Mastering EOS Scorecards - Boost Your E-Commerce Metrics - Commerce Today Episode 127
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Joshua: [00:00:00] Hi, everybody. We're talking about metrics today, specifically in EOS scorecard, you're probably wondering what the heck is an EOS scorecard. It's your GPS. It's simply five numbers, one weekly huddle, and that's it. So today in this episode of Commerce Today, you will walk away being able to draft a five, metric scorecard and run the first review of that in a weekly huddle.

I'm Joshua Warren, CEO of Creatuity. We're an e-commerce agency. We also happen to run on EOS. Which we're gonna be talking about a lot today. How most dashboards lie, how there's so many data driven companies, that aren't actually that data driven. So someone actually shared with me that they saw an e-commerce brand that had 47 different Google analytics widgets, and yet had missed that their repeat purchase rate had dropped by over 20%. That wasn't in the 47 widgets apparently. Vanity versus vitality is super important. So vanity metrics [00:01:00] describe the past. They describe things that you know, might look cool, might make you look good, but aren't actually moving the needle on revenue.

Vital vitality metrics are what really matters. These are the leading. Indicators that show you how healthy your business is and how healthy its growth is. So quick gut check about your dashboards. Look at each metric and just say, when that number moves, do I know exactly what action I need to take?

If not, might not be the best metric. So I'm gonna dive right in now to the EOS portion here. If you haven't, heard of EOS before, it is the entrepreneurial operating system. They call it a business operating system. Basically it's a framework, for managing a business.

It has everything from rocks, which are your, big priorities for the next 90 days. You have the, L tens, which are your leadership team meetings, or actually any team meeting. L 10 stands for level 10 because you wanna get those [00:02:00] rated as a 10. You have a scorecard that we're gonna talk about a lot today,

how to run your performance reviews, how to document your org, org chart or as EOS calls it, the accountability chart. Just literally processes for everything. So if your business is growing fast, you don't have a lot of solid processes in place, or you're outgrowing your processes, EOS the entrepreneurial operating system can be a great system to look at, that you can deploy into your business to basically get a ready-made set of those, processes.

And there's a book called Traction. As well as a few other books by Gino Wickman, the creator of EOS, that you can read. You don't actually have to go out and hire a consultant, although you can. You can actually just read the books and the EOS website and deploy EOS in your business.

But I believe that the scorecard is actually the secret sauce to EOS, and it's a piece that a lot of teams, including Creatuity, since we run on EOS, a lot of teams can struggle sometimes with the scorecard. They can. Think they have a great [00:03:00] scorecard, but when you dive into it, it's actually not helping, drive the business forward.

So you're wondering, how to put together a scorecard. And it's really simple. Most e-commerce businesses I find you can run on these five scorecard items. First qualified sessions, so sessions where. There's at least a click, or they were on your site for at least 30 seconds site wide conversion rate.

Now I like to bend the rules a little bit and actually have two different metrics for this. One, the mobile conversion rate and the desktop conversion rate, your average order value, your 60 day repeat purchase rate, and your deployment frequency. And for deployment frequency. For most brands, I would recommend you look at the number of releases deployed to production in the past 30 days, because if you're not deploying some new.

Feature to your site every 30 days, you're probably falling behind the competition at the same time. If you've had 100 deployments in the past 30 [00:04:00] days, you have either mastered continuous, integration and continuous deployments, or you've had a lot of hot fixes, so might not be the best thing. Now you define your metrics.

I just gave you five that you can use. We'll talk a little bit in a second about how you might want to tweak those or add new ones, but once you've defined those, what. Next? There's a little bit more you need to define with them. Actually. Each metric EOS says, needs to have one owner. And when I say one owner, that is a person, a real living, breathing person.

Not a committee, not a tool. It has to be the person that is accountable for it. And that accountability is a feature of this approach, not a bug. Having one person that's accountable, that's something that rolls through a lot of EOS.

We're gonna talk in a minute about how as you do a larger implementation of EOS, you're gonna have those level 10 meetings. You're gonna do something called IDS, which is identify, discuss, and solve issues. And throughout all of this, you will have one person whose face, who's [00:05:00] accountable for things, whose face is on them, who your EOS software.

Each metric also needs to have one person that's accountable. So when you go to IDs, that metric, that's the person that can explain this is what the metrics do. Telling us this is what we've tried, here's what I think. And you can successfully, just discuss and plan how to get that metric back on track.

Now speaking of getting metrics back on track, the other thing you need to define for each item on the scorecard is what makes it red, yellow, or green? So conversion rate, and again, conversion rates vary a lot from business to business, but especially industry to industry. I'm gonna throw out some examples, but I would definitely recommend if you don't know what a healthy conversion rate.

Is for your specific product or service. Talk to someone that is an expert on analytics and conversion rates, and they can give you some benchmarking data. But an example could be, you could have conversion rate. If it's over 3%, it's green. If it's between 2.7, 2.9%, it's yellow. If it's under [00:06:00] 2.7%, it's red.

