Why Not to Use Search Volume to Determine Giveaway Units (Follow the Data Ep. 27)

Why Not Use Search Volume to Determine Giveaway Units (Follow the Data Ep. 27)

When you’re running a launch, you need to match the daily sales of your top competitors. But how do you determine how many units to give away? Some sellers look at search volume. But this episode, we’re going to let you in on a secret: using search volume to estimate the number of giveaway units needed to drive keyword ranking is an extremely flawed method.

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Follow the Data Show Notes

Podcast Transcript

Keywords are extremely important when it comes to building a successful Amazon business.

This week we’re going to dispel a new but ever-growing myth that you can use search volume to determine the correct number of units to use when running promotions to drive keyword ranking or estimating the number of units customers are selling through a particular keyword. I’m Casey Gauss.

And I’m Cameron Yoder, your hosts for Follow the Data: Your Journey to Amazon FBA Success. In this show we leverage the data that we’ve accumulated at Viral Launch from over 30,000 product launches and our experience working with 8,000 brands to help you understand the big picture when it comes to Amazon and, more importantly, the best practices for success as an Amazon seller. This episode is an in-depth look at one really important aspect of product promotions, number of units for a giveaway. We’ll make the case for why using search volume specifically is mathematically flawed and talk you through current best practices based on what has worked for our clients specifically.

A significant number of sellers are running promotions and giving far too many units in their promotions. When asked, many cite their keyword tool as a source of the suggestion and, as a result, they’re wasting hundreds to thousands of dollars in extra inventory.

Let’s jump in. So we’re back from Vegas. It’s been – it was a good trip.

It was a good trip, and we are not in between some bunk beds recording on a mobile mic, and hopefully, I can guarantee this, but much better analogies will be coming your way than the half a piece of bread.

Listen, if you haven’t yet, go back to the previous episode right now, go to about six minutes and 15 seconds. I remember it specifically. It was hilarious. Just go listen to Casey’s analogy of bread, and you’ll be blown away.

Yeah, analogies can be very powerful, but sometimes a little tricky. And if you don’t get them right, then it’s just, it’s embarrassing.

Casey, what did you think of Vegas, just really briefly? I just want to get your opinion. What do you think of Vegas, the trip and the conferences?

Yeah, overall I mean conferences like – one reason we love going to conferences and bringing additional people, you know, we usually try to bring five people including Cam and I, is it’s really great for other people on the team just to hear the feedback that we get. You know, so many people come up to us excited about what Viral Launch has done, you know, for them and for their business. And so I love seeing that feedback in person. It’s so much different getting it in person than, you know, over email. And then you also just get a lot of really good candid feedback. You know, unfortunately I was thinking back. I feel like we didn’t get enough candid feedback on Keyword Research. So if you guys have that, we would love to hear it. But anyways, yeah, went really well, very exhausting. If you’ve ever been to a conference in general there’s very little sleep involved, especially if you have obligations back home or, you know, in the office or whatever. But yeah, what about you, Cam?

Yeah, no, I think you hit it on the head. Really it’s just so good to go, and we said this last week, but to go and to meet everyone, just put a face to a name, really I would encourage you if you ever see us in public or at a conference, just say hey. It’s always good to talk to everyone here, and again, to put a face to a name and to hear what you guys are going through and what advice you want or need and just say hey. So yeah, if you see us at a conference or just in general, feel absolutely free to say hey.

All right. So anyway, getting back to the podcast episode, we’re touching on search volume and why not to use search volume to determine the amount of units that you need to give away for something like a launch or a promotion. Casey, what do you think?

Yeah, and honestly, so taking it a step further back, I mean a lot of people, the real question – so to be honest the real question is not what is search volume for this keyword; it’s what is sales volume for this keyword? You know, again, like the main driver of rank, which is where a ton of organic sales traffic is coming from, is coming from keywords. And so the question – and how well you rank for those keywords. And so the question is not how many people ran a search for this, or how many times was this keyword searched, but how many sales actually came to this keyword? If there were a trillion searches for omega-3 but there were 10 sales that came through that keyword, then that would not be a good keyword. It would look good because there’s high search volume, but what you really need to understand is what is the sales volume? This will inform your strategy around what keywords are most important to rank for because you want to be where the sales are, not necessarily where the searches are, and then further so if I want to drive ranking for this keyword, then how many units do I need to give away? Again, it does not matter how many people are searching for your product. It is not number of sessions that is driving your ranking. It’s the number of sales that are driving your ranking.

