Market intelligence tools are an excellent way to gauge whether your ideas hold financial merit, or whether your sales efforts are bearing fruit. They also help determine and drive the efforts of your marketing strategies. This type of intelligence is critical if you want to perform well on Amazon.
But why should you consider measuring your performance using market insights and what are some of the specific metrics you can use?
Let’s find out.
Benefits Of Digital Metrics
Digital metrics are beneficial for several reasons. From using your digital marketing budget efficiently, making sales activity more effective by improving your conversion rates, to making more effective campaign decisions to improving your return on investment (ROI). These are just some ways in which metrics can help you determine your bottom line and whether your sales efforts are on track.
Of course, as Amazon Sellers, we all want our marketing and sales performance to be optimal. This translates into better rankings, more reviews, and higher sales. With digital metrics and web analytics, you’ll be able to:
- Measure online traffic: The number of visitors at any given time, their location, their actions on your site, and how much time they’re spending looking at your products.
- Track your bounce rate: The bounce rate refers to users who have visited your website without interacting with it. This might be due to irrelevant content or a poor user experience overall.
- Optimize and track your marketing campaigns: This can help you determine the effectiveness of the campaign as well as its profitability.
- Find the right target audience: By narrowing down your scope to a niche audience, you’ll be able to cater to them optimally and improve the profitability of your marketing campaigns as well as lead to positive results on your bottom line.
- Optimize your conversion rate (CR): Your conversion rate is calculated when you divide your goals by the number of users. Conversion goals may include adding a product to a cart, purchases, product views, registration, brochure downloads, clicks on links, registrations, shares on social media, contacts from contact forms, etc.
What Kind Of Metrics Can You Make Use Of?
It is said that not all metrics are created equal and that you need to carefully select which metrics you use and those which are applicable to your business. Some of the key digital metrics you should look out for include:
Sources of traffic: This refers to your marketing channel. Do you get traffic from paid or unpaid channels?
New or returning visitors: What is the user behavior, is your website usable and are your marketing tactics like copy useful to your users?
New sessions: This refers to the case whenever a visitor comes to your website. Although it may not reflect on your bottom line, it does help you track and measure sources of your traffic.
Time on page (average session duration): These metrics, which refer to how long users are staying on your page, can help you audit your page, look for ways to improve it, and make changes to provide a better user experience.
Device: Which device are your users using to get to your product offering? You will need to optimize for tablets and mobile devices.
Exit rate: This refers to a user’s experience with your site, leaving after they’ve browsed through several pages.
Bounce rate: While similar to the exit rate, it refers to visitors which leave a page without taking an action.
Conversion rate: How many people follow through on your call to action and convert?
Click-through rate (CTR): This is a ratio that focuses on the percentage of users that clicked on your ad, in comparison to the total number of users that actually saw your ad.
Cost per lead: How much do you spend to get someone to convert to a buyer? Your lead is considered a prospect who you can turn into a customer.
Cost per click (CPC): How much do you pay on average for every click on your ad?
Cost per acquisition (CPA): How much do you pay on average for a user to convert to a buyer?
Engagement rate: This will depend on the channel you’re measuring but you should ultimately look at aspects including session duration, page depth, and bounce rates.
Return on investment (ROI): Helps you determine whether you’re getting your money’s worth for your campaigns. Here, you focus on the amount gained minus the amount spent, with the total divided by the amount spent which is then multiplied by 100.
Although there’s a world of metrics out there, there’s also another universe of metrics for selling on Amazon. It doesn’t have to be complicated though. Here we provide you with a breakdown of some of the most important ones you should be tracking.
Pre-fulfilment cancellation rate: This refers to the percentage of times your customers have ordered from you, but you have been unable to fulfil their orders due to lack of stock. You need to keep this rate at under 2.5%.
Late shipment rate (LSR): Ideally, keep this rate below 4%. This metric is calculated every seven to 30 days.
Unit session percentage rate: This essentially refers to your conversion rate – the higher it is, the more sales it means you’re making. To keep your conversions high, make sure you ship on time, get reviews and price your products competitively.
Valid tracking rate (VTR): Ideally, this rate should remain under 5%, especially if you fulfil orders yourself. You need to ensure that your orders have a valid tracking number entered before the anticipated date of delivery.
Buyer-seller contact response time (CRT): Being unresponsive to your customers means that your metrics will be negatively affected, so you should make it a priority to answer customer queries quickly. This is also likely to lead to more sales if you have strong customer service. Amazon expects you to respond to messages within 24 hours – no matter what day or time it is.
Product ranking: The best seller rank is generally calculated by sales volume and they’re updated hourly. Appearing on the first page of the search results is crucial as 40% of customers don’t scroll beyond the first page. This may mean doing some price readjustments or revising your keyword usage.
Seller rating: This metric is based on customer feedback and fulfilment and takes the following criteria into account: shipping time, order cancellations, chargebacks, customer inquiries, customer reviews, and A-to-Z Guarantee claims.
Unit session percentage rate: The average unit session percentage rate on Amazon is 12.3%. To determine it, you need to divide the number of units ordered by the total number of sessions.
Units ordered: This metric is used to determine how effective your Amazon presence is by seeing how many units were ordered on a daily, weekly, or monthly basis.
Order defect rate: This is measured in several ways. It’s when a customer makes an A-to-Z Guarantee claim, makes a chargeback, or leaves negative feedback (1 or 2 stars). If your defect rate is 1% or higher, you may receive a warning or have your seller account suspended.
Inventory performance: Those who work on the Fulfilment by Amazon (FBA) program will need to know that the platform will limit storage for Sellers with a low Inventory Performance Index. Although it is not yet certain how this index is calculated, Amazon recommends that Sellers reduce excess inventory, update what they keep in stock, and avoid stranded inventory.
Fulfilment performance: This refers to pre-fulfilment cancellation, late shipping, order defects. Amazon recommends that all its Sellers work towards improving customer service and their estimates for good figures are:
- Less than 1% order defect rate
- Less than 2.5% pre-fulfilment cancel rate
- Less than 4% late shipment rate
Fees: Although your fees aren’t really a metric, they’re a great way of determining how profitable each of your orders, customers and products are. Here, you can look at the Seller fees and the fulfilment fees (as part of the Fulfilment by Amazon (FBA) program).
Invoice defect rate (IDR): This one measures whether an invoice has been uploaded within one business day after shipment as a percentage of Amazon Business customers, who expect this for tax and accounting purposes. Ideally, you’re expected to keep your IDR below 5% to provide a strong customer experience. At present, there’s no penalty yet for meeting this performance target.
Policy violations metric (PVM): This happens if you violate some of Amazon’s policies. You’ll be able to see this in the Seller Central account. It’s worthwhile keeping your eye on this to see if your account is under scrutiny.
Book Bolt for Amazon Book Sellers
As a final point, while it’s good to keep track of all your KPI’s and metrics, it’s also great to do so for the fierce competition on Amazon.
Some questions you may wish to ask yourself include: What keywords are my competition targeting, how does my competition stack up against my product, and is it possible to create something in the same niche and win their search position?
How can you get this information?
Book Bolt is a business intelligence tool for Amazon KDP Sellers that can help you optimize your titles, descriptions, and keywords and get real-time data on how competitors are doing as well as what strategies they’re employing by looking at their pricing, keyword usage, and more.