What Are the Top 7 KPIs of a Print-on-Demand Store Business?

As the print on demand industry continues to flourish, small business owners and artisans are constantly seeking ways to optimize their performance and stay competitive in the marketplace. One key strategy in achieving this is by leveraging industry-specific Key Performance Indicators (KPIs) to measure and track their success. Understanding the importance of KPIs in artisan marketplaces is crucial for driving growth, identifying areas for improvement, and making informed business decisions. In this blog post, we will delve into 7 industry-specific KPIs that are essential for print on demand store owners and artisans. We will explore how these metrics can provide unique insights and drive success in this dynamic and rapidly evolving market.

Average Order Value (AOV)

Definition

The Average Order Value (AOV) is a key performance indicator that measures the average amount of money customers spend when placing an order. This KPI is critical to measure in the print-on-demand industry as it provides valuable insights into customer purchasing behavior and the effectiveness of sales and marketing strategies. A high AOV indicates that customers are making larger purchases, which can contribute to increased revenue and profitability for the business. On the other hand, a low AOV may signify that customers are only making small or infrequent purchases, highlighting the need for strategies to upsell and cross-sell products.

How To Calculate

The formula for calculating Average Order Value (AOV) is the total revenue generated from orders divided by the total number of orders. This gives a clear indication of how much customers are spending, on average, when they make a purchase. By analyzing the AOV, businesses can gain insights into customer spending patterns and identify opportunities to increase the value of each transaction.

Example

For example, if a print-on-demand store has generated a total revenue of $10,000 from 100 orders in a given month, the Average Order Value (AOV) would be calculated as follows: AOV = $10,000 / 100 = $100. This means that, on average, each customer is spending $100 per order.

Benefits and Limitations

The benefit of using AOV as a KPI is that it provides valuable insights into customer purchasing behavior and can help businesses identify opportunities to increase sales and profitability. However, it's important to note that AOV is just one piece of the puzzle, and businesses should also consider other factors such as customer acquisition cost and retention rate to gain a comprehensive understanding of their financial performance.

Industry Benchmarks

According to industry benchmarks, the average AOV in the print-on-demand industry ranges from $50 to $100. Businesses that are able to achieve an AOV above $100 are considered to be performing exceptionally well and may have implemented effective strategies to increase the value of each order.

Tips and Tricks

• Implement upselling and cross-selling strategies to increase the value of each order.
• Offer incentives such as discounts for larger orders to encourage customers to spend more.
• Personalize product recommendations based on customer browsing and purchasing behavior to drive higher AOV.

Customer Acquisition Cost (CAC)

Definition

Customer Acquisition Cost (CAC) is a key performance indicator that measures the average amount of money a business spends to acquire a new customer. It is critical to measure because it directly impacts the profitability and sustainability of a business. By understanding the cost involved in acquiring customers, businesses can make informed decisions about marketing strategies, pricing, and overall business growth.

How To Calculate

The formula for calculating Customer Acquisition Cost (CAC) is to divide the total cost of sales and marketing by the number of new customers acquired within a specific period. The total cost of sales and marketing includes expenses related to advertising, promotions, sales team salaries, and other marketing campaigns. By dividing this total cost by the number of new customers acquired, businesses can determine the average cost associated with acquiring each new customer.

Example

For example, if a business spent $10,000 on sales and marketing efforts in a month and acquired 100 new customers during that same period, the Customer Acquisition Cost (CAC) would be calculated as follows: CAC = $10,000 / 100 = $100. This means that, on average, the business spent $100 to acquire each new customer in the given month.

Benefits and Limitations

The advantage of measuring CAC is that it provides insight into the effectiveness of a business's sales and marketing efforts, allowing for informed decisions on resource allocation and customer acquisition strategies. However, a limitation of CAC is that it does not consider the long-term value of acquired customers, meaning that a low CAC may not necessarily indicate strong customer retention or profitability.

Industry Benchmarks

According to industry benchmarks in the US, the average CAC varies by industry, with e-commerce typically having a CAC between $7 and $10, while software-as-a-service (SaaS) companies often have a CAC ranging from $1,000 to $1,300. Exceptional performance in customer acquisition cost is often considered to be lower than industry averages while still maintaining high customer retention and profitability.

Tips and Tricks

• Optimize marketing channels based on CAC data to focus on the most cost-effective customer acquisition strategies.
• Invest in customer retention efforts to maximize the long-term value of acquired customers and offset the CAC.
• Regularly review and analyze CAC data to identify trends and adjust sales and marketing strategies accordingly.