And so, again, you should really – the real question is sales volume. We don’t have sales volume, so as a proxy for that we’re using search volume. But because now you kind of understand it is not – it’s sales volume that you do want, you can’t use search volume in a number of ways. And so the main thing that we’re talking about here, primarily because we help with product promotions and driving keyword ranking is that we see so many people using search volume as a way to estimate number of units to give in a product promotion or, you know, drive external traffic, whatever, to drive keyword ranking. And we see a lot of people wasting, you know, thousands of dollars by doing this. We just really want to kind of dispel the myth, right? Like we are a company that has a ton of data, and we love using that data to help you make better decisions. And so that’s – I mean Follow the Data. That’s the name of the podcast, and that’s why we’re here.

That’s what we even see – so just to iterate that again, it’s really important for listeners to understand that it’s not search volume. Again, you need to base these numbers that’s something like a giveaway number, off of sales, sales that are attributing to keyword ranking. And even in some cases people are using different tools that are even just using search estimations, right, estimation volume, not even sales estimation but search estimation. In that case, again, what we’re seeing is a lot of people giving away more units than they should or way more units than they need to to actually gain rank. And so we want to help. We want to help the people that are listening and people that are planning for promotions in the future. We just basically want to help people with their business to make sure that they’re not losing on money that they don’t need to lose on.

Yeah, so this is not directed towards a particular tool. We see people using this. There are tools that are suggesting number of units to give specifically based off of sales volume. We see that, but then we also see people using maybe even Keyword Research to look at search volume to then estimate number of units to give. And so we just want to dispel this whole concept as a whole. So we’ll jump into it if that’s okay, Cam.

Yep. So there are two major flaws. Major flaw number one is conversion rate. Casey, talk about conversion rate.

Yeah, so I think a real insight here is we’ve had some, you know, special Amazon data that we’ve gotten. So we’re – like this is just, you know, one report, let’s say, and we’re not building anything off of this one report, but it’s definitely helped us make better decisions. And so basically what we’ve seen is, you know, we get this report that shows us what the search volume is for a particular keyword, what the click – number of clicks into a listing, number of add to carts through that keyword, and number of purchases, again, through that keyword.

So let’s take omega-3, again, as an example. We would see the number of searches, then from there the number of clicks into a listing, then from there the number of add to carts and then the number of purchases. So we are able to see what is the conversion rate from search to add to cart? What is the conversion rate from search to purchase? So looking through, you know, this list of words we were trying to figure out, okay, what is the average – what is the average conversion rate from search to purchase? Because again, we care about purchases, not searches. And the problem is that there wasn’t a good average. The range is [immense 0:08:28.8]. And so the range was literally anywhere from 50% – so that means if there was 10,000 searches there were 5,000 sales, let’s say, and all the way to .01%. So if there’s 10,000 searches –

And that’s conversion.

Yeah, yeah, sorry.

50%, to .01% conversion.

Yeah, conversion. So that would mean if there’s 10,000 searches there’s literally 10 sales. I mean that’s insane, right? So there’s 10,000 searches for a keyword. There’s anywhere from 5,000 actual sales to 10 sales. And so you know, no tool, nothing like that on the market is able to estimate what the conversion rate is for these particular keywords. And so, again, if you tried to take an average, let’s say you’re like okay, well I’ll just shoot for the middle, and let’s call the middle 25%. Well, so if you give away 2500 units that’s, you know, 2490 more units than you would need to give in order to match the .01% conversion, right? But if you give away 2500 units that’s only half the units you would need to give to hit the $5,000 mark or the 5,000 sales mark, the 50% conversion mark. And so it’s so hard. It’s really just a shot in the dark if you’re guessing at any particular conversion rate. So again, I could care less if there’s a trillion searches for omega-3 or, you know, any keyword if the sales volume is only, you know, 10 sales, or 100 sales, or 1000 sales. So flaw number one, conversion rate.

I think a simple way that – something simple that people can use to remember or to just like get this flaw into perspective is just because someone is searching for something does not mean that they’re buying it, and that goes back to keyword, keyword ranking being attributed through sales. Just because someone is searching for something does not mean they’re buying it, and that’s shown specifically with the data that we have between that 50% and .01% conversion.

