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Different platforms offer various positives for dropshipping.

You can adjust the CPO formula to include other costs.

Business metrics Average Cost Per Order (CPO): Definition, Formula & Example Online shopping is growing rapidly. In fact, Statista estimates that 20.8% of retail sales will be online in 2023 and can increase to 24% by 2026. This means that e-commerce sellers should make the most of online advertising techniques that can increase sales and profits. After all, in e-commerce, success can often be measured in orders received. Many expenses that e-commerce sellers incur go toward encouraging customers to place an order. And that's where the cost per order (CPO) metric comes in. What is Average Cost Per Order? CPO refers to the total cost it takes to acquire and fulfill a single order. Costs can include marketing, manufacturing, storage, shipping, and other miscellaneous expenses, depending on the type of business. When evaluating an online marketing campaign, you can include the CPO and other metrics like cost per impression (CPI), cost per thousand (CPM), and cost per click (CPC). Analyzing your CPO can offer insight into areas for improvement and areas that are working. This can include: Where to optimize the supply chainIf your pricing strategies need adjustments, like introducing dynamic pricingHow effective your advertising and marketing campaigns are in attracting customersIf your budget allocations are driving sales and profits Evaluate Your Marketing Performance Easily Use real-time data metrics to help identify conversion rates and product profitability. Create and export custom data reportsIntegrate multiple stores and advertising platforms into one dashboardTrack your CPO and revenue-based metrics BeProfit offers an intuitive way to keep an eye on your expenses and profits, so you can easily see the results of your marketing techniques. What is the Formula For Average Cost Per Order? To calculate your average CPO, use the following formula: Average CPO ($) = Total Advertising & Marketing Expenses / Number of Orders Received This should be calculated at regular intervals for the most accurate baseline, like monthly, quarterly, or yearly. A low CPO indicates that the campaign is successfully generating higher sales and profits. A higher CPO can mean the campaign does not have the desired effect. You can also adjust the formula for the following costs, depending on what you'd like to track: Cost of goods sold (COGS): This includes material and labor costs, and other expenses associated with producing goods. Some products may have higher manufacturing costs, which can increase your CPO if included in the calculation.Packaging: This should secure the product and promote brand identity. Cost-effective packaging can help lower your CPO.Storage: Depending on how fast inventory ships, you may need various storage sizes. So, storage and warehousing costs can fluctuate your CPO.Shipping: If you factor in location, carrier, and turnaround times, your shipping costs can vary greatly. This can, in turn, significantly increase or decrease your CPO depending on the shipping methods you choose. So, if you're considering all these expenses in your evaluation, the advanced CPO formula is: Advanced Average CPO ($) =Total Advertising & Marketing Expenses + [COGS + Packaging + Storage + Shipping] / Number of Orders Received » Unsure about your COGS? Find out how to calculate COGS for your Shopify store Example of Average Cost Per Order Imagine an e-commerce retailer that sells designer shirts and launches an ad campaign to promote its new collection. It spends $200 on creating the campaign and $300 on promoting it. After a month, the retailer sold 50 shirts for $15 each. Average CPO ($) =Total Advertising & Marketing Expenses / Number of Orders Received= [$200 + $300] / 50= $500 / 50= $10 Now, what happens when you factor in additional costs for selling the t-shirts, like $150 for COGS, $30 for packaging, and $90 for shipping? Advanced Average CPO ($) =Total Advertising & Marketing Expenses + [COGS + Packaging + Storage + Shipping] / Number of Orders Received= $500 + [$150 + $30 + $90] / 50= $500 + $270 / 50= $770 / 50= $15.40 Naturally, when factoring in other costs, the CPO is higher. So, if you take into account the $15 of revenue per order, you can see that the basic formula shows a $5 profit, and the advanced formula shows a $5.40 loss. This can indicate that marketing efforts are effective, but that the fulfillment process is not cost-effective enough. Tips to Manage Average Cost Per Order If you're struggling to reduce your CPO, tracking your e-commerce expenses and your sales performance can provide the insight you need to make result-driving changes to your budget. Here are a few steps you can take: Track your expenses accurately: Make sure you're looking at the complete picture when it comes to costs. You should try to keep supply chain expenses low, automate tasks to lower labor costs, and optimize your ad spending.Analyze relevant data regularly: Staying on top of industry trends and comparing your metrics can help you keep your CPO optimal and make production adjustments according to demand. You can use tools like Google Ads to track conversions.Set realistic benchmarks: Use industry-wide benchmarks as a guideline to identify problem areas. This can help you plan your sales strategies to reach future targets. But remember that your goals should be relative to your business size, product offerings, and means.Use an e-commerce analytics solution: You can streamline your data for real-time monitoring through tools like BeProfit. This can help you keep up with your business's performance. » Discover what ad trackers are and how you can use them in e-commerce Waste No Expense—Improve Your Average CPO Your average CPO can reveal valuable information, from your marketing efficacy to your shipping efficiency. And knowing your CPO can help you optimize and strategically use your budget while reducing profit losses. Plus, it can be hassle-free. Using data analytics dashboards like BeProfit allows you to access all your data, including CPO, in one place and carry out precise profit analyses. With a real-time view of your business's sales, marketing, and profit metrics, you can act fast and make educated decisions about your customer acquisition, product advertising, and fulfillment techniques.

