'm diving deep into to figure out what went wrong. Did we overpay for shipping? I did an episode on that on Monday. If you haven't seen that, I'll link to it in the description as well. You should look at that. But I'm looking basically to see if our profit margin, as a percentage, again, on a per order basis is outside of our KPI, our key performance indicators and if it is, figuring out went wrong and fixing it. Now, again, for the majority of people that are listening to this or watching this, my advice is just keep track of your profit on Google Sheets on an order by order basis. If you're a member of the Drop Ship Blueprint, in module seven I actually give you a profit tracker spreadsheet that you can use. And just refer to that. Again, maybe do this on Monday mornings. That's typically when I do this, looking back at the previous week, and it's a really simple process because what will happen, over time, again, not your first probably even year in business, but over time, you'll have really good baselines for everything that's happening. And you'll have this system down where you have these three things you do at the start of every week.
Again, first thing is you're checking traffic by source. If everything is good, then nothing to worry about. If something's off you get it resolved. Maybe that'll take you 15 minutes to an hour if there's issues that need to be fixed. Then looking at revenue by channel. Again, if everything's good, this'll take you probably 10 minutes to check. If there are some serious errors that need correcting, maybe it'll take you an hour. And then profit per order. When you're checking that if numbers are within KPI, this will take you five minutes to look at. If anything's off, maybe it takes you an hour to fix what happened in the past so that your margins are healthier moving forward.
So worst case scenario where your numbers were totally out of whack, and each of these three scenarios are things that require more of your time, you're still looking at maybe three hours on a Monday to make sure, to answer the original question, to make sure that your business is doing well, that you're evaluating the current state, and that you're improving whatever needs to be improved upon. So again, something I personally do every week. Early on in business where our numbers in terms of traffic and sales weren't as high, I did this every two weeks, but as your business grows, again, three hours a week to make sure your business is healthy and to make sure issues get caught sooner rather than later is a very efficient use of any business owner's time.
So that's it for this episode guys. As always, I do hope you got value. If you did be sure to give it a like and leave a review over on Apple Podcasts over here. And if you're listening to this or watching this and you want to know how my team and I build highly profitable stores without having to quit jobs, without having to work 10 hours a day, and without having to invest a ton of money, be sure to go to dropshipwebinar.com, D-R-O-P-S-H-I-Pwebinar.com where you'll get a free training from me, plus a special offer on the award winning program we have over there, the Drop Ship Blueprint. So thank you everybody. I appreciate you. And I'll talk to you on Monday for the next episode of the eCommerce Lifestyle Podcast. See you everybody.