Yeah, and I mean just think of all the people that are doing keyword research to sell on Amazon, or like you’re just looking at prices, or you’re trying to do research and you think Amazon is a place to do it, probably not, but anyways, so what we’re seeing is, again, just a ton of searches that are not converting to purchases. So flaw number two, sales distribution. So this one is a little bit harder to conceptualize or to explain without visuals.

If you have a piece of paper and a pen that would help, but it’s not necessary.

Yeah, nor am I going to be good enough at walking you through this for you to, you know, really draw it out. So we do have a blog post on this where we did try to provide some visuals to really help you understand. I’m going to try to do my best. Cam is always better at summarizing and really helping you to understand.

I’ll see what I can do.

Yeah, let’s see what Cam can do. So anyways, flaw number two is sales distribution. So what sales distribution is referring to is what percentage of shoppers that are searching or purchasing. Let’s say you search omega-3. What percentage of the shoppers are buying the first product, what percentage are buying the second product, you know, the fifth product? What percentage are going to page 2 and then buying the top ranking product there? Like sales distribution is referring to, again, who is buying what product where and, you know, what percentage. And so if you, let’s say that 100% – this is very unlikely I would imagine – but let’s say 100%. Let’s take Instant Pot, right? So I would imagine sales distribution for Instant Pot searches are pretty high towards the top. If you see the Instant Pot then you are going to be buying, right? Same with let’s say AA batteries. If you search AA batteries you don’t need to scroll through, you know, pages of results. You probably don’t need to scroll past, you know, number three, or you know, number five, before you find out what you want because there’s not that much variation there. So you’re probably buying the first, second or third product, let’s say, that shows up in the results. But a more stylized product or a broader search, let’s say, you know, gifts for men or Valentine’s Day gifts, or Father’s Day gifts, I mean the results are much more broad. You probably don’t even have in mind exactly what you want, and so you’re probably scrolling through the results. You may hit page 2. You may scroll through to try to figure out what you want, and you may end up buying, you know, that whiskey decanter or something like that that’s, you know, number 15. Or you may end up buying this tie that’s ranking number 25. And so sales distribution for a word that has a bit more style or kind of different bundles or whatever, I would imagine sales distribution is much higher.

And so again, we are trying to figure out how many units is the sell – let’s say we want to rank in the top five for omega-3. So what we’re trying to figure out is what is the sales volume to the products ranking number one, number two, number three, number four and number five, and then we need to match that in per day sales to rank alongside them. So we’ll try to go with an example. Let’s say we want to rank in the top five. There’s 2,000 sales through this keyword, and sales distribution is 100% to the top five listings, right? So the top five listings are seeing all 2,000 of the sales coming through this keyword. And let’s say it’s evenly distributed, meaning so it’s 2,000 divided by 5, which is 400. And so each listing is seeing 400 sales. So number one, number two, number three, number four, number five, all 400 sales. And you want to be able to match them in per day sales. So basically, again, you have to hit that $400 – or sorry, 400 sales mark. But let’s say that sales are evenly distributed among the top 20 results. So position number one sees as many sales as position, you know, number 20. And so then sales are 100 per day. And so giving away – basically the giveaways will be – could be significantly different depending on what the sales distribution is, and these are very simple examples. I imagine it’s something, you know, for one keyword sales distribution for Instant Pot is 80% to position number one and then, you know, evenly distributed through – or like the next 10% is through positions two through four. So I think it becomes very, very confusing or is very complex, and every single keyword is so different. So if you’re wanting to rank position number five it’s going to require a totally different percentage of the sales from the conversion percentage from the search. So you can see the math really starts to add up, right? And so, and it’s so different depending on each keyword. Basically if you wanted to use search volume to estimate number of units to give you would have to know the conversion rate or approximate the conversion rate from search to purchase. And then depending on where you wanted to rank you would need to understand what the sales distribution from this word to position – let’s say you want to rank position between positions five and 10. You would need to know the sales distribution from that sales would be between those positions so that you can match in per day sales those competitors.