Business data analysis 4 Benefits of Customer Retention Analysis for Your Shopify Store Customer retention is essential for the success of any Shopify store as it helps you increase your sales, customer referrals, and customer lifetime value. Essentially, you create a loyal customer base and build long-term relationships. In turn, you understand their needs better and provide them with tailored services and products. After managing various Shopify stores, I discovered that a cohort analysis is a good place to start analyzing customer retention, because it gives me valuable insight into customer behavior. I find areas where I can improve and try out new ways to keep customers coming back. This helps to drive the direction and strategy of my business. What is a Customer Retention Analysis? Customer retention analysis is a method of tracking customer engagement and loyalty over time by grouping customers based on when they first made a purchase. It sure is an eye-opener to discover how certain types of customers, according to their demographics and interests, would interact with my store. It even helps me identify the best times to run promotions and other campaigns to increase customer retention. I rely on the data in Shopify's analytics and advanced reports to conduct my customer retention analysis. Once my customers are grouped based on their purchasing history, I can track customer engagement and loyalty over time (data from the customer cohort analysis report is particularly useful). » Follow these steps to conduct a Shopify cohort analysis 1. Easily Identify When Your Customers Churn As a starting point, I use these metrics to find out when my customers churn (i.e., where do I lose customers along the way): Repeat purchase rate This measures the percentage of customers who make a second purchase after their first one. If this metric goes down, it means customers were unhappy with their first purchase and aren't likely to come back.Customer lifetime value This is the total amount of revenue that a customer is expected to generate for your store over their lifetime. If this number goes down, it means customers aren't coming back as often or aren't spending as much.Abandoned cart rate This measures the percentage of customers who add items to their cart but don't complete the purchase. If this number goes up, it means customers are losing interest in your products or having trouble with the checkout process. You can use third-party apps to track customer behavior and engagement with your store. For example, I faced a situation where the abandoned cart rate increased. So, I installed an abandoned cart recovery app and followed it up with an automated email that I triggered a day later offering a 10% discount. The abandoned cart rate decreased as a result. 2. Understand Why Your Customers Churn Once you know where you're losing your customers, you can investigate why. I like to gather and analyze data from many different sources to get a full picture of the problem and test any theories. Analyze customer data Look at customer data such as purchase history, demographics, and behavior on your website to identify patterns or trends.Test the checkout and customer service processes Test your checkout and customer service processes to ensure they're fast and user-friendly. Consider running A/B tests to test different processes.Conduct surveys or interviews Reach out to customers who have left the store and ask for feedback on why they decided to stop shopping. » Improve your customer retention strategy with email marketing 3. Manage Your Marketing Budget More Effectively Doing a customer retention analysis also helps me save marketing costs. Why? Because ROAS and customer retention and directly related and, more importantly, it's usually cheaper to keep customers you already have than to get new ones. A study I recently read by Invesp showed that acquiring a new customer can be as much as 5 to 25 times more expensive than retaining an existing customer. So, by focusing on retaining my customers, I further reduce my marketing costs because I'm creating targeted ad campaigns with a higher likelihood of conversion. According to Business.com, repeat customers spend on average 67% more than new customers. As an extra, I've also found that my repeat customers are more likely to refer their friends and family to the store—reducing costs further and boosting revenue. » Learn about customer acquisition cost in e-commerce and how to find yours 4. Boost Your Revenue and Business Growth Repeat customers help boost revenue and business growth through two main factors: reduced price sensitivity and being more open to new products and services. Pricing By engaging with my customers and building a community, my repeat customers trust my brand. This makes upselling and cross-selling easier and increases my average order value (AOV). New products or services Because of trust in my brand, repeat customers are more open to trying new products or services. This keeps them engaged and simultaneously helps to attract new customers because it shows my business is relevant and competitive. For example, I added a new product and ran a marketing campaign for 2 weeks where I offered my existing subscribers an additional discount for ordering the new item. It worked like a charm and boosted my revenue by 20% for that month. » Follow these extra tips to boost Shopify sales Solidify Your Customer Base With BeProfit I cannot overstate the importance of customer retention analysis. Retaining your customers and building a solid customer base are key to a successful Shopify store. When you take full advantage of the data that your Shopify store gives you, you can experience the benefits I've discussed. To simplify your analysis and improve customer retention rates, invest in BeProfit's solution and make data-driven decisions while viewing all your metrics at a glance.

