This guide will explain what benchmarks are, how they’re calculated, and how to access and interpret your benchmarks to see how your metrics stack up in your industry.
- What are benchmarks?
- How benchmarks are calculated
- How to access and interpret your benchmarks
- How to opt-in/opt-out of benchmarks
What are benchmarks?
Benchmarks are data points that give you context for how your business metrics compare to related businesses in your industry. This makes your metrics much more actionable.
A good example is your 90-day repurchase rate. Without having a sense of the distribution of repurchase rates of similar Shopify stores, it’s difficult to know how much room you have for improvement. If your repurchase rate ranks in the bottom quartile of your industry, you’re likely leaving money on the table by not focusing on how to boost repeat sales. If you’re in the top quartile, perhaps your resources should be focused elsewhere.
The same can be said of other metrics such as average order value, gross margin, and blended CAC. You know which direction you want these metrics to go, but without industry benchmarks, it’s hard to establish realistic targets.
This is why we built our Benchmarks tool.
How benchmarks are calculated
When you create your Lifetimely account (or when you log in for the first time after the launch of our Benchmarks tool), you’re given a short 4-question survey to help us categorize your business.
You’ll be asked to select:
- Your business model (whether you sell your own brand, resell other brands, or dropship)
- Whether you sell consumable or durable goods
- Which product category best describes your shop
- If you sell to businesses or consumers
Your answers to these questions determine which stores we use as a comparison for your metrics.
Let’s say that based on your survey answers, we find 40 reasonable matches for your store. We’ll then create bell-curve distributions based on 11 different metrics, with specific values provided for the median, the 25th percentile, and the 75th percentile for each metric. We'll also plot your business's value on each curve. All data is completely anonymized.
How general performance ratings are calculated
General performance ratings are determined by averaging your store's position relative to similar stores across all 11 benchmark metrics.
How to access and interpret your benchmarks
Accessing your benchmarks
To see your benchmarks, click on the Benchmarks tab in the left-hand menu.
Once benchmarks are ready for your industry, your report will look like this:
In the top left of your report, you'll find the survey answers that we've used to categorize your store. These answers can be modified with the pencil icon in the bottom right of the window labeled "Edit".
⚠️ Note: Changes to your answers can only be made after there are enough stores in your current category.
In the top right of the report, you’ll see a measure of your business's general performance based on your positioning in your industry across all 11 benchmark metrics. Your performance is given as the quartile in which your store ranks relative to similar stores.
The rest of the report charts your benchmarks for the following 11 metrics:
- P&L metrics
- Net sales
- Contribution margin
- Gross margin
- Order metrics
- New customer AOV
- Repeat customer AOV
- Retention metrics
- New customer repurchase rate, 90 day
- New customer repurchase rate, 180 day
- Repeat customer repurchase rate, 180 day
- Acquisition metrics
- Blended ROAS
- Blended new customer CAC
- Marketing % of net sales
- P&L metrics
Understanding your benchmarks
There are four numbers provided for each benchmark:
- Your business's calculated average for the metric
- The median metric value across all businesses in your industry
- The 25th percentile metric value across all businesses in your industry.
- The 75th percentile metric value across all businesses in your industry.
The quartile in which your business ranks will be shaded either green (top 25% or 25-50%) or yellow (50-75% or bottom 25%).
How to opt-in/opt-out of benchmarks
You can opt-in or out of benchmarks at any time in the Privacy and Personal data tab of your Settings.