Our 3-Step Process to Generate Profitable Sales on Amazon

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We began managing this account in March and took the overall sales from avg. $61k to $103k in 4 months, while increasing profits by 35%. In this week’s email, we share the 3-step process that enabled us to Add profitable revenue to the account.

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1. Reevaluating Performance Goals

Initially, the client set an overarching TACOS goal of 8%, which was based on their revenue and past advertising performance. However, we identified several critical factors that were not considered in this calculation:

1. Branded vs. non-branded sales: More than 60% of the account's sales came from branded targeting. While this was a good defensive strategy, the brand was missing out on awareness and new-to-brand customers.

2. Product-level contribution & margins: After analyzing product-level performance, we discovered that 80% of sales came from only six products, while others received insufficient budget allocation and traffic. Different products also had varying TACOS.

3. Repeat sales and Lifetime value: We analyzed customer repeat sales and lifetime value in the past 12 months. We believed new customers in this category of baby products were highly important for upselling, as the brand offered diverse products for various needs.

4. Awareness impact: We needed to find out how much impact would awareness make on the overall sales. Since there was little data on non-branded, we needed to bring in relevant traffic to find it out, in addition to the aforementioned aspects not considered before. So, in the next 1 month, we focused on gathering data and examining it thoroughly.

2. Optimizing PPC Setup

In the initial audit, we found that the PPC setup needed to be optimized with new strategies, and required changes in the existing campaigns.

On the one hand, we implemented new strategies to bring in relevant traffic to the detail products’ detail page, as well as the Store.

On the other hand, we fine-tuned the existing campaigns and resolved issues causing wasted Ad spend and preventing scalability. We took various steps that included:

1. Optimum Campaign structure. More details on our restructuring process are available here,

2. Identifying and maximizing spend on high-converting targets and Ad placements,

3. Segregating branded and non-branded campaigns,

4. Updating bids regularly based on conversion trends,

5. Identifying wasted Ad spend and reinvesting it on higher ROI campaigns.

We talked about our optimization strategies in detail in a recent case study here.

3. Monitoring the Impact of PPC on Overall Performance

In the final step, we established product-level reporting to closely monitor changes in performance and profits.

In the first month of March, both PPC and organic sales increased significantly with only a 3% increase in ACOS.

Since it was the first month, we were yet to see the impact of increased relevant traffic in the months to follow. A good indicator was the increase in the "Add to Cart" numbers and new-to-brand customers.

Furthermore, we gained valuable non-branded targeting data and a deeper understanding of product-level dynamics. From the analysis, it came out that some products were more profitable even at a higher 12% TACOS as a result of increased sales volume. So, the overarching TACOS goal of 8% was hugely limiting individual product sales and profit growth.

In July, we faced operational challenges and decreased our PPC activity, but importantly, we have been able to build the foundation for scalable PPC setup, and the account is ready to take on new heights.

We believe that these steps can be applied to all accounts to grow sales profitably, as they help make more informed decisions on the next steps.

Other learnings:

1. The new "Cost control" feature for SD campaigns. It enables you to establish limits on metric values based on your chosen "bid optimization" strategy. [Read more].

2. The new variations scrolling feature on the App. This new feature lets you scroll through size variations from the search results on the app. [Read more].

3. Useful filters for the Budget tab. The budget tab is an efficient way to manage your campaigns’ budget. With the filters, you can manage them more quickly. [Read more].

4. New creator recommendations on the detail page. We noticed Creators related to the searched category showing up on product detail pages with their recommended items and help article. [Read more].

Thanks,

Himanshu

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