Marketing How to Improve Your Customer Retention Strategy With Email Marketing You’ve probably heard that acquiring new customers costs more than keeping them. Most studies show acquisition marketing is six to seven times more expensive. Fishing for new blood certainly is part of the ecommerce merchant’s toolbox, but devoting energy to customer retention marketing is much more advantageous. Email marketing is the best vehicle for doing it. We’re looking at why that is, along with five tips to get the most out of it. But first, let’s dive deeper into why ecommerce merchants should invest more in retention marketing. What Is Retention Marketing and Why Is It So Important? Before you even start to think about ROAS and customer retention strategies in general, remember that the goal of retention marketing is to turn customers into repeat buyers. Such marketing campaigns and initiatives aim to drive higher engagement so that the brand is top of mind. Retention marketing is worthy of your resources for two particular reasons: You’re not wasting money on the hunt. You’ve already got the first-party data of current customers who — we assume — are happy with your brand. Repeat customers are more profitable than first-timers. One study shows merchants reap an average of $39 in profits for every repeat customer purchase. They lose $29 for every new customer, primarily because of the cost of customer acquisition (CAC) and higher product return rates. From a broader perspective, the more customers who repeatedly spend on your brand, the higher the net profit throughout your mutual relationship. This is called customer lifetime value (LTV). And the higher the LTV, the better you can justify the CAC. The optimum is a 3:1 ratio, where your LTV is triple that of the initial CAC. » Discover 4 benefits of customer retention analysis for your Shopify store 5 Tips for Using Email Marketing to Retain Customers Full disclosure: we are an email marketing software company with considerable bias. That said, email marketing is the ultimate customer retention strategy besides excellent customer service. Leading retailers agree. They cited email as the top investment (87%) when polled on their 2022 resource allocation plans for retention marketing strategies, beating out loyalty programs and SMS. They’ve got good reason to trust in email marketing. It has an impressive return on investment: for every $1 spent on email marketing, the average return is $42. Of course, keeping customers around requires maintenance. Some of our tips apply to all types of email marketing, no matter the target. Others specifically cater to nurturing customer relationships. 1. Provide Variety How often do you receive an email from a brand, and it’s a case of deja vu? Every promotion sounds the same. If you haven’t unsubscribed, then you’ve stopped opening them. Don’t be a brand that emulates this email marketing behavior. Provide a mix of valuable content that engages your customers and makes people excited to open your newsletters. There are times for sales promotions, announcing new releases, and addressing pain points. It’s nice to toss in a slice of your brand’s story every so often, too. And for meatier value, think educational and inspirational. Style guides, for instance, are perfect for apparel-related merchants but also handy in providing advice around arranging/displaying products. The key is curating content so the customer doesn’t have to think. Imagine you’re on the quest to spice up your space with a rug. But online searches make your head spin because interior design is not your strong suit. The example below from The Citizenry could be just the intervention needed. The email highlights pieces from its rug collection by showing how they could work in different rooms. It’s an excellent tactic for leading people toward imagining the possibilities for their own homes, versus a product shot without the surrounding context. It brings things to life. We also appreciate the section that takes viewers to a rug size guide, providing additional information and styling tips. 2. Make a Footer That Functions You may wonder why the last section of an email is pertinent to retaining customers. Seems like real estate of little significance, right? Wrong. Not everyone will scroll to the bottom. But others will, which makes it ideal for reiterating the vital stuff you want people to affiliate with your brand. A “footer that functions” serves as reinforcement for those who have already invested in you. The more they see the same block of messaging — we’re talking simple icons accompanied by short, descriptive words — the more you build trust and grow brand affinity. (It also can tip the scale for securing a first-time purchase.) Allbirds has a polished retention marketing strategy worth dissecting. All icons link to a landing page with more information. Here’s what we like about the footer: It calls out its “tread lighter” brand value loud and proud; any brand that stands for something — sustainability, a cruelty-free approach — should do the sameIt overrides common friction points of shipping and returns; bonus points for offering a free 30-day trial Infuse your footer with elements that communicate your brand’s value. Alleviate pain points, lean into your audience or niche, and drive home your unique selling proposition. Stick to three or four icons in total, as anything more is overwhelming. Contemplate adjustments for Black Friday and holiday marketing, honing in on common friction points during the Q4 season. For example, we see ecommerce merchants broadcasting a buy now, pay later option. Take the opportunity to feature complementary services such as customization or gift wrapping, or highlight a return policy to help reduce return rates. 