Online store owners, freelancers, and other types of small businesses should be sharing revenue and expense data the same way indie developers share subscription data.
The software developer community is built on openness and collaboration. This is often the only way to solve hard problems and maintain the large projects that underly most modern software.
However, a new generation of indie developers has taken these core values and applied them to more than just the software they create. They are sharing revenue and customer subscription metrics with the community and building better businesses because of it.
If openness and collaboration help build better software, the same principles can help indie developers build better businesses too.
Indie developers! They (mostly):
- build software that is sold on a monthly subscription (SaaS)
- build for niche markets/needs (online stores that need specialized analytics, freelancers that need transparent time tracking, etc.)
- distribute their software through word of mouth as well as platforms like Stripe and Shopify
- are usually teams of one or two with little to no outside funding
- Sound familiar?
If you run an online store your business looks a lot like an indie software business.
Here are two examples of open benchmarking data from the indie developer / Software-as-a-Service (SaaS) community.
Much like an indie developer, your competitive advantage is understanding your customer better than anyone else, and using that to offer better products and services than anyone else. Your goal isn’t to be the only place they shop. Your goal is to build a relationship that keeps customers engaged.
That means focusing your attention on the things that are valuable to your customers.
Most online store owners are happy to share advice about writing great product descriptions, when to offer free shipping, and how to negotiate terms with suppliers. None of these things alone will make a business successful so it seems harmless to share them as best practices.
But would it scare you to share your monthly revenue, average order size, returns percentage, or maintained margin? Why?
These are lagging indicators of your success, not predictors of it. They help you understand where you’re headed, but don’t tell you (or your competitors) what the final destination is or how you’ll get there.
Your biggest competitor isn’t another independent store owner; it’s Amazon, apathy, or that a potential customer doesn’t know your store exists.
Share a little more, get a little more back
We’re proposing that online store owners start sharing metrics with one another for the purposes of discovering industry, category, and geographic benchmarks.
- Make it easy to contribute. Focusing on the data that is available and accurate (ie. sales, avg. qualifying dollars for free shipping, etc.). Contributors should manually input their data so that they have full control over what is being shared.
- Make it easy to consume. The data should be presented as visualizations that quickly answer a store owners most important questions. Ideally, you could also go into the raw data (a spreadsheet!) to get a better understanding of a store and it’s metrics.
- Make it fun. With enough data, on a long enough timeline, we could give store owners a way to predict the impact ad spend, inventory levels, etc. can have on revenue and profit.
If you run an online store, and would like to contribute to open benchmarks for online store owners please use this form to provide me with your contact information. It takes less than 5 minutes and requires no sensitive information. Once you fill out the form I will be in touch personally to give you more information about the project, discuss your store data, and in turn give you access to the benchmark data.