And that example is mainly to show you that with these metrics, you want green to be healthy success, you want yellow. To be, things are trending in the wrong direction, and then red is okay. We need to stop everything and address why this particular metric has turned red. Now be careful. First of all, everything we're talking about, you don't have to implement all of EOS to use.

You can just define your five metrics, define who's accountable for them, define what makes them red, yellow, and green, and you'll be ahead of probably 80% of the businesses I talk to. If you wanna go all the way though into a full EOS implementation, go for it. It's a pretty awesome system. It's definitely been helpful at Creatuity, but I do wanna warn you, EOS was originally designed around a paper book and paper whiteboard and everyone sitting in a room together type processes.

Then later on, little thing called the pandemic happened. Little thing called Zoom became a big part of our lives or [00:07:00] depending on where you work, maybe teams. And now it's all online and now there are software packages you can use. S platforms basically that can run your EOS implementation. Now, there's pros and cons of that.

I actually think that if your team is located in the same location and y'all can physically get together and use a whiteboard for EOS, that's a better way to start than using some of these software packages. But I'm a little opinionated about them. The reason I say that though, is each of these software packages, it takes their own little twist on EOS.

They don't all do things exactly the same way where that comes. Comes up with the scorecards is I mentioned earlier, red, yellow, and green for each metric. Some of the US software packages out there define it differently.

They will actually, as long as the metric is healthy, it is green. If it has been off track at least once in the past three weeks or so, it'll be yellow, and if it is off track consistently for multiple weeks, it turns red. I don't think that's the best way to do it, because I [00:08:00] think that can make you. Numb to a metric that is really needing your attention, but you haven't, it hasn't turned red yet.

It's only yellow. It's only bouncing back and forth. Maybe it's even green that week, but it's really in starting to approach that danger zone. So just be aware if you're US software you're using, defines it differently, you may want consider using, the way I define red, yellow, and green instead.

Now, every time I talk about red, yellow, and green metrics and, leadership teams meeting. To talk about how healthy their businesses and their metrics are. I think of an awesome book that if you haven't read it, I definitely recommend it. It's called American Icon, Alan Mullaly and the Fight to Save Ford Motor Company.

So Alan, was the first non Ford family member to be brought in as CEO of Ford. They brought 'em in when the company was going bankrupt and really having a hard time and people thought, oh, this is it. Ford's not gonna make it. And one of the things that Allen Institute. Suit was [00:09:00] a red, yellow, green scorecard review.

They would meet every Thursday and they, every department would present their numbers and if they were red, yellow, and green, first few meetings, everything was green. Now remember, they're losing money like crazy. They're on the verge of going outta business. They bring in a new CEO to turn things around so everyone knows there's some problems in the business, and yet the entire executive leadership team is saying everything's great.

All the numbers are on track. My department's good. Nothing to see. Year. Green green. So Alan finally called this out, said, wait, so there's no red at all. And when he did that, and he basically created a safe space for someone to say actually my numbers are yellow, or my numbers are red. Or even in some cases, yeah, we call this green, but it's not really green.

It is red and we need to address it. And finally someone spoke up, it was actually the product Chief Mark Fields. He said, yep, my department, this. Number's red. We need to fix it. And Alan, did what a great leader will do in that [00:10:00] situation. He did not jump on him. He did not say, why didn't you tell me sooner?

He didn't say, oh wow, you're fired because your numbers are red. He said, thank you for sharing that. That's what we need to do. We need to be honest about if our numbers are on track or not, and then we need to dive in and fix them. And he rallied the team around fixing it. So taking that to an e-commerce level.

If your conversion rate's red. And yet no one is admitting it and no one is fixing it. You're losing money every single week that's ignored. So you have to not only create the scorecard, but also create a leadership team culture that where people will call a red number red, and that when it is red, you don't just sit there and say, oh, maybe we'll talk about that next week, or maybe we'll fix that later.

Or, oh, I think somebody else is looking into that. You address it. You figure out what's going on. You define a project for someone to solve it. You take. The necessary steps until it is green again. Now we've been talking for a few weeks about different archetypes of e-commerce [00:11:00] businesses. There's sidecar B2B, so that's where you add on e-commerce as a sidecar to your existing B2B business.

These are the big B2B businesses that work a lot via catalogs via, third party brokers via sales reps, where e-commerce is a growing piece. Omnichannel, so you have multiple stores. And pure play D two C or B2B. So because there are, I think pure play B2B gets overlooked so often, but there are B2B businesses out there now that are 100% e-commerce driven, which I think is pretty cool.

So looking at those three, if you're a sidecar B2B business, I would swap out qualified sessions for new accounts created, and I would even look at not just new accounts created. Directly on the website, but total new accounts created across the business because you should see e-commerce influencing that number and in a positive direction.