3. Implement Automation One of the most powerful aspects of email marketing is the ability to nurture subscribers and make them forget about the competition. An easy way to do it is with email automations. An email automation is a message (or series) triggered when a subscriber takes a particular action. Once you activate one, it quietly works in the background. Welcome and abandoned checkout email automations are the most widely known and used, but there’s an entire group of automations specifically targeted at retaining customers. Consider developing any or all of the following: New customer automation. Acknowledge your subscriber’s first purchase. Invite them to join your loyalty program. Provide a customer service point of contact to answer questions. You want to keep the momentum going. Post-purchase automation. We call this a “get ready” email. Unlike a transactional order confirmation message, post-purchase automations build excitement as the customer waits for the order to arrive. It’s ideal for sharing information, such as care tips or installation instructions. Repeat customer automation. It’s always a good idea to show gratitude to customers who buy from you more than once. That spells loyalty, so they deserve recognition. Tell them why their confidence in your brand matters. Lapsed purchaser automation. Connect with customers who haven’t purchased from your shop in a while. It could be 90 days or longer, depending on what you sell. This automation is especially impactful when you offer consumable products — like pet food or cosmetics. Use it as a reminder that it’s time to replenish. A lapsed purchaser email from Grubhub Pick which automations are suitable for your brand. Consider a multi-part series if it makes sense. Sprinkle in small promotions, such as a discount or free shipping, to entice an order. You might even use them to ask for a review. 4. Use Segmentation Ecommerce merchants that personalize their marketing have a huge advantage in retaining customers. A survey cites that 71% of consumers expect brands to personalize their marketing. Not only that, but more are frustrated when it doesn’t happen. An even greater percentage will recommend brands that personalize marketing to their family and friends. Email segmentation is a terrific vehicle for sending relevant messages. It’s the practice of tailoring emails for a subset of subscribers. There are many options when creating customer segments, from purchase behavior to demographics. Typical means for grouping include: High-value customers who have passed a certain threshold of spendingCustomers who join your loyalty programWholesale customers Placing customers by residential locationMaking segments per product category purchased The example from Carved is a classic example of how to employ segmentation in your email marketing. The brand grants early access to VIPs for Black Friday sales. A custom code at the bottom reassures the customer that this invite isn’t for everyone. Carved’s email scrapes the surface of segmented email marketing. Consider giving perks to loyalty program members. Reach out to customers when you debut a complementary product or service to one they purchased. You could even identify those who bought during the holiday season and haven’t returned since, and follow up with a message six months later. » Learn about the cost of customer acquisition in e-commerce and how to find yours 5. Survey Your Customers People like their voices to be heard. They want to know that their opinion matters, especially as a consumer. Surveying them equals empowerment. You could send a survey to your entire list, including subscribers who have never bought a thing. But customers have some skin in the game, as they use your products and have better insight into your brand than onlookers. The email message itself can be short, like Food52 does. Question them about the new products they’d like to see or services that interest them. The goal: understand how you might better meet needs before a competitor swoops in. The results are data points for improving your business. Answers may open your eyes to new solutions worth pursuing or turn your attention to flaws that need fixing. And if you make changes based on their input, let customers know how valuable they are in shaping your business. Use Email Marketing to Show Your Value Resist viewing customer retention marketing as just another promotional tactic. Seeing it through such a narrow lens won’t reap the desired benefits. Instead, know that good retention marketing strategies give customers value well beyond their purchase. When you’re motivated to strengthen relationships with your customers — versus spew sales pitches — you’re empowering your business to flourish. So, we challenge all ecommerce merchants to examine their email marketing programs. How are you doing with our five tips? How well are you providing variety, harnessing your footer, using email automations, sending segmented emails, and surveying your customers? Find a job in email marketing on Jooble.