Print Error Rate

Definition

The Print Error Rate KPI measures the percentage of print orders that contain errors in the final product. This ratio is critical to measure as it directly impacts customer satisfaction, brand reputation, and operational efficiency. In the business context, maintaining a low print error rate is crucial for ensuring quality control and minimizing the need for reprints, which can be costly and time-consuming. Additionally, a high print error rate can lead to negative customer reviews and decreased repeat purchases, ultimately affecting overall business performance.

How To Calculate

To calculate the Print Error Rate, divide the total number of print orders with errors by the total number of print orders, and then multiply by 100 to get the percentage. The formula is as follows:

Example

For example, if a print-on-demand store received 250 print orders in a month and 15 of those orders contained errors, the Print Error Rate would be calculated as follows: (15 / 250) x 100 = 6%. This means that 6% of the orders resulted in errors in the final product.

Benefits and Limitations

The main benefit of monitoring the Print Error Rate is the ability to maintain high quality standards, meet customer expectations, and reduce rework costs. However, a potential limitation is that this KPI does not provide insight into the specific types of errors occurring, which could be valuable for identifying areas of improvement.

Industry Benchmarks

According to industry benchmarks in the US, the typical Print Error Rate for print-on-demand services ranges from 2-3%, with above-average performance falling below 2% and exceptional performance achieving an error rate of less than 1%. These benchmarks indicate that maintaining a low print error rate is a standard expectation in the industry.

Tips and Tricks

• Implement stringent quality control measures at every stage of the printing process.
• Regularly train and educate staff on best practices for minimizing errors.
• Utilize advanced printing technology and software to detect and prevent errors.
• Collect customer feedback to identify recurring issues and areas for improvement.
• Conduct regular audits to assess the effectiveness of error prevention strategies.

Customer Retention Rate

Definition

The customer retention rate KPI measures the percentage of customers who continue to do business with the company over a specific period. This ratio is critical to measure as it reflects customer loyalty and satisfaction with the products or services offered. In the business context, customer retention is vital for sustainable growth, as it is more cost-effective to retain existing customers than to acquire new ones. A high customer retention rate indicates that the company is meeting customer needs and expectations, leading to increased customer lifetime value and positive word-of-mouth promotion. On the other hand, a low customer retention rate may signal dissatisfaction, poor product quality, or inadequate customer service, impacting overall business performance.

How To Calculate

The formula for calculating the customer retention rate is:

Where: - Number of customers at the end of the period: The total number of customers at the end of the period. - Number of new customers acquired during the period: The number of new customers acquired during the period. - Number of customers at the start of the period: The total number of customers at the start of the period.

Example

For example, if a print-on-demand store 'Designs Unleashed' starts the month with 500 customers, acquires 50 new customers throughout the month, and ends the month with 490 customers, the calculation of customer retention rate would be: ((490 - 50) / 500) x 100 = 88% This means that Designs Unleashed has a customer retention rate of 88% for that particular month.

Benefits and Limitations

The benefits of a high customer retention rate include increased customer lifetime value, lower customer acquisition costs, and positive brand reputation. However, the limitations of this KPI lie in the fact that it does not measure customer satisfaction or the potential for customer growth, as it focuses solely on retaining existing customers.

Industry Benchmarks

According to industry benchmarks within the print-on-demand industry in the US, a typical customer retention rate ranges from 60-70%. Above-average performance levels would be considered anything above 80%, while exceptional performance would be reflected in a customer retention rate of 90% or higher.

Tips and Tricks

• Invest in customer relationship management (CRM) tools to better understand customer behavior and preferences.
• Offer loyalty rewards and incentives for repeat purchases.
• Solicit and act on customer feedback to improve products and services.
• Personalize the customer experience to foster a sense of connection and loyalty.

Order Fulfillment Time

Definition

Order Fulfillment Time is a key performance indicator (KPI) that measures the time it takes for an order to be processed, printed, and shipped to the customer. This KPI is critical to measure as it directly impacts customer satisfaction, operational efficiency, and overall business performance. In the context of a print-on-demand store like Designs Unleashed, the ability to fulfill orders quickly and accurately is crucial for meeting customer expectations and maintaining a competitive edge in the market.

How To Calculate

The formula for calculating Order Fulfillment Time involves dividing the total time it takes to process an order, including printing and shipping, by the number of orders. This formula provides a clear indication of the average time it takes to fulfill each order, helping businesses assess their operational efficiency and identify areas for improvement.

Example

For example, if Designs Unleashed processes, prints, and ships 100 orders in a week, and the total time taken for these processes is 500 hours, the Order Fulfillment Time KPI would be calculated as follows: 500 hours / 100 orders = 5 hours per order. This means that, on average, it takes 5 hours for an order to be fulfilled from start to finish.