And so there’s so many approximations that really what existing tools are doing, or what most people are doing is just saying like, you know, let’s just take a percentage of search volume and say that’s how many units you need to give away per day in order to rank for this particular keyword. And what we see on the flip-side is so many people are coming to use Viral Launch to run these promotions or whatever, and they’re trying to give away sometimes, you know, five times as many units as we would expect. And if, you know, we were suggesting 100 and you’re saying you think you need to give away 500, I mean that is a significant amount of inventory that you’re giving away. And so I do think that continuing to build the best sales history is great. I think that like overkill is not the worst thing, but I do want to make sure that people are well aware of this because if you have a limited budget and you’re spending that limited budget on excess inventory and these promotions where in reality you could be targeting additional keywords, or you could be using it to ramp up your sponsored ad costs, or your AMS campaigns, or whatever, I just want to make sure that you’re spending – you are knowledgeably spending your money as efficiently and as effectively as possible.

Let’s see if I can – let me see if I can summarize sales distribution a little bit. All right, so it’s really important to go back to what we said at the beginning where keyword ranking is attributed through a sale, right, not a search, but a specific sale. A launch or a promotion for something like a keyword is – it’s not rocket science, right? The entire goal of a promotion like this, or of a launch, is to get you to somewhere on page 1 where you want for that search term. In this case let’s say it’s omega-3. I want to get to page 1 for omega-3. So I need to look at the sales, the sales numbers that are going on on page 1 in order to match those per day with something like a launch or a promotion. So to do that I need to see those sales numbers, those sales estimates, instead of seeing the search volume. Number one, those sales estimates aren’t really even available on certain tools like other tools, right? The search volume is. That’s not what we want. What we want are sales estimations and accurate sales estimations, right?
So let’s say I type in omega-3 into Amazon, and I see the spread, right, and on the top five are a ridiculous amount of sales. Now in order to reach that top five – again, also maybe taking into account something like your sales history, but at this time let’s just use the sales velocity or something like a launch or a promotion as a factor for getting to page 1. So you typed in omega-3, and your goal is to be in top five. So you look at the sales and you see that the average is around like – you’re going to need around 2,000 units, or maybe not 2,000 units, something like 500 units to give away. And you’re like, yikes, that’s a lot of units. I’m not a big business man in omega-3 yet, so I can’t get there. So you go down. Let’s say you look at the top 10. And so you look at the sales distribution, again, just the sales numbers spread out across the top 10. It’s going to take less, typically – it depends on the market. Again, it’s going to take – it might take less for you to get to the top 10 than it will for you to get to the top five. But again, the entire goal of a launch or a promotion is to simply match the number of sales that are going on in whichever range you’re going for. That is the idea of sales distribution being applied to something like keyword ranking. And that’s why it doesn’t work for search volume because search volume, again, it’s not – it does not involve the sales volume. And search volume cannot show you the spread of where sales are going. That’s my summary. That’s my simple summary.

Well done, cam. There’s an example in the blog post where we go over, so let’s say a keyword gets – this is kind of in a little bit of an exaggerated example, but I think sometimes these, you know, exaggerated examples really help to help you understand what we’re – the point that we’re trying to get across. So let’s say a keyword gets 100,000 searches per month. The conversion rate from search to purchase is 2.5%, meaning 2,500 sales across this keyword per month. And then let’s say sales distribution, 80% go to the top five listings. That means the top five listings see 2,000 of those 2,500 sales per month, and after top five 500 sales. Let’s say you want to rank between positions six through 15, and that’s where the rest of the sales are happening, so 20% of that 2,500 is 500 sales. And so 500 sales evenly distributed among those 10 products, let’s say, means each product is really only seeing 50 units per month in sales through this keyword. So if you need to rank in position six through 10 then you only need to give away two units per day. So 100,000 searches down to two units per day, and these estimates that we’ve used are completely arbitrary but are not out of the realm of possibility. And so that just goes to quickly show you, you know, that’s 100,000 searches. We could easily show you the math where 10,000 searches you need to be giving away, you know, much, much more.

Your goal, pick a target, pick a target for a keyword, look at the sales numbers for that target and match it with a launch or a promotion.

Yeah, so real quick we’re just going to go over how we’re estimating number of units to give. You know, in an ideal scenario we’re able to do some data science or whatever to really give some good estimates in terms of sales volume, leveraging both search volume and Market Intelligence data. But right now we’re not able to do that. We’re not aware of anybody that can realistically do that, even if maybe someone can say they do. I don’t know of anybody, but I’ve heard – recently I’ve heard some people that are like, you know, we do data science. And it’s like they have insanely terrible answers. And so I think it’s one thing to be aware of. You know, I think you should always be questioning the authenticity of something. You should always be using, you know, your best judgment, logic. You should always be testing everything because too often do we see people – and this is one reason we wanted to start this podcast – but too often we see people in a place of power, people that may have, you know, an audience for one reason or another mislead people, not necessarily out of intention, but maybe just out of, you know, ignorance, or I don’t know. And we see people, you know, we do data science so you should trust what we’re doing. And it’s like, you know, you could have the most technically amazing whatever, but if you’re getting, you know, bad results, then data science is worthless.