If you're an omnichannel retailer, then definitely add something around bopus to your, metrics. [00:12:00] I like to either measure Bopus as a percentage of store sales, or bopis is a percentage of e-commerce sales. To see the trend line of are we shifting more people to buy online pickup in store or not?

I know that the store experience can be such a strong differentiator for those omnichannel brands, so it's important that you're always driving an increase in your boas share. Then if you're pure play, but specifically if you're pure play selling a consumable item, I would say that you should track instead of your repeat purchase rate, a subscription opt-in percentage.

So what percentage of your customers are actually opting into an auto shipper subscription program? I wanna share a couple of case studies. With you before I dive into the final steps in this episode of how you can implement this in your business today. Couple fun case studies I found of e-commerce businesses that are running EOS, cherry Republic.

They're a North Michigan D two C brand. They actually sell Michigan cherries, hence the [00:13:00] name. So they adopted EOS scorecards. They began meeting every Tuesday, and then by week 10 they saw a spike thanks to their scorecard. In Stockouts, they saw outta stock skews spiking up. It went red. They shuffled production around.

They were able to make adjustments fast enough to save $1.2 billion in their Q4 sales. So again, having these scorecards and actually meeting and taking action on them can make such a difference in your business. And a second case study. I love this one. So there is a game out there if you haven't seen it.

Highly recommend it called Taco versus Burrito, and their parent company even is called Hot Taco. Incorporated and, they're an independent game. They sell it on Amazon and on Shopify. And the founder instituted EOS and A scorecard and they actually had, five numbers that they were tracking. So total units ordered their fulfillment by Amazon in the stock percent.

Their new five star reviews and days of cash on [00:14:00] hand were just some of the metrics on their scorecard. They actually found that they cut their decision time in half by starting all of their leadership team meetings. Looking at that scorecard, everyone can see the numbers get on the same page and make decisions faster.

That led them to double their margin in the first 12 months of using this type of scorecard. So hopefully you're convinced, hopefully you're ready to go build your scorecard if you don't already have a scorecard. Or even if you do and it's super complicated, I would recommend starting simple. Use what you already have.

So if you have Google Analytics, there's actually a lot you can do through Looker Studio, which is. Free kind of data analysis and analytics system that Google offers. If you are using Adobe Commerce, you most likely have access to Adobe Commerce's business intelligence tools. They can provide this for you.

I've seen Shopify Plus merchants using Shopify QL notebooks. Big thing is use the tool. You already have a tool you already know. Keep it simple. You want your scorecard to be visible on one [00:15:00] screen. No scrolling, don't add a bunch of special analysis and analytics and other things. To it. Maybe a trend line or an average number could be useful, but don't go beyond that.

I've seen teams, break out standard deviations. It looks like they're basically launching a rocket into space, not just running an e-commerce business when you look at their scorecards. You can consider EOS software. If you do go back to what I said earlier about be careful, some of the EOS software is opinionated and will shift you into certain directions.

And some of those are good and some of those may not work well if. Your business. A few of the software packages out there are E os one ninety.io, which is the one that I have the most experience with, and a new one I found actually called Stre, S-T-R-E-T-Y. All of those have scorecard features and functionalities built in.

So once you have your scorecard built out, you don't have to implement all of EOS to start using it. You can just start with a 15 minute scorecard [00:16:00] huddle, and then later expand it into. That leadership team level 10 or L 10 meeting. So start the same time every week. Screen share just the scorecard.

Keep it super simple. Read the numbers top to bottom. And there's no debate. The number is the number. The color is the color. There should be no, oh, that is red, but let's ignore it for a week. If it's red. Anything that y'all are red. If you're doing a full EOS implementation, it actually becomes an issue for IDS.

That's that identified dis. Us solve approach that I mentioned, later in the meeting. If you aren't doing a full EOS implementation, anything that's yellow or red, I would assign to a person to say, you need to come up with a plan for how we're gonna make this green and execute. Make sure also it's easy to focus on just the yellow or red stop and celebrate the greens.

It's important to celebrate what's working or what's on track and make sure you're ending this meeting on time. One of the things that EOS really pushes that. It's been transform, transformative for [00:17:00] so many e-commerce businesses is literally have an agenda start on time, end on time. There's so many internal meetings, so many teams that don't follow that, that just a moment in that can make a big difference in morale and performance.

Alright, so I highly recommend you go out there and as soon as you are done listening to this episode, if you don't have a five metric scorecard, go create one set what your five metrics are gonna be, select the accountable name on each one. Run your first 15 minute scorecard. Our huddle sometime in the next week and let me know how it goes.

As I mentioned on previous episodes, I am working on an awesome new book about e-commerce to help you grow your mid-market e-commerce business. Please reach out to me.

Easiest way to find me is on LinkedIn. My name is Joshua Warren. So DM me there.

And in the meantime, I hope you can go out there and set an awesome scorecard to drive real results for your e-commerce business. Thanks.