CTR impacts conversion rates and ultimately profits.

Business metrics CTR Manipulation: 5 Expert Tools & Techniques Depending on the industry or ad and site type, the click-through rate (CTR) can differ drastically. For example, Wordstream reports that arts and entertainment have an average CTR of 16.29%, but furniture businesses have an average CTR of 3.49%. Even a small increase in CTR can have a significant impact on business growth, insights, and profits. So, manipulating your CTR can aid in adjusting your site's search ranking for better traffic, understanding user behavior, and helping you stay competitive in your industry. What is CTR? CTR is a key metric that measures the number of clicks your ads or website receive in relation to the number of impressions they generate. A higher CTR typically means: More people are interested in your content, which can lead to increased sales and profits.Search engines identify your site or ad as valuable and relevant, which can increase traffic and engagement. But this can vary depending on the type of content, frequency of posting, and use of relevant keywords. Businesses can use strategies such as keyword research, optimizing content, and A/B testing to find a solid CTR benchmark specific to them. » Learn how to calculate CTR and why you should track it Monitor Your Ad Metrics With Ease Save time by auto-syncing data from numerous ad platforms into one easy-to-use dashboard. Uncover actionable insights to improve your profitability.Access on desktop or mobile devices.Get customizable data reports. BeProfit offers an intuitive one-stop platform where you can keep track of sales and ad data from various stores. CTR Manipulation Tools & Techniques CTR manipulation can help increase a website or ad's CTR to boost search engine ranks and traffic. This is typically done with various optimization methods, but some less favorable tactics can bring risks, like fines or search rank losses. These are known as 'Black Hat' SEO strategies and include click bots and human CTR services. But 'White Hat' SEO strategies leverage organic search, which accounts for 53.3% of traffic, and can foster more sustainable growth. These strategies include: 1. Email Marketing Email marketing allows for optimized subject lines, body copy, and CTAs to entice recipients to engage. Personalization takes it a step further by offering emails tailored to the recipient's interests, preferences, and behavior. This can lead to higher open rates, CTRs, and conversions. Additionally, email marketing can help previous visitors complete conversions, such as recovering abandoned carts. 2. Social Media Social media offers various strategies, such as improving organic social media presence by: Connecting with customersIncorporating social commerceUtilizing push notifications This helps extend brand reach and familiarity, which can lead to higher conversions. Using targeting and retargeting through social media can help improve customer retention because more tailored posts and social ads can attract them based on interests and relevancy. Higher retention can help lower ad spend and increase CTR. 3. Improve Copy Copy optimization can help maximize the relevancy and persuasiveness of your brand message to your target audience. Varying your copy with images and incorporating videos can help keep your content dynamic and engaging. Updating copy with more targeted language or visuals can also help increase CTR with particular desired target audiences, which can help boost conversions. 4. Paid Ads Optimizing paid ads' copy can help target the right audience. This can be done by selecting appropriate keywords and conducting research to find the best platforms for your ad to meet your conversion goals. Social media platforms offer various formats, such as: Sponsored postsIn-feed adsBanner adsVideo ads Pew Research reports that 95% of teens prefer YouTube over other social media platforms. So, let's take this example: If a brand wants to target teenagers, they can run short, dynamic video or banner ads on YouTube to increase engagement with their target audience. » Find out the best platforms to advertise based on CTR 5. Optimizing Your Website Optimizing your website can improve CTR by prioritizing a better user experience. This can include: Creating more intuitive site navigation through a better visual hierarchy.Ensuring your site is compatible with and runs seamlessly across devices.Optimizing your SEO to increase visibility in search engine results.Leveraging the design based on your product offerings and audience preferences. How to Manage CTR Manipulation Even with an improved CTR, tracking it regularly is still essential. Luckily, many social media business platforms have tracking capabilities, like Google Analytics's cohort analysis feature or BeProfit's ad data tracking functionality. Through monitoring, you can gain better insight into the success of your CTR manipulation techniques. It can highlight which strategies aren't cost-effective and which are effective. Using data like CTR, conversion rate metrics, customer retention rates, and other sales metrics can help businesses streamline their methods for better metric outcomes, revenues, and profits. » Using Shopify? Check out the benefits of customer retention analysis Elevate Your Content With CTR Manipulation CTR manipulation offers numerous ways to increase organic traffic and CTR. By tracking ad metrics like CTR, you can assess your performance and identify areas for targeted improvement. With BeProfit, profit and performance tracking is streamlined into one place for easier analysis. This can help you take control of your marketing data and make informed strategic decisions that manipulate your CTR creatively. Establishing a better CTR that aligns with your ROI and ROAS goals can help keep your expenses low and conversions and profits high.

