(WHILE EVERYONE IS BUSY DOING 101 THINGS, THE TOP DROPSHIPPERS DOUBLE DOWN ON THESE 3 UNDERRATED METRICS)
A couple of months back, I remembered something that I learnt from the “The 9 Billion Dollar Man”, Jay Abraham.
He said, in order to build a successful business, focus on thes 3 metrics:
– Get more customers
– Increase the average order size or AOV
– Increase the frequency of transactions for each customer, also known as LifeTime Value (LTV)
This got me a little curious…
I started to wonder:
What are the most important metrics that dropshippers must focus on if they want to break their revenue plateau and scale hard and fast?
Basically what I’m looking for are the core essentials that our operations agency can use to easily plug them into the rest of our clients’ businesses and scale them at warp speed.
After working with, studying, and breaking down the successes of some of the fastest growing and highest revenue generating dropshippers…
Our team has discovered and distilled the 20% of business operations that contributes to 80% of these top performers results.
Then we break down these essential 20% even further into 3 actionable metrics to focus on.
These 3 metrics become the laser pointer that help us to streamline the operations and activities so that our clients will be able to achieve their biggest growth within a short period of time.
The 3 metrics that act as the “rocket fuel” to propel dropshipping business to the moon.
The 3 metrics that you should focus on, if you wish to scale or even maintain at the 7 figure per month level.
(And if you are someone that takes your dropshipping business seriously, never stop focusing on these 3 metrics!
Note: ROAS/ROI is not in this list because it’s a commonly known metric and should be looked at since the start)
Introducing the 3 “Rocket Fuel” metrics to scale your business to the moon
(with actionable tips you can immediately implement in your business):
Metric #1: Product Test Rate (PTR)
If you are an experienced dropshipper, you should already know that the key to growing and scaling a dropshipping business to 6 figures and beyond is to…
>> Have As Many Winning Products As Possible <<
This is the reason why testing as many products as possible is always the top priority.
The more products you test, the higher chances that you can find more winning products.
This is why large scale dropshippers build large product research teams. So that they can 2x, 3x and even 10x the number of products they test.
But oftentimes, when a dropshipping business tries to scale their product research team, they tend to face this one big issue.
They tend to find duplicate products.
Meaning, the product research team would constantly find products that another team member has already found.
The reason why this happens is because as your product research team grows, the chances of them finding the same products over and over again gets a lot higher (especially if your product research process revolves around AdSpy).
So even though your team may have 10 new products to test each day (which looks pretty good on excel sheets)
The truth is, out of the 10 products, usually only around 6 of them are UNIQUE products…
With the other 4 of them are actually the same (duplications of each other).
While this may sound like a small issue…
The implication can be HUGE!
Because the opportunity cost for these duplications can be very high.
4 duplicated products a day means 20 duplicated products a week.
Having 20 duplicated products a week means you’re missing out the chance to test 20 additional unique products… which could have greatly increased your chance of finding more winners every week.
Product duplication is one thing you want to avoid at all cost as you scale up your research team.
So how should you solve it?
Do This: Use a Scorecard Metric to measure both the Quantity and Quality of their product research.
First, get your product research team to upload all of the products that they’ve found onto just ONE centralized sheet to keep things clearer.
When our client first came to us, he had his team upload their products in multiple google sheets and platforms.
This meant that the product researchers had to constantly refer back to several different google sheets to see if the product has been added previously.
Because of the extra steps, a lot of time is wasted.
The result? His team wasn’t able to test more than 3 products a day.
Now here’s what we did to 4x the number of unique products they test without sacrificing on quality.
At our agency, we created a customized system for his team by streamlining his entire product research process.
One of the effective things we did was to integrate a google form TOGETHER with the google sheet.
We then got his product research team to upload the products into the google form which then automatically adds the product into the google sheet.
A product research team leader will then vet through the google sheet and remove any products that are duplicated.
This will prevent the product researcher to constantly refer back to the google sheets, and focus on finding as many products as they can.
We also created a Scorecard Metric that shows the product researchers how many unique products they have found each day (after removing the duplicates). So that they know how many more products they need to search at any time.
At the end of the week or month, this Scorecard Metric will also show how many of their products they found turn out to be a winner.
That way we can track both the quantity and quality of each product researcher.
If they are not hitting their numbers, then we improve on the process and system to make it more efficient.
If the quality is not good enough, then either we review their process, their skills or find a replacement if they are not suitable.
That way, everything is tracked, measured and continuously optimized.
Using this customized system we built, our client was able to scale his product research team, and went from testing 3 products a day to up to 12 unique products a day EVEN when they had to follow his extremely strict 5 step product research criteria.
This allowed him to find winning products consistently and he is now on his way to crushing 7 figure months.
Metric #2: Winning Product Ratio (WPR)
There’s no doubt that winning products are the lifeblood of all dropshipping businesses.
Without any winning products, your dropshipping business simply will not survive.
And we’re not just talking about getting just 1 winning product, because if your business is dependent on just 1 product, you’re not really running a business.
Because if that product dies out (which it will), your business dies with it.
So the key to hitting consistent 6-7 figure months?
Have multiple winning products running at the same time!
Of course… that’s easier said than done.
It’s common for dropshippers to face inconsistencies in their business.
You may find 3 winning products this month, while the next month, you may only find 1.
At our agency, we have created a system for our clients to monitor their Winning Product Ratio (WPR)
This helps them to tweak and optimize their entire product research flow to increase the Winning Product Rate.
(As a bonus benefit, it also helps the team’s results to be more predictable and consistent — a huge advantage for breaking into those sweet 6-7 figure months consistently)
So how can you create this system?
Do this: Create a google sheet and link the google form that the product research team is using for their product research.
