As an Amazon seller, you have one clear goal: to make as many sales as possible. But measuring growth on Amazon isn’t as simple as keeping an eye on sales. For maximum success, you need to track and measure the right Key Performance Indicators (KPIs).
Using KPIs internally is key if you want to become a data-driven company. But they are equally important for your eCommerce success on Amazon. There’s a problem, however. It’s impossible to monitor all KPIs – there are too many. Instead, you need to consider which KPIs are the most useful to your business.
Read on and we’ll look at some essential KPIs that can help drive your Amazon sales growth.
The three types of KPIs
We’ve put each of the KPIs below, into one of three categories. Each can tell you something slightly different about your sales growth. These are:
- Sales-related metrics – How successfully is your organization progressing towards your sales goals? Are any problems with your strategy that are hampering your success? Sales-related metrics can help you to monitor these important factors.
- Ad-related metrics – Are your adverts effective in bringing customers to your products? Or are you pouring resources into the wrong areas? With a close eye on ad-related metrics, you can bring continuous improvement to your ads.
- Performance-related metrics – Are people finding your products easily? Performance-related metrics can provide useful information to help optimize your sales page.
Now let’s look at the top Amazon KPIs seller should track.
#1 – Total revenue
This is one of the most important metrics for any business. Without a healthy level of revenue, your business won’t get very far. Revenue is the sum of your income from all of the products and services that you provide.
To calculate revenue, simply multiply:
Number of products or services sold * price of the product or service.
You’ll need to do this for each product or service that you provide and add them together to give your total revenue. You will also want to track revenue by product. Beyond this, consider different trends in revenue. What factors are having both a positive and a negative influence?
Always remember to segment
Segmentation can be a useful tool when looking at your revenue. For example, if you are a jewelry retailer, it would be beneficial to segment your sales data based on product types, such as necklaces, earrings, and tennis bracelets. This is the process of breaking data down into smaller groups. This might include region, sex, age, and interest group. By digging deeper into your data, you can better understand the factors that influence revenue.
All of this will influence your future marketing campaigns. You can utilize date even further by conducting qualitative research and breaking the information into different categories. You’ll be able to target your marketing much more effectively. And when you have run a campaign, the revenue KPI will help you to monitor its success.
#2 – Market penetration rate
When it comes to succeeding on Amazon, having good organizational skills can make all the difference. How big is the market that you’re targeting? If you feel that a particular market is too crowded, you may choose to stop selling a certain product. Is there space for new sellers? Most crucially, how much of the market are you taking up? The more success you have, the larger proportion of the market that you’ll control.
These are important factors to consider in relation to Amazon sales growth. To calculate the market penetration rate, use the following formula:
The number of your existing customers / by the size of your target market * 100
A strong level of market penetration is usually considered to be between 10% and 40%. Remember, there are steps that you can take to increase the penetration rate. This might include boosting customer loyalty or considering ways to make your products more appealing, such as bundles.
It’s important to monitor the market penetration rate frequently, not just when selling new products. Numbers will fluctuate over time, as the market changes. Try to calculate penetration rate after every new marketing or sales campaign.
#3 – Click-through rate
When you run an advert, how many people are clicking on your link or call to action? This information is key to improving your marketing and Amazon sales growth. Thankfully, this is exactly what click-through rate (CTR) provides. Working out your CTR is easy. Just follow this calculation:
The number of clicks on an ad / by the number of impressions (people that have seen it) * 100.
Let’s imagine that 1,000 users have seen your advert. Of those 1,000, 50 went on to click the link. This gives you a CTR of 5%.
Keeping a close eye on CTR is vital for understanding the wants of your customers. What do they like to see and what content helps to keep them engaged? As you tweak your efforts, consider exploring small business forecast insights to keep up with trends that could influence your customer’s interests and the market at large.
If you have a low CTR, it doesn’t necessarily mean that customers aren’t interested. It could be an indication that an advert simply isn’t that appealing. You could use photos & videos or edit your copy. As you you tweak your efforts, continue to pay attention to CTR. If the number is increasing, you’re on the right track.
What CTR should you aim for?
There is no clear-cut answer to this question. Some industries have a higher CTR than others. Additionally, the type of marketing will affect your CTR.
The average CTR across all industries for email marketing is 10.5%.
For Facebook advertising, the average CTR is often much lower. Education has a CTR of 0.73%. Conversely, retail has a higher CTR of 1.59%.
The average CTR across all industries for Facebook is 0.9%.
#4 – Cost-per-click
Cost-per-click (CPC) is arguably just as handy a feature in your E-commerce analytics as CTR. Under CPC, when you post an ad online, you don’t pay anthing until someone clicks it. CPC determines how much you pay for each click. Measuring CPC is important for understanding the success of your marketing.
Let’s say that you have placed an advert for your Amazon product on Google. A user then clicks on your ad, but when they see the product page, they go back to the search engine. Google views that as an unsatisfactory result. A user didn’t see what they wanted to, so you’re now charged a higher CPC by Google.
But what if instead, a user was impressed with your product, and bought it? In this scenario, Google sees a positive user experience, so you’d be charged a lower CPC.
Of course, there are other factors that also influence your CPC. Like CTR, CPC is influenced by industry. The average CPC for arts and entertainment, for example, is 0.85%. More expensive are legal services, with a CPC of 8.46%.
#5 Buy box percentage
How well are you doing on Amazon? Of all the key performance indicators, this is perhaps the best for answering that question. For success on Amazon, your products need to be appearing in more places than just your page.
The buy box is found on the right of the product page near ‘add to cart’ and ‘buy now’. When buying a product from a seller, you’ll see a list of products from different vendors. Your buy box percentage is how often your items appear in this section.
There are lots of factors that can help determine how often your products appear in the buy box. These include:
- Reviews – Amazon is less likely to feature products from sellers with poor reviews. Do everything you can to gather favorable reviews on your items.
- Price – The platforms favor vendors with competitive prices. Price too high, you’ll be featured less often.
- Product information – Have you taken the time to fill out your product information? Incomplete product descriptions are a surefire way of losing buy visibility.
- Software – There are lots of Amazon Seller Tools that can be used to boost your buy box percentage.
Don’t overlook data analytics
Monitoring KPIs can be a hassle. Especially if this means looking at raw data and handling calculations yourself. The right analytics software makes this process much simpler. For example, Google Analytics places all your data in a centralized location. From there, you can gain easy access to KPIs and E-commerce analytics to help you to grow on Amazon.
The best news is that the software is free, and there are lots of materials to help you learn Google Analytics.
KPIs are the key to growth
Using Amazon without key performance indicators is like driving without a map. No matter how confident you feel about your route, there’s no guarantee you’ll reach your destination. Amazon sales growth doesn’t come overnight. It’s a process that needs monitoring and improving if you want to succeed. This isn’t possible without KPIs.
But which KPIs should you use? There are many, many options to choose from. There’s also no right answer. The KPIs you use will be dependent on the specific needs of your business.
The examples shown here fit most businesses and can create a framework for success. Using these as a basis, consider other KPIs that can support your business. Remember, that GA4 ecommerce reporting is on hand to simplify the process.
Take your time, but don’t take too long. Choosing the right KPIs is key to unlocking success on Amazon.
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