A woman looking at an infographic of CTR effects

Business metrics Calculating CTR For Beginners: Formulas, Guides & Examples Click-through rate (CTR) is an essential metric that can help businesses evaluate their advertising campaigns' performances. Depending on the industry and platform, CTR averages can vary. For example, Wordstream shares that business services' paid search CTR average is 5.17%, whereas apparel has a 2.24% average CTR. So, this metric should be treated as more of a guideline than a definitive benchmark. Understanding your CTR can also provide insight into revenue and profits by highlighting how effectively you're utilizing your marketing budget. Understanding CTR CTR measures the engagement of online ads and other digital content, such as emails or website pages. To understand this engagement's correlation to revenue, you would need to also calculate metrics like conversion rate, cost-per-click (CPC), and others. CTR can be analyzed by subsections, such as micro conversions, search ads, and display ads. Each of these could provide different results, which can offer data for comparison to find from which ad type, for example, you garner the most conversions. Why Should You Track CTR? Tracking your CTR allows you to understand your marketing strategies' strengths and weaknesses. It can help better your business with: Increased conversions - Knowing where your campaigns are successful can help you identify and utilize effective techniques more widely, resulting in higher interaction and conversions.Insight into marketing campaigns - This can guide you to points in your campaigns that need optimization or costs that should be cut. By tracking CTR, you can better understand user behavior and, therefore, tweak your marketing approaches for better conversion and customer retention.Improved ROI - With a better understanding of your marketing campaign, you can increase the chances of users completing sales actions and the likelihood of turning profits. Track Profits From Your Marketing Conversions Automatically integrate your advertising data and easily track sales profits. UTM-based tracking allows you to analyze and optimize all engagement from social media to ad campaigns.Get an aggregated view of your business performance.Accessible on mobile and desktop devices for real-time team collaboration. BeProfit offers a customizable platform to track your advertising performance using key metrics. » Looking to do some CTR manipulation? Here are 5 expert tools and techniques How to Calculate CTR CTR is the ratio of clicks to the number of users who viewed the page, email, or advertisement. Some metrics to decide between before doing any calculations are unique clicks and overall clicks. If you want to categorize every time the same user clicks on the same link as one click, that's considered a unique click. Whereas overall clicks count every click, even on the same link and by the same user, as numerous clicks. Aside from industry benchmarks as a guideline, it's worth having your own benchmarks so you can measure your improvement from one period to the next. Although the CTR can vary based on platform, content, and channel, calculating it uses the same method and should be done at regular periods. CTR (%) = (Clicks / Impressions) x 100 Example of a Good CTR CTR (%) = (Clicks / Impressions) x 100= (75 / 3,000) x 100= 2.5% In this example, a call-to-action (CTA) button in an email campaign had a CTR of 2.5% Because email marketing CTR averages at 2.3%, this result is positive. This high CTR may have been achieved through extensive user behavior analyses or retargeting to ensure it was reaching people more likely to be interested. Successfully reaching a desired target audience can help businesses assess their marketing prowess and retain customers, which can improve conversion and help maximize profits. » Want to know more? Here's how email marketing practices can improve your ROI Example of a Poor CTR CTR (%) = (Clicks / Impressions) x 100= (50/10,000) x 100= 0.5% With the average CTR for Facebook ads at 1.4%, this example of a display ad that appears on Facebook feeds shows a low CTR. This may be a result of poor ad type selection, weak copy, and inefficient audience targeting, among other practices. This highlights how lower CTRs can cause businesses to lose out on potential conversions that could, in turn, lead to wasted costs with little to no ROI. Ways to Improve Your CTR Using data insights from tracking your CTR, and other metrics can inform new ways to use that can optimize CTR. Some of these ways include: Personalization - This includes web personalization, which targets your potential customers' specific interests and fosters a familiarity that can encourage engagement and loyalty.CTAs - By implementing CTAs for more strategic direction and redirection, you can increase the opportunity for users to visit specific pages or product pages.Retargeting - You can leverage