Anyways, how are we estimating number of units to give at Viral Launch? So like we said at the top, you know, we’ve – again, this is not a plug to use Viral Launch or anything. We just, again, want you to make good decisions around running your promotions for ranking, estimating number of units that are being sold through a keyword. Again, we just want to dispel this myth.

This is simply what we’ve seen work directly.

So 30,000 product launches later this is what we’re doing. So first obviously you have to know your main keywords. The best proxy for this is using something like Keyword Research or using some tool that has good search volume estimates so that you can see, okay, what are the most popular keywords? It’s very important to know. So many times we have someone come to us and they think, you know, I don’t have a funny example – high heels for dogs is a good keyword for high heels because their keyword tool told them that. And in reality obviously it’s not. That is a real result in a keyword tool. Anyways, so people will think, you know, this keyword blue 32-ounce insulated water bottle is a good keyword for their insulated water bottle, and in reality it’s not, and we see people so focused on ranking for it, and they’re wasting their money. So know your main keywords.

Next up, know your budget. So again, if you’re going for a high-volume keyword, again, you can use search volume as a proxy here, but if you’re going for these high-volume keywords then make sure that you have the budget to give the units away necessary to drive the sales necessary, and then just to have the inventory needed so that when you are ranking for this keyword and you’re increasing your sales you won’t run out of stock immediately after. And so if you have a smaller budget, again, everything is relative here, smaller, bigger. If you have a smaller budget compared to your market you have to go after these keywords that are appearing to get lower volume sales, and we’ll show you how to estimate that.

And yeah, so then step three is determine estimated sales volume for this select for your selected keywords or the keywords that you’re considering. So the way that we do that is we run Market Intelligence on these keywords. And so Market Intelligence is showing you the estimated sales volume for the products for every keyword that they’re ranking for, sponsored ads and so forth. So looking at sales volume for the products that are showing up for a particular keyword does not mean that the majority of the sales volume is coming through that keyword. And so one thing that we do is we like to go look at what is, you know, how many high-volume keywords are showing up for this particular product. So let’s take fish oil. Let’s say the only – let’s say there’s three high-volume keywords. Fish oil, omega-3, fish oil supplement. So what we would do is we would go, and assuming these keywords are relatively similar in volume, we would go and to be on the safe side we would look at the sales per month that we’re seeing in Market Intelligence and we would divide it by three. So if you’re seeing 1000 sales a month, then we’re guessing that you’re seeing around 33, 34 sales per day through this particular keyword. So now I know that if I want to run a promotion for seven days, then I would need to give away that 33 or 34 times 7.

And so if it’s a lower volume keyword then it’s a little bit more difficult. It’s, again, going to be your best guess, and I would rather err on the side of caution. I would rather give too many but not, you know, five times too many. So again, I would go and try to get a good feel of the landscape in terms of keywords. You should’ve done this already when you optimized your listing and when you were preparing to even sell this product because I think it’s important to understand how you’re going to drive sales before you even source a product. But again, I’m going to go get a feel for okay, there’s about 10 words that are the same volume as this. Again, the product is seeing a thousand sales a month. And so divide it by 10, and then you would just give away at that volume. So let’s say I’m going for this keyword. There’s 100 sales. We’re estimating 100 sales through this particular keyword. Divide that by 30, and so that’s basically, you know, three, four sales per day. And so I’m going to give away at the three to four sales per day to go after this particular keyword, or maybe not give away, run through external traffic, you know, however you’re running your launches, however you’re ranking products. I would go and target that number.