At our agency, we separated the google sheet into 4 criterias:
2. Number Of Products Researched For That Month
3. Number Of Products Qualified And Approved For That Month
4. Number Of Products Launched For That Month
For point 2-4, we have an internal benchmark and KPI so that we will know whether the team is on track or not.
Target Number of Products Researched: For our clients, our goal here is to aim for a minimum of 800 products per month.
Now, 800 seems impossible. But take note that this 800 includes product duplicates and unqualified products.
(Note: This is BEFORE we vet through and approve the products)
Next, we have a TARGET number of products to be QUALIFIED and APPROVED.
Here, we aim for a rate of 25%. Which is about 200 products.
If we see that the number of products that are qualified and approved are below 25%, it’s an indicator for us to start analyzing and optimizing the product research criteria.
Is it too strict? It is not strict enough? Are there too many product researchers researching in the same niche?
Only when you have a benchmark or goal then you will be able to track whether your team is on track or not.
From there we will pinpoint the bottle neck of the process, and optimize it quickly.
(At our agency, we’re constantly optimizing our clients operations, systems, SOPs, processes so that they will be more efficient and effective. The results? Huge gains in revenue and ROAS)
Next, we have a TARGET number of products LAUNCHED.
For our clients, we aim to launch at least 40% of the products that are qualified and approved.
The number of products that are launched is dependent on the capability of the team and their ability to prepare the products from product import, copywriting, design, video creatives, all the way to launching the product and media buying.
If we see that the number is below 40%, this is a good indicator that one of the departments is the bottleneck of the business and we work on fixing it.
This gives us a clearer picture of identifying the real fault of the business instead of simply guessing or focusing on things that don’t actually move the needle.
Overall, if you take a look at the numbers, 40% of the products that are qualified means 80 products launched for the month. (2-3 high quality products with a number of great creatives launched per day)
This is a great benchmark for anyone to start and eventually scale higher to high 6 or even 7 figures a month consistently.
Metric #3: Customer Service Response Rate (CSRR) – How quickly your customer gets a response
You probably already know that customer service and the response rate is important for any business…
This impacts not only the brand but the entire business as a whole.
Here’s the thing:
Whenever you provide great customer service, you create a domino effect.
1. The customer is happy and leaves you great reviews.
2. The customer states that they are satisfied whenever Facebook asks for their feedback.
3. You get a higher feedback score for your ad accounts.
4. You keep Mr Zuckerberg happy, and he in turn, keeps you happy with healthy CPM and ROAS.
5. Lesser chance of getting your ad accounts or business manager banned!
6. Lesser chance of getting your ad accounts or business manager banned! (This deserves to be repeated because of how important it is)
7. Your customer comes back to buy from you again and again, giving you a high customer LTV which allows you to have the ability to spend more than your competitors to acquire a customer.
So there we have it, by providing better service, you can potentially transform your business and obliterate your competitors.
Usually, whenever most ecom stores want to improve their CSRR, they will end up doing 2 things:
1. Hire more people into their customer service team.
2. Migrating their team into expensive Customer Service tools.
Not that there’s anything wrong with that, but after working with many dropshippers ranging from 5-7 figures, I realized that this not only significantly increases the costs for the business (especially when the customer service tool charges by tickets and number of users. One of our clients was receiving over 500 tickets a day with more than 10 customer service team members, the customer service tool would have cost him thousands of dollars monthly).
…but by consistently hiring new members, you have to constantly onboard the new member and spend precious hours training and management them!
What if there’s a way to cut your response time by 50% WITHOUT hiring new team members?
At our agency, we’ve developed a couple of strategies and systems to greatly improve our clients CSRR without additional cost:
One of them is to integrate automation as part of the workflow.
And here’s how you can do it: First, analyze all your past queries and categorize them into tags/keywords.
Next, we then set up a system to trigger an email response template according to they keywords.
For example: Tag keywords like “delivery”, when a customer sends in a query regarding delivery issues. The keyword “delivery” automatically triggers an action to send an pre-templated email regarding common delivery issues and solutions.
Same goes for products that are broken. Simply tag the keyword “broken”, and an email addressing returns and refunds will be automatically sent to the customer immediately.
Also included in the template is a disclaimer that if the customer still has an unresolved query, they should reply to the same email.
By doing this, we were able to reduce the tickets for our client’s customer service team by HALF.
The team was then able to answer the other 50% of not-so-common queries in less than half of their usual response time.
This not only allowed us to see a higher satisfaction rate from the customers, but it has also allowed us to do so without hiring any new team member.
Remember, whenever you provide great customer service, you create a domino effect.
Your customer is happy and leaves great reviews and feedback.
Mr Zuckerberg is happy and gives you better CPM and ROAS.
Your ad accounts and bank accounts are happy.
See how simply implementing a system like this can potentially change your business and allow you to consistently scale?
So you definitely want to think about building this bridge with your customer…
(Or at the very minimum, track the speedy replies metric)
Remember the 80/20 Pareto Law?
20% of your efforts will bring about 80% of the results.
And in the world of dropshipping where there are 100’s of metrics you can track, these 3 Key Metrics are the ones you should be focusing on…
Because not only do they make up the foundation of dropshipping, they bring about disproportionate ROIs.
Given that we all have the same 24 hours each day, WHAT we choose to focus on will determine the volume and quality of our output.
And our output will determine the level which we can scale our business to (and the number of 0s in our bank account)!
Tracking these 3 metrics is an actionable step every dropshipper can do to multiply their time and gains.
If you are a 5-6 figure dropshipper looking to scale your business to the next level, and want do so faster with proven systems and result-oriented strategies, let us know in the comments below!