7 Essential Reseller KPIs to Track and Measure

Introduction

As a reseller, tracking and measuring key performance indicators (KPIs) is essential to accurately assess the health of your business. The top seven KPIs that any reseller should track are Cost Per Acquisition (CPA), Average Order Value (AOV), Customer Lifetime Value (CLV), Average Profit Margin, Number of New Customers, product category performance and customer retention rate. Tracking these metrics helps you learn how your business is performing, what areas may need additional attention, and how to better market your products.

In this blog post, we’ll look at each of these KPIs and how to calculate and track them. Each has its own purpose and importance, so let’s get started.

Cost per acquisition

Definition

Cost per acquisition (CPA) is a KPI metric used by thrift dealers to measure the cost associated with acquiring a new customer or making a new sale. It is calculated by dividing the total cost of an acquisition campaign by the number of customers or sales acquired through the intermediary.

Benefits of Tracking

Tracking CPA is important for thrift dealers because it gives them an understanding of how much it costs to acquire a new customer or sale. This helps them identify which marketing campaigns or activities are the most profitable and which should be avoided. Plus, it allows them to track the success of their acquisition campaigns and adjust their strategies accordingly.

Industry Benchmarks

The average CPA for thrift dealers is usually between and , depending on the nature of the sale and the type of customer. Higher costs can be indicative of campaigns not being as effective as they could be, and are a sign that adjustments need to be made.

How to calculate

Calculation example

If a thrift dealer spends 0 on a marketing campaign and acquires 10 sales, their CPA would be:

Tips and tricks

• Be sure to track the cost of each acquisition campaign, including the cost of advertising, labor, and materials.
• Compare CPA to industry benchmarks to identify areas for improvement.
• Experiment with different marketing strategies to find the most profitable approach.
• Focus on customer retention and loyalty to reduce the cost of acquiring new customers.

Average order value

Definition

Average Order Value (AOV) is a KPI metric used to measure the average amount generated by each order in a given time period. This metric helps stretch resellers understand the revenue generated from each sale and identify opportunities to increase profitability.

Benefits of Tracking

Average order value is an important metric for reseller savings because it is used to measure the success of sales initiatives. By tracking AOV, resellers can identify the most profitable items to focus on and identify products or services that are not generating enough revenue. Additionally, tracking AOV can provide insight into customer buying habits and help resellers determine the best strategies to increase average order size.

Industry Benchmarks

The average order value of energy resellers can vary significantly depending on the size and type of business. Smaller resellers generally have lower AOVs, while larger resellers may have higher AOVs. In general, AOVs for thrift dealers range from to .

How to calculate

The average order value is calculated by dividing the total order revenue in a given period by the total number of orders placed during the same period. The formula for AOV is:

Calculation example

For example, if an energy reseller had total revenue of ,000 in a given month and received 100 orders, their average order value would be . The formula for this calculation would be:

Tips and tricks

• Regularly track the average order value to understand customer buying habits.
• Evaluate AOV alongside other metrics such as customer lifetime value and customer acquisition cost to identify opportunities for growth.
• Identify the most profitable products and services that generate the highest AOVs.
• Focus on strategies that increase average order size such as up-selling and cross-selling.

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Customer Lifetime Value

Definition

Customer Lifetime Value (CLV) is a metric used to measure the overall value of a customer to a business. It is calculated by taking the total revenue generated by a customer over its lifetime, subtracting the costs associated with acquiring and maintaining that customer, and then multiplying the remaining value by the probability that that customer stay with the company for the long term. The goal of tracking CLV is to better understand a client’s potential revenue stream.

Benefits of Tracking

CLV tracking is essential for reseller savings because it helps businesses identify and reward loyal customers. It can also be used to predict customer behavior and inform marketing and sales strategies. By understanding the value of a customer, businesses can focus on acquiring more high-value customers, while improving customer retention.

Industry Benchmarks

Industry benchmarks for CLV vary by industry. Generally speaking, a high CLV indicates that customers are loyal and stay with the business for a long time. On the other hand, a low CLV suggests that customers are not loyal and are likely to switch to another business.

How to calculate

CLV can be calculated using the following formula:

Calculation example

For example, an energy reseller might have an average revenue per customer of , an average customer lifetime of 12 months, a customer acquisition cost of , and a customer retention cost of . In this case, their CLV would be calculated as follows:

Tips and tricks

• Track CLV over time to gain insight into customer loyalty.
• Identify patterns in customer behavior to inform marketing and sales strategies.
• Focus on acquiring high-value customers and improving customer retention.
• Compare CLV to industry benchmarks to better understand customer loyalty.

Average profit margin

Definition

Average profit margin is a key performance indicator (KPI) that measures the average amount of profit earned per item sold, expressed as a percentage. It is calculated by dividing the total profits by the total number of items sold.

Benefits of Tracking

Tracking the average profit margin is an important KPI for saving resellers because it allows them to keep track of the profitability of their business. It also allows them to monitor their pricing strategies and identify any potential areas for improvement.

Industry Benchmarks

The industry benchmark for average profit margin for extended resellers is between 15% and 25%. It is important to note that this benchmark may vary depending on the size and type of business.

