Do you think that as long as your customers are satisfied and continue to buy your products on the Amazon marketplace, everything is fine? Well not quite. Success on Amazon is much more complex than just measuring sales. There are other parameters to monitor to ensure its performance.
In this article, we review these main indicators to take into account.
Table of Content
- Measure the efficiency of its advertising efforts
- Estimate the cost of customer acquisition
- Understanding the “organic” growth of your brand
- Determine how their brand is positioned compared to the competition
- Find out if its product sheets lead to sales
- Review the profitability of your brand
# 1. Measure the efficiency of its advertising efforts
Thanks to the Advertising Cost of Sales (ACoS) KPI, it is possible to measure the efficiency of advertising efforts on Amazon. This indicator is a basic measure used to measure the success of advertising campaigns on Amazon.
It helps brands understand the performance of their advertising as a whole. It is provided at different levels: keywords, ad groups, and campaigns.
This indicator reflects the success of advertising and can be understood as the opposite of RoAS (Return on Ad Spend).
# 2. Estimate the cost of customer acquisition
Measuring the cost of customer acquisition has long been a challenge for brands that sell on Amazon. But, in early 2019, Amazon Advertising released “New-to-Brand” measures to help alleviate this problem.
These measures are particularly useful for brands that focus on reaching new customers.
This gives an overview of all sales made to new customers, and the evolution of demand from these new customers.
This indicator also makes it possible to determine whether the purchase can be attributed to the advertisement made or to a loyal customer who already knows the brand and who returns to buy it.
Therefore, it is possible to estimate the customer acquisition cost (CAC)
# 3. Understanding the “organic” growth of your brand
Thanks to the “Total Advertising Cost of Sales” (TACoS) indicator, brands can understand the impact of advertising on overall turnover, beyond the simple attribution of sales advertising.
TACoS offers a more holistic approach because it takes into account the organic growth of your brand.
Remember that TACoS analysis leads to ACoS analysis because it helps to better understand the growth of your brand.
# 4. Determine how their brand is positioned compared to the competition
The BSR (Amazon Best Seller Rank) is a classification assigned to each product. Brands use it to compare sales of one product
against others in the same category.
The main factors that determine the BSR of a product are the speed of sales and the “historical” data concerning the product.
It is possible to obtain a “best seller” badge awarded to the number 1 product in a category. To try to be a “best seller” on a product, you need to investigate the competition to identify which products have the best chance of winning a best seller badge.
It then suffices to reduce the choice of products to target and then to support them through advertising.
A “bestseller” badge increases conversion rates but does not always promise a place at the top of search results pages.
# 5. Find out if its product sheets lead to sales
The conversion rate of a brand determines whether it is possible to improve its revenues. It can also highlight price problems or poor page optimization. The conversion rate is obviously relative and depends on the category of products sold for example.
To improve your conversion rate, start by optimizing your product title, description, and image library. Consumers are more likely to make a quick buying decision when they don’t have to comb through a product sheet for more information.
It is important to track the percentage of time your brand appears in the Amazon Buy Box compared to a competitor. In general, the higher this percentage, the better.
Be careful, however, if this percentage is high, but you cannot transform conversions, ask yourself if the price of your products is not too high.
# 6. Review the profitability of your brand
Measuring your margins on Amazon is crucial. As a seller, even if you are growing, it is important to make sure that your growth is profitable. You will certainly hear about “CRaPing out” on Amazon.
It means Can’t Realize a Profit (which doesn’t make a profit).
Amazon can completely stop selling an unprofitable product.
Understanding your margins is essential before embarking on larger scale sales on the marketplace!
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