That old cliche about “working smarter, not harder?” It's just as true in eCommerce sales as it is in any other industry. Particularly when it comes to marketing trends.
But both intelligent sales and intelligent marketing have one critical element in common:
performance metrics. And while some performance metrics and KPIs may vary somewhat between channels, they're relatively consistent for the most part.
That's not the case with Amazon performance metrics.
Account Health: Why Amazon Performance Metrics Make a Difference
Amazon seller metrics don't just measure your sales. They impact both your search frequency rank, your overall visibility and most importantly, your account health.
Account Health Rating
The Account Health Rating program is a relatively new feature accessible from your Amazon seller dashboard in Amazon Seller Central. It consists of a color coded score ranging from 0 to 1,000 which allows you to monitor real time status of your performance and notifies you in advance whether or not your account is at risk of deactivation.
Accessing your account health page is simple. Open the Performance menu in Seller Central. From there, simply click on the Account Health tab. From your account health dashboard, you'll note be able to note whether or not your performance is healthy (coded green), at risk (yellow) or compromised (red.)
Keep in mind that three Amazon metrics constitute the health of your account: customer service performance, product policy compliance and shipping performance. All three play a crucial role in your business; and if any one is at risk, your selling privileges could be as well.
Deactivation can occur more frequently than many sellers even realize. It's not just a question of policy violation which can result in deactivation of your account. It can be poor overall sales performance itself, particularly if you're an FBA seller; and appealing the suspension of your account may not always help.
It's a sad reality, but not every brand is suited for Amazon. That's because not every brand will convert. The higher your unit session percentage rate, the higher your conversions. But ensuring you maintain an optimal conversion rate doesn't just affect your sales. It affects the very health of your seller account.
Amazon seller performance metrics can give you insight into what you're doing wrong as much they can about what you're doing right. And if you're not paying careful attention to them, you might find your shelf life as an Amazon seller could be much shorter than you expected.
Who are Amazon Performance Metrics For?
Virtually any seller, whether they have a professional selling plan or not, can benefit from reviewing some of the more basic Amazon seller metrics: payment reports, return reports and general performance reports.
But only Amazon professional sellers are able to access more in-depth performance updates, including traffic, product listings, sales performance and regular inventory and business reports.
Yet the one metric that has the most significant impact on your overall Amazon performance happens to be what Amazon was founded on: customer engagement.
How Does Amazon Measure Customer Engagement?
Amazon measures both your performance and customer engagement through the following metrics:
Buy Box visibility
Buy Box Visibility
Amazon's Buy Box placement is probably one of the most competitive metrics to be aware of. And with good reason. It's the first option a buyer sees when reviewing a listing. In fact, an estimated 82 percent of all Amazon sales occur through the Buy Box feature.
If you have a highly competitive product, winning Amazon's Buy Box is critical; an estimated 64 percent of all users never bother clicking on more than the first three results of a search.
Buy Box eligibility doesn't happen overnight. Your chances of retaining your Buy Box percentage is contingent on having an well-established product line and well as a history of providing superior customer service.
More specifically, Amazon uses some of the following factors when considering your Buy Box percentage, including:
Delivery date fulfillment
Invoice defect rate
Valid tracking rate
Pre fulfillment cancel rate
In short? Your eligibility for the Buy Box isn't a question of luck. It's a question of two things: a high quality product and your ability to provide outstanding customer service.
How your product ranks in search results is never the easiest metric to uncover. And Amazon doesn't make it any easier.
That's largely because they're notoriously tight-lipped about the analytics their own proprietary A9 algorithm uses to determine your placement in Amazon search results.
But one rule of thumb to keep in mind is that a large percentage of your product ranking will likely depend on product relevancy and search compatibility.
How do you ensure product relevancy?
Include only relevant information in your product title.
Make certain your product description is accurate and precise.
Summarize your description with concise and relevant bullet points.
Ensure high resolution images in your product listings.
Develop a comprehensive keyword research strategy.
Revise and audit keyword strategies frequently for best results.
These are rarely static influencers. Amazon's product ranking algorithm is just as much influenced by consumer demand as it is by conversion rate. It's time consuming to constantly optimize and update your listings; and not every brand will have the time and know how to do so. But their impact on your Amazon seller performance won't just ensure the health of your account.