Benefits and Limitations

The benefit of effectively measuring Order Fulfillment Time is it allows businesses to identify bottlenecks in their production and shipping processes, leading to improved operational efficiency and faster order processing. However, a limitation of this KPI is that it may not account for external factors such as shipping delays or supplier issues that can impact fulfillment time.

Industry Benchmarks

According to industry benchmarks, the average Order Fulfillment Time for print-on-demand stores in the US is approximately 3-5 days. However, top-performing businesses in this industry are able to achieve Order Fulfillment Times of 1-2 days, demonstrating exceptional operational efficiency and customer service.

Tips and Tricks

• Implement automated order processing systems to streamline fulfillment workflows.
• Regularly review and optimize print and shipping processes to reduce fulfillment time.
• Utilize data analytics to identify trends and patterns in order fulfillment to make informed operational decisions.

Design Upload to Production Lead Time

Definition

The design upload to production lead time KPI measures the time it takes from when a design is uploaded to the system to when it is ready for production. This KPI is critical to measure because it directly impacts the turnaround time for customer orders. In the print-on-demand industry, speedy production is essential to meet customer expectations and maintain a competitive edge. Delays in the design upload to production lead time can result in dissatisfied customers, missed sales opportunities, and increased operating costs.

How To Calculate

The formula for calculating the design upload to production lead time KPI is the difference between the time the design is uploaded and the time it is ready for production. This time frame should include all necessary design processing, approval, and preparation for printing. It is crucial to track each step in the design-to-production workflow accurately to get an accurate measurement of lead time.

Example

For example, if a design is uploaded on January 1st and it is ready for production on January 7th, the design upload to production lead time would be 6 days.

Benefits and Limitations

The advantage of measuring the design upload to production lead time is that it highlights bottlenecks and inefficiencies in the design-to-production process, allowing businesses to streamline their workflows for quicker turnaround times. However, this KPI does not account for factors such as shipping and delivery times, which could also impact overall order fulfillment times.

Industry Benchmarks

According to industry benchmarks, the average design upload to production lead time in the print-on-demand industry ranges from 5 to 7 days for typical performance, while above-average companies aim for lead times of 3 to 4 days. Exceptional performance is achieved with lead times of 2 days or less.

Tips and Tricks

• Automate design approval processes to minimize delays.
• Use pre-emptive production planning to reduce lead times.
• Invest in efficient printing technology to expedite production.
• Regularly review and optimize the design-to-production workflow for better efficiency.

Rate of Return Customers

Definition

Rate of Return Customers is a key performance indicator that measures the percentage of customers who make a repeat purchase after their initial transaction. This ratio is critical to measure as it reflects customer satisfaction, brand loyalty, and the effectiveness of your marketing and customer service efforts. It is important to measure this KPI in the business context as it directly impacts revenue and profitability. A high rate of return customers indicates that the business is successful in retaining customers and generating recurring sales, while a low rate may suggest that customers are not satisfied or are finding better alternatives elsewhere.

How To Calculate

The Rate of Return Customers is calculated by dividing the number of repeat customers by the total number of customers, then multiplying the result by 100 to obtain a percentage. The number of repeat customers represents the individuals who have made more than one purchase within a specific period, and the total number of customers includes both new and existing customers. This formula provides a clear and concise measurement of customer retention and loyalty, allowing businesses to track the effectiveness of their strategies in maintaining a loyal customer base.

Example

For example, if a print-on-demand store like Designs Unleashed has 500 total customers in a month, and 200 of them made a repeat purchase within the same period, the Rate of Return Customers would be calculated as follows: (200 / 500) x 100 = 40%. This means that 40% of the customers have made repeat purchases, indicating a strong level of customer retention and loyalty.

Benefits and Limitations

The benefit of measuring Rate of Return Customers is that it provides valuable insights into customer loyalty and satisfaction, helping businesses to identify areas for improvement and focus on retaining existing customers. However, this KPI does not take into account the frequency or monetary value of repeat purchases, which may limit its ability to fully capture the lifetime value of customers. It is important to complement this KPI with other metrics to gain a more comprehensive understanding of customer behavior.

Industry Benchmarks

In the print-on-demand industry, a typical benchmark for Rate of Return Customers falls within the range of 20% to 40%, with above-average performance reaching around 50% or higher. Exceptional performance levels can exceed 60%, reflecting a strong customer retention strategy and high levels of brand loyalty.

Tips and Tricks

• Offer personalized promotions and discounts to encourage repeat purchases
• Implement a customer loyalty program to reward frequent shoppers
• Request feedback and reviews after purchases to gauge customer satisfaction
• Provide exceptional customer service to build strong relationships with customers