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Top Amazon Seller KPIs to Measure Success

Amazon Seller KPIs are crucial for anyone serious about selling on Amazon. KPIs, short for Key Performance Indicators, also known as seller metrics for Amazon eCommerce, are not just a list of dos and don’ts that sellers need to abide by. Instead, they provide valuable insights that can be used, analyzed, and leveraged to further grow and expand their online business. 

However, with so many KPIs to track and measure, it often gets confusing to measure the correct list of metrics to grow your online business. To simplify things for you, here are eight essential metrics that you must start tracking in order to grow your Amazon business successfully. Keep reading to know everything about the essential metrics – along with what benefits they offer and how to calculate them! 

1. Advertising Cost of Sales (ACoS)

Advertising Cost of Sales is the ratio of ad spend to ad revenue, in its basic sense it is simply how much money you spent on advertising versus the revenue you received for a given product on Amazon. ACoS is, therefore, a great metric for marketers to see if their campaigns are profitable or not. 

What does ACoS help marketers with? 

  • Provides keyword-level profitability data
  • Measuring the effectiveness of campaigns and keywords
  • Identify areas of opportunities and optimizations 

An important point to note here is that aiming for low ACoS might not always be the right strategy. In general cases, low ACoS is a good business goal. However, in specific cases, such as if you are creating a new PPC campaign or trying a new product, you should consider running PPC at a high Amazon ACOS over a 3-4 weeks period of time (typical reaction time for new Best Sellers Ranking to settle). This might end up being beneficial in the long run to your overall sales. 

How is ACoS calculated?
ACoS is calculated using the following formula: 
ACoS = Ad Spend / Ad Revenue 

2. Total Advertising Cost of Sales (TACoS)

While ACoS is a crucial Amazon seller metric, it doesn’t consider how ad spend is affecting brand awareness and the organic sales that result from brand growth. ACoS doesn’t measure the actual value of the ad spend. TACoS – or Total Advertising Cost of Sale – on the other hand, measures advertising spend as a fraction of total revenue generated. In doing so, TACoS provides a much clearer picture of the performance of various ad spends. 

What does TACoS help marketers with? 

  • Provides campaign level profitability data
  • Helps marketers track things on a more global level for the longer run
  • Help unlock growth opportunities
  • Helps analyze profitability even across multiple channels

Since advertising is not just about selling a product but also about boosting brand recognition and growing the overall business, TACoS provides marketers with the right insights into how the various actions are influencing your overall business goals. 

How is TACoS calculated?
TACoS = Ad Spend / Total Revenue

3. Return on Ad Spend (RoAS)

This metric is used for measuring the effectiveness of an advertising campaign. It helps retailers evaluate which methods are working, which aren’t working, and what can be done to improve future advertising efforts. In essence, RoAS is the inverse of ACoS. 

The average Return on Ad Spend on Amazon is around 3x. However, this is not a fixed figure, and it changes based on your goals, strategies, and industry of operation. For instance, consumer electronics tend to have a higher RoAS of upwards of 8-9x, whereas games and toys have around 4.5x. To keep things in perspective, a RoAS of 3-4x is a good starting point. But again, this is very vague, and the exact figure will rely more on your specific context of the ad campaign. 

As a rule of thumb, it’s advised to aim for high RoAS. This is a good strategy for selling products that are generally low-converting and don’t require high visibility. Low RoAS, on the other hand, works when you are trying to sell a low-selling stock and want to increase visibility. Basically, you’re committing a large amount of ad spend to get that higher visibility and a higher return on investment. 

What does RoAS help marketers with? 

  • Provides campaign level profitability data
  • Provides keyword-level profitability data
  • Helps in gauging the effectiveness of campaigns and keywords

How is RoAS calculated? 
RoAS = Ad Revenue / Ad Spend 

4. Cost Per Acquisition (CPA)

Cost Per Acquisition is an important marketing metric that indicates the total cost of acquiring a new customer from specific campaigns. While this figure can be applied as narrowly or broadly as you wish, it is generally used concerning media spending. Cost Per Acquisition focuses on the cost for the entire journey, from when the customer first contacted your product to their purchasing of it. It is important to keep in mind here that CPA is different from CAC (Customer Acquisition Cost). Unlike CAC, CPC looks at more granular details and dives into specific channels and campaigns instead of looking at an average customer acquisition cost across multiple channels. 

What does CPA help marketers with? 

  • Measuring the aggregate cost to acquire a shopper on a campaign, traffic segment, or channel level
  • Measuring effectiveness of campaigns and their underlying strategy

How is CPA calculated? 
CPA = Ad Spend / Orders

5. Click Through Rate (CTR)

A CTR is simply the number of clicks your ad gets divided by the total number of impressions. For example, if you get one click on your ad per 50 impressions, you have a 2% CTR. On average, the CTR for Amazon Advertising is  0.3 – 0.5%. Anything above that is considered good! 

What does CTR help marketers with? 

  • Checking the effectiveness of different advertising campaigns
  • Finding out the keywords that are driving ads. 
  • Lower CTR could mean poor keyword ASIN mapping, which could help you in identifying unprofitable search queries, etc. 

How is CTR calculated? 
CTR = Clicks / Impressions 

6. Average Order Value

Again, this is a very important eCommerce metric that tells you about the amount every customer spends per transaction. Every online seller must pay attention to AOV. Simply put, AOV can help data-driven businesses understand whether they should scale their growth and revenue. Increasing AOV is one of the best ways to balance the CAC, increase ROI, and reduce the payback time. This essentially means that a higher AOV enhances your business profits. This can be accomplished through cross- and up-selling of complementary products. For example, you can advertise pillowcases on your bedsheets’ product page or run promotions on pillowcases, when a customer buys sheets. 

What does AOV help marketers with? 

  • Provides insights concerning the changes in customer order size over time
  • Helps when strategizing product mixed/bundles/bulk ASINs

How is AOV calculated? 
AOV = Revenue / Orders

7. Ad Conversion Rate (Ad CVR)

Ad Conversion Rate is the percentage of visitors who engaged with your advertisement campaign and landed on your product page to complete the desired actions. This shows one thing – to define conversions, you need to first set accurate business goals. 

What does Ad CVR help marketers with? 

  • Suppose the CVR is low or constantly dropping. In that case, marketers may need to clean up their product ratings, improve their listing pages, and perform elementary market research to find competitors’ product options. 
  • Helps marketers ensure that products listed for certain keywords with low conversion rates are relevant

How is Ad CVR calculated?
Ad CVR = Orders / Clicks 

8. Percent of Sales from New to Brand

The new-to-brand sales help understand the amount of revenue made from customers who had not interacted with the brand in the last year. Objectively, this metric helps analyze acquisition efforts and reflects how new people react to the brand online. Therefore, the percent of sales from new-to-brand customer shows the percentage of revenue that the seller can attribute to new customers. 

What does this help marketers with? 

  • Percent of Sales New To Brand is the most important metric for sellers to assess their acquisition efforts and tweak it accordingly. A reducing New-to-brand sales number may indicate stagnation or decline in the brand sales, and some corrective actions may be needed.

How is this calculated? 
Percent of Sales New To Brand = New-to-brand Revenue / Ad Revenue

These were the eight important metrics that every Amazon seller should be keeping an eye on. With the insights derived from these KPIs, you will then be able to tweak your marketing, acquisition, and even sales efforts to help your business grow faster! After all, growing your eCommerce business is largely about measuring and tracking the right KPIs.

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