Focus on the right things: why share of online sales is irrelevant

02.06.2020

Focus on the right things: why share of online sales is irrelevant

I bet there are thousands of E-commerce Managers out there who get measured by the share of revenue generated online. I bet there are hundreds of Sales Directors staring at last quarter’s channel split at this very moment. There may be a board member or two out there, contemplating a strategy deck stipulating that “our target is to achieve X % of sales digitally by 2022”.

What is the point in all that?

None, sorry.

You can do stunning good business with 0% online sales (okay, that’s getting hard these days), and you can do awful business with 100% online sales.

Still, these kinds of revenue split targets are set, and metrics are stared upon. Investment programs are being tied to these kinds of success criteria; people’s salaries are tied to them.

So why is that a bad thing? Because there’s a risk that it takes focus away from what really is important: why you want more digital sales in the first place. Being sloppy in your thinking around that is risky, because it can eat your NPS, ROI and margin for breakfast.

Looking back at the customers we have worked with over the past 15 years, and the reasons for why digital commerce has been important to them, my favorite reasoning is this one:

Digital sales in itself is not important – but the wide range of tactics you can leverage within digital channels makes all the difference

Okay, what does that mean? One example: once all your dealers, distributors and sales offices are using the same digital tools, you have radically better possibilities of influencing their pricing decisions and up-selling efforts. My hypothesis which I outlined in another blog: it’s way easier to build the intended behavior into the tools in use, rather than trying to get your point across in “all hands” sales calls and internal trainings. But all of this starts making sense only once you know your objectives and what you want to achieve when you have the dealers and internal salespeople on board the digital channel.

Another example: once all your customers are interacting over digital channels, you have radically better possibilities of gathering data about behavior patterns, which again is not an end-goal in itself, but it gives you tons of options on automating customer experiences at scale, improving your offering, optimizing your supply chain decisions, or re-prioritizing your development backlog. And this is what starts making sense. Not the share of online sales per se.

By all means, do measure your share of online sales. It does tell you something about your progress – but don’t forget to focus on measuring the degree to which you succeed in your envisioned tactics and the business outcomes you hope to get out of those. That’s where the money is.

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Mathias Hjelt

Country Manager, Sweden. Director, Portfolio & Offering.