That’s good, Casey. I honestly, I just want to add, or I just want to iterate the importance of budget. Not everyone has the ability to automatically target the keyword with the highest search volume and sales volume, right? And in this case what I’ve seen work for individuals is actually to go for secondary or tertiary keywords where the targeting keywords that on average don’t have as many sales volume – as much sales volume – excuse me – or they automatically, right off the bat, they – I’ve seen people try to target – they want position one, right? I want – I’m targeting fish oil, and I want to get to position one on page 1. So let’s do it. And then they don’t have enough units to do it, and by the time they’re done with their promotions they just end up failing because they didn’t have the resources to get there in the first place. So it’s really important to recognize what you’re capable of doing. In this case I’ve seen people do really well once they recognize how many resources they have, or how much money, or how many units they have to give away for a promotion. They accept that fact, and then they go for something like, let’s use the fish oil example. Let’s say they wanted to get to page 1, or position one page 1 initially. They recognized they did not have the number of units available. So instead of going for position one they look at something like – let’s say they looked at position one, but even position one through eight, or one through – let’s just say one through six are out of their means. So then instead they look at positions seven through something like 15, and they say actually after position six the sales drop off decently, and while I want to gain as many sales as possible, I’m not capable of launching into positions one through six right now. So I’m actually just going to target – I’m going to bite the bullet for them. Maybe it’s their pride or something. I’m going to bite the bullet. I’m going to go for positions seven through 12 or something like that. So then they look at positions seven through 12. They look at the sales for – the sales estimates – again for those products in those positions, and they match those over a promotion time, something like seven days, right? And in that they get to page 1. They don’t – they did not give away more than they were able to give, and they got to page 1. And after that, if they stay there organically, if they’re able to continuously maintain rank, then I’ve seen people specifically do this, they get to position something like seven to 12 and they maintain that position and just organically, as they stay there, they move up the ranks because they’ve optimize their product well enough.

Bottom line, know your main keywords. Pick the right ones to target. Number two, determine your budget. Determine what you’re capable of doing, and determine what you want to do and if your budget and what you want to do align. And if not, then you might have to take it a step down. And number three, determine the monthly sales volume for that selected keyword and match it over something like a seven- to 12-day period of time.

The takeaway for today is base your projection for giveaway units on sales volume, not search volume. You can apply some of these techniques to your own promotions. No matter what traffic source you’re using, something like discounted promotions, or Amazon sponsored ads or Facebook promotions, in order to reach page 1 for your targeted keyword you’re going to need to match or exceed the average number of sales for that specific keyword that you want to target. Basing your estimates on something like search volume could honestly cost you a lot of money. I’ve personally seen it happen. Our team sees it happen, and we don’t want that to happen to you guys. Sales volume, not search volume.

Well hey, everybody, that is all for this week. Thank you again so much for joining us here on Follow the Data. For more insights and reliable information on how to succeed on Amazon, subscribe to the podcast and check us out on YouTube. I have a new walk-through up for Keyword Research on our channel. So if you want to check it out just search Viral Launch on YouTube. Go to our page, look for my face and the video titled, “How to use Keyword Research.” We’ll also link to the video in our show notes. Again, we’re just coming off of a couple conferences. We’re actually gearing up to go to a couple more over the next couple weeks, and we had such a good time meeting some of you, some of you listeners. So thank you. Thank you all so much. Feedback is really important to us, so if you’re listening on Apple Podcasts feel absolutely free to leave us a review and/or a rating. If you know of a fellow seller who is using suggestions from their keyword tool to determine how many units to give in their launches, please send them our way. Send them to this podcast. We want to be a resource for sellers and the information source in this space, trusted information source. So please tell your friends, spread the word and share the show.
So thank you again so much for listening, and as always, if you want to be featured on the show, have an Amazon-related question or an idea for an episode, feel free to leave us a voicemail. Our number is 317-721-6590. Don’t feel intimidated at all to call in. Really, we want to hear your voice. It will be a voicemail that pops up so you won’t have to talk to anybody directly. You’ll be able to just leave your opinion or leave a question. I feel like after talking to people at these conferences I recognize that maybe they were – or people listening are intimidated by calling in. So please call in. Feel free. Don’t be intimidated. We’d love to hear from you. Again, it’s 317-721-6590. So until next time, remember, the data is out there.

The Limitation of Conversion Rate on Amazon

Let’s say I sell a product that is more expensive than my competition. It is of better quality than my competitors, the product listing is well written, and my conversion rate is 25%. Should I increase the price to test the limits of my conversion and see if I can make better profit?

This seems like a logical question, right? One logical answer would be to either sit back and enjoy a rather satisfactory conversion rate. Another would be to perhaps try out some split testing and see if that rate begins to fall as the price rises.