They'll ensure the health of your brand.
Product Reviews and Seller Ratings
Just how relevant are product reviews? Consider the fact that an estimated 94 percent of online consumers have indicated negative reviews have convinced them not to purchase a product.
Amazon didn't just become synonymous with eCommerce based strictly on convenience alone. Their strength since day one has always been by providing critical, unbiased reviews. And if social proof has become one of the most indispensable components of contemporary marketing, you can thank Amazon for that.
And social proof is going to be the single most vital Amazon performance metric you're going to have.
It's also the most unpredictable. You can't buy an Amazon review, even if you can request one. And negative feedback is inevitable. There's always going to be at least one customer who's never going to be satisfied with both your product and their order. That's the bad news.
The good news is that fake and unfairly malicious reviews are something both Amazon and regular users are acutely aware of; so much so, community guidelines are constantly being revised to be more inclusive and transparent for both Amazon sellers and consumers.
But if you're not promptly responding to customer messages and if you're not addressing immediate concerns, the impact on your overall customer experience is going to be a significant one. Even more so than a negative review. And customer-centricity is the cornerstone of Amazon.
How to Align Feedback
More sales means more feedback. Review your unit session percentage rate and your order rate constantly. Both will affect your overall seller rating. And both can be found in your Amazon FBA inventory report, available in Amazon Seller Central. If you're noticing that they're not fully aligned with your seller rating, consider the following:
Is your product priced non-competitively?
Are you offering soft sell incentives such as free shipping or bundled packages?
Is there an inventory management plan in place for high traffic items?
Are there ways you can help improve product visibility?
Have you established a comprehensive Amazon account management plan?
Have you reviewed your order cancellation rate?
How proactive are you in addressing customer service concerns?
The latter is important. Customer feedback plays a critical role in establishing best practices that influence overall Amazon metrics, and your contact response time is just one of many to keep in mind. Never forget that the success of Amazon isn't based on being "the only game in town." They're not. It's based on providing a superior customer experience.
Inventory Performance Index Metrics
It's never just fees that FBA sellers have to worry about. It's their Inventory Performance Index (IPI), as well.
Your Inventory Performance Index is used to gauge your performance on Amazon as an FBA seller based on your inventory management over a 90 day period. The higher your score is on a range of 0 - 1000 helps demonstrate your productivity as an Amazon seller.
But how does inventory management affect your FBA seller rating? And how does it impact your account health?
Because Amazon can (and will) penalize you if you fail to remove or sell excess inventory—even at a loss to your profit margin. All FBA sellers must maintain an IPI of 450 or higher to avoid limitations on storage space in Amazon warehouses. A consistently low score beneath that threshold could potentially result in the removal of your FBA selling privileges altogether.
You can access both your IPI and inventory reports in your Inventory Performance Dashboard in Amazon Seller Central and we recommend you review it once every 30 days to ensure the health of your account.
While IPI is relevant only to FBA sellers, it's still one of the more important metrics to pay attention to—not solely because of its impact on your account. What your IPI can point out is just where you may not be meeting Amazon seller standards.
You may provide excellent customer service. You may not have a single late shipment. But if your product isn't selling, have you optimized your listing effectively? Is your pricing competitive? Is your Amazon storefront providing a unique customer experience?
Because if you're not, it won't just have an impact on your sales. It won't just have an impact on your inventory, either. It will have a direct impact on your ability to sell on one of the largest online retailers in the world.
Amazon Metrics and Your Brand
Selling on Amazon isn't just a question of having an established brand. Or even fulfilling a need. It's about learning how to market your brand effectively, as well.
The sad fact is that not every brand is suited for Amazon's marketplace. Extremely niche brands may find it next to impossible to gain traction sometimes, while high demand products have to face a certain competitiveness they may not be prepared for.
As we like to emphasize, Amazon is not a rational marketplace. It's a marketplace that can be frustrating. It's a marketplace that's frequently difficult to break through in. And it's a marketplace where success isn't guaranteed.
Are You Ready to Grow Your Business on Amazon?
Understanding Amazon performance metrics is only part of our story. And growing your Amazon business is just the start. Find out more at Color More Lines.