social retargeting. This creates display pop-ups when a user interacts with your social content through likes or comments.Improve Ad Copy - Performing keyword research, rewriting, and making use of images and video marketing can optimize your ad copy with data-driven adjustments that can help drive engagement.A/B Testing - Testing various versions of an ad and comparing the metrics can highlight more precise areas of your ad that resonate best with users. You can use this insight and apply it to other ad campaigns for an improved CTR. » Discover steps to build a successful hybrid e-commerce marketing campaign Leverage Your CTR to Help Increase Conversions CTR is a key metric in understanding the success or failure of any given digital marketing campaign. Analyzing which platforms, techniques, and ad types are most successful, and which target audiences are most responsive to certain campaigns, can aid businesses to optimize their strategies for increased sales and profit-driving conversions. That's where BeProfit comes in. With a customizable dashboard that can easily track your profits and integrate your advertising data for real-time monitoring, you can focus more on spearheading informed strategies to continually improve your CTR.

Using Excel to calculate these is simple to use.

Profit calculation 3 Best Excel Formulas for Calculating Markup vs. Margin According to the NYU Stern School of Business, the average gross profit margin across all industries is 36.28%, with online retailers generating an average gross profit of 42.78%. How does yours compare? As an e-commerce entrepreneur, knowing your profit margin and focusing on the factors that influence your profits and contribute to a robust bottom line is crucial. Grasping the concepts of margin and markup is a key component of this process, and thankfully, Excel makes calculating these vital metrics a breeze! In this post, we'll delve into the top Excel formulas for determining markup and margin and how you can leverage them to make informed pricing decisions and boost your profitability. Understanding the Difference Between Markup and Margin Markup Markup refers to the amount you charge above the cost to cover expenses and generate a profit. In the marketplace, markup is expressed as a percentage, that is, the percentage added to the cost of a product or service to determine its selling price. To work out your markup, you need to accurately calculate the cost of goods sold (COGS). Margin Margin represents the portion of each sale that contributes to covering expenses and generating profit. We also express margin as a percentage: the percentage difference between the selling price and the cost expressed as a percentage of the selling price. So, in summary: Markup is the percentage increase in price over the cost of the productMargin is the profit made as a percentage of the selling price Below are three key pairs of Excel formulas you can use to calculate your markup and margin. » Learn more about the differences between gross margin & gross profit so you don't get them confused 1. Basic Percentage Formula To gain a better insight into a company's pricing strategy and make informed decisions on pricing and sales, we can use two basic formulas that apply to markup and margin. Markup Calculation Formula Markup = [(Selling Price - Cost) / Cost] x 100 For example, if a T-shirt costs $23 to produce and the company wants to sell it at a price of $30, the necessary markup would be [($30 - $23) / $23] x 100. This works out to be a markup of 30.43%. To calculate this in Excel, enter the cost and selling price in separate cells, such as A2 and B2. In cell C2, input the formula: =(B2-A2)/A2*100 Alternatively, enter the formula =(B2-A2)/A2 and select "Percentage" from the dropdown list in the "Number" field in the top menu. This automatically expresses the value as a percentage. » Simplify calculations and optimize profits. Book a demo for BeProfit's profit-tracking app Margin Calculation Formula Margin = [(Selling Price - Cost) / Selling Price] x 100 Using the same example as above, your calculation would be [($30 - $23) / $30] x 100. The gross margin, therefore, works out to be 23.33%. As with the markup formula, input the cost and selling price in separate cells, such as A2 and B2. In cell C2, enter the formula: =(B2-A2)/B2*100 Or you can enter the formula =(B2-A2)/A2 and select "Percentage" in the "Number" field in the top menu. 2. Sales Price Formula Considering both the cost of producing the product and the desired profit margin is something businesses must do when setting a sales price. Sale prices are another key factor in margin and markup calculations. Sales Price Using Markup To calculate the sales price with the desired markup in mind, use this formula: Sales Price = [1 + (Markup/100) x Cost Price] Using the same figures are the previous examples, the sales price = [1 + (30.43/100) x 23]. This means your sales price should