The Simple (But Not Easy) Equation for Amazon Sales Growth
If there’s one simple calculation every advertiser is familiar with, it’s…
Traffic x Conversion = Sales
The impact of your advertising is directly tied to the quality of the traffic you’re driving to your brand and the rate at which you’re able to convert that traffic. This equation gives you the ability to identify your current sales performance and anticipate what sales growth could look like if you optimized your approach.
The Complexity of the Equation
To make your sales growth goals a reality, you can flip this equation to help map a path toward where you want to go. Start with the question:
What is your target sales growth? (Be sure your sales growth goals are realistic based on what you’re able to support.)
From here, you have 3 options to consider:
Assume your conversion rate doesn’t improve. If that’s the case, how much incremental traffic would you need to drive to hit that sales growth goal?
Throttling your budget to increase traffic might seem like the easiest approach, but you’ll hit a threshold (most likely sooner than later) where your dollar returns less and less, driving your conversion rate down.
The Better Approach: If you were to stick with traffic only, focus on driving higher- quality traffic by fine-tuning keywords, restructuring your targeting methods, and reevaluating what you know about your customer’s typical shopping behaviors. This will help safeguard your conversion rate as much as possible.
You could focus on conversion and assume that the volume of traffic won’t improve. If that’s the case, how much of an improvement would you need to see in your conversion rate to reach your sales growth goal?
Improving your conversion rate is a layered process that includes all the elements that influence a consumer’s decisions.
The simplest lifts would be related to things like optimizing your creative and retail set-up to make sure consumers understand the value of your product and can easily embrace it as a solution for them. The more complicated lifts are related to things like user experience, customer satisfaction, or managing weeks of coverage with your inventory.
Remember, a conversion at the point of sale is often the culmination of other moments of “conversion” along a consumer’s path to purchase.
The Better Approach: If improving conversion is your sole focus, explore initiatives that drive higher conversion rates across the consumer journey. This might mean that you redefine conversions that happen further up the funnel as something more nuanced than a purchase. Utilizing the initial equation with this perspective, you could think of it as multiple equations with different conversion moments that compound and look something like this:
Awareness Traffic x Conversion = Consideration Traffic
Consideration Traffic x Conversion = Purchase Traffic
Purchase Traffic x Conversion = Loyalty
Or you could combine both traffic and conversion efforts for the best approach…
3. The Best Approach: If you invested in improving the quality of your traffic and conversion rates across the path to purchase, what is a realistic performance in both areas that would reach your sales growth goal?
To get a clearer picture of that realistic performance, you could measure performance against category leaders in terms of current market share and leaders with the fastest sales growth. Setting those category baselines will give you an idea of what your sales growth could look like in the near term.
Taking It to the Next Level.
With an ongoing commitment to improving the quality of your traffic and the rate of conversion, you can set a trend line beyond what the current category activity can project and build towards even higher thresholds of success.
Here are a few suggestions for how you might approach that:
Target Audiences with the Right Intent.
At the bottom of the funnel, the intent is to purchase. But further up the funnel, the intent might shift depending on the buying process and lead time a consumer needs to research a brand and product before committing to a purchase.
In the Awareness phase, the intent might be to engage with a brand they haven’t considered before.
Targeting Tip: Look to broad aisle and near aisle audiences, as well as overall lifestyle and behavioral targeting for additional shoppers to reach.
In the Consideration phase, the intent might be to learn about a specific product, follow your brand store, or sign-up for email updates.
In the Purchase phase, the intent is much more clearly marked as an intent to buy, maybe to utilize a deal or promotion.
And in the Loyalty phase, the intent is about the desire to rebuy, maybe to utilize subscribe and save for additional savings and convenience.
Targeting Tip: Prioritize those customers who are approaching their “rebuy window”; the timeframe that is closest to when they might need to rebuy anyway.
Test and Learn Your Creative Assets and Catalogue Details.
Long-term success on Amazon is built around the ability to be nimble and adjust with the needs or interests of the consumer. An ongoing commitment to test and learn creatives, PDP details, product variations, and other retail elements will help you maintain a close connection with the shifts happening in your customer base.
Further Reading: “The Importance of A/B Testing Content on Amazon”
Prioritize the Customer Experience.
Few things will derail the success of your strategy like poor customer reviews or a confusing shopping experience.
Evaluate the shopping experience from the lens of a new customer; reviewing product details, creative assets, and the fulfillment process to determine the quality of the experience. Is it the kind of first impression you want to make on a new customer?
Case Study Recommendation: “GO Improved Product Detail Page Performance Through Creative & UX Optimizations”
If negative reviews start to show up on your products, address them with fast, empathetic responses and make it right as quickly as possible. At the same time, evaluate if there’s a deeper issue with the product or fulfillment process that needs to be addressed to avoid further negative reviews.
This isn’t all that you should be doing, but it’s a good start.
Need Help with the Complexity of this Simple Equation?
Yes, the equation for calculating sales on Amazon is simple, especially if all you’re doing is calculating the performance of today. Changing the trajectory of your performance, however, is where things get complicated.
By attracting the right type of traffic and optimizing your conversion rates across the path to purchase, you can position your brand for long-term sales growth and profitability. But few brands can do all of that complex work on their own. That’s where we can help. Let’s connect to see how our GO team can offer the kind of support your brand needs to reach your goals and build sustainable profitability.