How to calculate

To calculate the average profit margin, you will need to know the total profits and the total number of items sold. The formula is:

Calculation example

For example, if an energy dealer had total profits of ,000 and sold 500 items, the average profit margin would be calculated as follows:

Tips and tricks

• Focus on increasing the average profit margin by reducing costs or increasing prices.
• Regularly monitor the average profit margin to ensure it is within industry benchmarks.
• Track other related KPIs, such as average selling price, to better understand business profitability.

Number of new customers

Definition

The number of new customers is a key performance indicator (KPI) for reseller savings that shows the total number of customers acquired over a given period of time. This metric is important because it provides insight into how well a reseller is doing in bringing in new customers.

Benefits of Tracking

Tracking the number of new customers is important because it gives a reseller a better understanding of how well they are doing in terms of acquiring new customers. It also helps identify any potential problems in the customer acquisition process. Additionally, tracking this metric can help a reseller set realistic goals and objectives for their customer acquisition efforts.

Industry Benchmarks

Industry benchmarks for the number of new customers vary by reseller type and industry. Generally, the more new customers, the better. However, it’s important to keep in mind that the goal should be to acquire quality customers, not all customers.

How to calculate

The number of new customers can be calculated by subtracting the total number of customers at the start of the period from the total number of customers at the end of the period. The formula for this calculation is as follows:

Calculation example

For example, if a reseller has 10 customers at the beginning of the month and 15 customers at the end of the month, the number of new customers would be 5. This can be calculated using the following formula:

KPI Tips and Tricks

• Make sure you are targeting the right type of customer for your business.
• Focus on providing an excellent customer experience to retain customers.
• Analyze customer acquisition costs to ensure you’re getting the most bang for your buck.
• Track the number of customers acquired over different time periods to identify trends.

Product category performance

Definition

Product category performance is a key performance indicator (KPI) that measures a reseller’s sales success in a particular product category. This KPI tracks revenue generated in each product category, allowing the reseller to identify which categories are more successful than others and adjust their product mix accordingly.

Benefits of Tracking

Tracking product category performance offers a range of benefits to resellers. By tracking the success of each product category, resellers can identify which items are selling well and which are not. This information can be used to adjust the product mix to focus on the most successful items. Additionally, product category performance can be used to identify trends in shopping behavior and make informed decisions about future stocking decisions.

Industry Benchmarks

The industry benchmark for product category performance varies depending on the type of reseller and the particular product category. Generally, a successful reseller should have at least 70% of their revenue coming from their top five product categories. Additionally, it is important to compare the performance of each product category to the overall performance of the company to ensure that the category is performing above average.

How to calculate

Product category performance can be calculated by dividing the total revenue generated from a particular product category by the total revenue generated from all categories. This will provide a percentage of total revenue for each product category.

Calculation example

For example, let’s say a reseller generated 0,000 in revenue from their top five product categories and ,000 in revenue from all other categories. Product category performance for the top five categories would be calculated as follows:

KPI Tips and Tricks

• Regularly track the performance of each product category to identify trends in shopping behavior.
• Compare product category performance to overall company performance to ensure the category is performing above average.
• Adjust the product mix to focus on the most successful elements.

Customer retention rate

Definition

Customer retention rate (CRR) is a metric used to measure the percentage of customers who continue to buy from a business over a period of time. It is used to measure customer loyalty and the effectiveness of marketing campaigns.

Benefits of Tracking

Tracking customer retention rate is important for businesses because it can provide valuable insight into the effectiveness of their marketing campaigns, customer loyalty, and how the business is performing as a whole. It can also help the business identify areas where improvement is needed and allow them to adjust their strategies accordingly. By tracking this metric, businesses can ensure that they are able to keep their customers happy and loyal.

Industry Benchmarks

The industry benchmark for customer retention rate is typically 80%. This means that 80% of customers should continue to buy from a business over a period of time. However, this benchmark can vary by industry, so businesses should research their specific industry to find out what their ideal customer retention rate should be.

How to calculate

The customer retention rate is calculated by dividing the number of customers at the end of the period by the number of customers at the beginning of the period. This number is then multiplied by 100 to give the percentage of customers who continue to buy from the company.

Calculation example

For example, if a business has 100 customers at the beginning of the month and 90 customers at the end of the month, its customer retention rate would be:

Tips and tricks

• Track customer retention rate over time to get an accurate picture of customer loyalty.
• Work to improve customer satisfaction to increase customer retention rate.
• Compare customer retention rate to industry benchmarks to identify areas for improvement.

Conclusion

Tracking key performance indicators (KPIs) is an essential part of running a successful reseller business. Know how to calculate and track the top seven reseller KPIs – cost per acquisition (CPA), average order value (AOV), customer lifetime value (CLV), average profit margin, number of new customers, category performance products and customer retention rates – gives you insight into how your business is doing, what areas may need extra attention, and how to better market your products.

By understanding and regularly measuring these metrics, you will be able to more effectively identify areas for improvement in your resale operations, allowing you to optimize your business operations and increase profits.