Conversion can be a great data point to understand how customers are responding to your listing. If your conversion is really low, it tells you that there is likely something about your offering that is causing shoppers to pass on your product. It could be something as simple as an unattractive photo or word choice on a bullet, or it could be something a little more challenging to resolve, such as a poor review. It could also indicate that shoppers in the category tend to bounce around and explore their options a bit before settling on a product.

While conversion rate can give you some perspective, it doesn’t paint the whole picture. Let’s now return to the original question (because of course, it is a trick question):

What conversion rate doesn’t capture is the number of people actually interacting with your listing. What if I only made four sales in a month? Yes, a 25% conversion rate is great but if only 16 people interacted with my listing, does conversion matter? In this case, I’m probably paying attention to the wrong metric.

If you’re selling a high value item, you might be happy with four sales a month, but this probably isn’t the case. You could have one sale and a 100% conversion rate. In other words, if a product is listed on Amazon, and no one is around to buy it, does it make a sound?


What is a Conversion Rate?:

A conversion rate is the number of sales divided by the number of interactions (people clicking on your link). If 16 people click on your listing and 4 of them buy, your conversion rate is 25%. But as we’ve already discussed, while a low conversion rate most commonly means there may be a problem with your listing, a high conversion rate does not always signify a successful product. To access your conversion rate you will want to log into Seller Central, go to Reports, Business Reports, and finally, Sales and Traffic. You will be able to locate it in the “Order Item Session Percentage”.

The Limit of Conversion Data:

The number one problem with spending too much energy analyzing your conversion data is that there could be a much larger limiting factor at play.

You can have a high conversion rate, but if you’re ranking on page 20 for every major keyword, the reason for your conversion rate could be that you’ve got a great offering but almost no one ends up finding it.

Alternatively, and potentially what is occurring in the question asked, maybe you have a great conversion rate and are on page one for some major keywords, but you’re not making many sales. You could have a situation where upon further inspection of your listing, shoppers are inspired to buy, but something is very quickly forcing the majority of shoppers to overlook your product.

For instance, you could have a great product, but it’s priced much higher than the competition. If someone clicks on the listing, they’ll realize that the improved quality is worth the price but most shoppers will skim through it in search of a more affordable option.


What should you be asking?:

While conversion rate is not a bad piece of intel to have, at the end of the day, selling on Amazon is all about one thing…THE MONEY. In other words, you must look at your conversion rate from a broader perspective: in the context of your visibility, your sales numbers, and your market share.

A more appropriate question is something like this:

I sell a product that is more expensive than my competition. It is of better quality than my competitors, the product listing is well written, and I’m selling 40 units a day with a healthy profit margin. Should I increase the price to test the limits of my revenue and see if I can make better profit?

With regards to this question, the answer is yes*.

The asterisk is that you shouldn’t just test a higher price, you should test a lower price too.

Let’s say you’re selling the product for $25 with a profit margin of $10 and you’re making 40 sales a day ($400 profit).

Maybe you up the to $26 to press your luck ($11 profit margin) and you still sell 40 units a day ($440 profit).

But what if you drop your price by a dollar to $24 ($9 profit margin) and you end up selling 80 units a day? Now you’re making a profit of $720.

The point is, everyone selling on Amazon has different metrics of what success is, but all of those metrics of success are all based on (you guessed it) the money.


The Conclusion on Conversion:

Among Amazon sellers, we frequently see questions and concerns when people get held up by the plethora of data points that they have to comb through at any given time. Whether it’s BSR, or conversion, or how your product is categorized, you need to ask yourself what the data is actually telling you. If that data is not directly correlated to how much money you’re making, it’s probably not worth focusing too much attention on.

Conversion rate can absolutely hint at potential problems or successes with your listing, but it by no means is an absolute sign of a successful product. You could have a 100% conversion rate selling expired meat on the internet. No shopper will even look at your listing, but eventually maybe some sicko buys it. Boom! One interaction/one sale.

The point is: to be effective on Amazon, you need to determine your metric for success, and you need to ask the right questions to achieve success. Use conversion; use BSR, and determine what you can learn from it and what you can’t.

You can make almost no money and have a high conversion rate, or you can make a lot of money with a ton of visibility and a low conversion rate. It’s just about asking the right questions and seeking the right answers.
On a final note, if you are looking for answers and wish split test some elements of your listing, check out Viral Launch’s split testing tool at listing-dojo.com.

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