be $30. An Excel formula is a much quicker way to calculate the sales price. If you enter the cost price in the cell A2 and the markup in cell C2, the formula you would enter in cell B2 is: =(1+C2)*A2 Make sure that for B2, you select "Number" from the dropdown list from the top menu, as you can see below: Sales Price Using Margin To determine the sales price using the profit margin, use this formula: Sales Price = Cost Price / [1 - (Margin Percentage/100)] For example, if you want to achieve a margin of 23.33% on the T-shirt that costs $23, your sales price = $23 / [1 - (23.33/100)]. This works out to be $30. For a simpler way to calculate the sales price, you can use this formula in Excel: =A2/(1-C2) Again, be sure to select "Number" from the dropdown list for cell B2, as you can see below: By using these sales price formulas, businesses can ensure that they're setting prices that will result in the desired profit margins. 3. Discount Formula Another common strategy businesses use is discounts to attract customers and increase sales. When it comes to margin and markup calculations, discounts can affect profit margins. If a company offers a discount on a product, the sales price will decrease, which may impact the margin percentage. Firstly, if you have a discount percentage in mind, you need to calculate what the new discounted sales price will be. To do that, use this formula: Discounted Sales Price = Selling price x [1 - (Discount Percentage/100)] To illustrate with our same example, to work out the discounted sales price for our T-shirt with a 10% discount, the calculation would be: discounted sales price = $30 x [1 - (10/100)]. This works out to be $27. To calculate this in Excel, enter the sales price in cell A2 and the discount percentage in cell B2. Then input this formula in cell C2: =A2*(1-B2) Remember to select "Percentage" from the dropdown list for cell B2 and use "Number" for cells A2 and C2. Once you have this amount, you can work out your new markup and margin values. Use the basic percentage formulas, but replace the original selling price with the discounted sales price you just calculated. This means the new markup formula will be: New Markup = [(Discounted Sales Price - Cost) / Cost] x 100 Using our example, the new markup after the discount = [($27 - $23) / 23] x 100. This comes to 17.39%. The formula to calculate the new margin will be: New Margin = [(Discounted Sales Price - Cost) / Discounted Sales Price] x 100 Using our example, the new margin = [($27 - $23) / $27] x 100. This works out to 14.81%. You can use the same basic percentage formulas in Excel, but just make sure you replace the selling price in cell B2 with the discounted sales price. In other words, replace $30 with $27. By calculating the new markup and margin after applying a discount, you can better understand the impact of the discount on your profits. This will help you make informed decisions about whether or not to offer a discount and how to adjust your pricing strategy to maintain profitability. » Looking for more help with discounts? Check out more easy Excel discount formulas Factors That Can Impact Markup and Margin We already established that markup and margin are key metrics that impact businesses and their profitability. However, several factors can impact these metrics, including competition, market demand, production costs, and pricing strategies. In highly competitive markets, businesses may need to lower their prices to remain competitive, which can impact both markup and margin. Production costs, including raw materials, labor, and overhead, can also impact markup and margin. Finally, different pricing strategies can impact these metrics, as businesses may need to adjust their prices to reflect changes in their overall pricing strategy. » Remember to keep your pricing strategy flexible. Learn how with dynamic pricing Calculate Markup and Margin in Excel for Effective Pricing In today's competitive market, it's crucial to calculate markup and margin accurately to ensure profitability and sustainability. Using the above formulas in Excel is a simpler, more time-efficient, and more accurate way to calculate these key metrics. By using Excel to calculate markup and margin, businesses can make informed decisions about pricing that will ensure customer satisfaction and boost customer lifetime value (CLV) while still maintaining profitability. Once you have effective pricing in place, it's essential that you continually monitor, track, and analyze your profits and expenses. BeProfit is one of Shopify's best profit calculators to get the job done. It's an all-in-one analytics tool that auto-syncs your order and expense data to provide real-time product, order, marketing, and expense reports. With a clear overview of your business finances, you can make informed and strategic decisions to scale your store and boost your bottom line.

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