The numbers are out — in the US, Amazon continued to grow its share of online retail sales throughout 2021.¹ It’s further expected that Amazon’s net sales for Q1 2022 will grow between 3% and 8%.² There has never been a better time to upscale selling through Amazon.
With that said, plenty of Amazon Sellers have yet to recognize this and have remained rooted in a sales philosophy of one-off product pushes. Some have overcome the difficulty of extracting and integrating Amazon data and are generating new sales insights that are driving more cost-effective selling strategies — but what are the best ways to do that? In a nutshell, through Amazon analytics tools.
As Amazon continues to make more customer data available and introduces more marketing flexibility, analytics driven Amazon strategies are going to become the norm rather than the exception. Now is the time to invest in building existing tool stacks or selecting a suitable analytics partner that will both raise sales performance today and continually enhance its service to exploit future datasets.
Suggested reading: The biggest drive for growth in Amazon strategies is understanding your customer journeys — find out more and how to drive this by reading our newest eBook You Don’t Understand Your Amazon Customers and It’s Costing You.
DIY sales insights: Amazon Brand Analytics
Sellers commonly make use of Amazon Brand Analytics (ABA) insights by, for example, using the Item Comparison report to target ads to products that are compared with theirs, or by using the Search Terms report to identify keywords to include in product titles and descriptions.
Only limited, fragmented data is made available through ABA, yielding insights that are distinctly one-off product-push in nature. Moreover, the process of extracting insights from ABA is also distinctly manual. Putting aside the cost in time and effort, whether useful insights are uncovered at all is entirely at the mercy of individual skill, intuition (and a great deal of patience!).
But surely some insight is better than none? Yes, but it’s not necessarily enough. More advanced Sellers are moving beyond these limitations to incorporate much more powerful data-driven insights into their sales strategies. By doing so, they are achieving cost effective sales growth even in the face of rapidly increasing CPCs. Competitive parity for Amazon sales analytics is now much higher than simply trawling through ABA reports.
Suggested reading: Learn how to maximize ABA to its fullest potential with our eBook Mastering Amazon Brand Analytics.
New data-driven sales strategies
The rate of progress of the abilities of analytics tools has been astonishing and shows no sign of abating. Specialist analytics firms can stitch together data from ABA, Amazon Market Web Services, and third party data sources to then systematically sift through to yield new, powerful sales insights. Perhaps the most material change has been the migration from a single product purchase philosophy to a customer-centric one, with Customer Lifetime Value (CLV) being the master key to unlocking a wide range of new sales strategies along the sales funnel.
As Amazon has become a cornerstone for ecommerce, customer purchasing behavior is now much more expansive, extending across multiple product purchases across multiple points in time — and analytics tools are adapting to reflect this new reality. CLV captures the full nuance of customer purchasing behavior in the form of a customer’s net value (revenues minus comprehensive costs, across all purchases) over a customer lifetime.
Implementing a shift of marketing focus to CLV can have very rapid positive impacts. Here are some examples of the new insights and new sales strategies that the lens of CLV has made possible:
- Allowing Sellers to outbid the competition on PPCs to acquire new customers, because the full CLV return (incorporating repeat purchase expectations) can justify higher acquisition PPCs than the margin on the first product sale alone.
- Improving the effectiveness of cross-sell / upsell campaigns by using insights about customer repeat purchase and purchase journey behaviors within and across products to better select introducer and gateway products and facilitate better retargeting.
- Incentivizing loyalty and reducing the churn rate of high value customers with targeted offers and promotions off-Amazon.
Looking to the future
But this is only the beginning. Stimulated by competition from other online marketplaces, Amazon appears committed to providing more data and introducing further sales and marketing functionalities. We should expect Amazon to introduce demographics-based ads targeting, and maybe even release demographic data associated with each customer. Amazon is already launching new customer engagement tools such as live streams and SNS (Simple Notification Service.) It’s safe to expect that advanced analytics will soon be able to:
- Analyze unstructured data to, for example, directly link search keywords to CLV to identify which correspond to higher-value purchase journeys; or automatically analyze customer reviews for insights on product optimization opportunities.
- Develop segmented marketing strategies (e.g., segmented product and promotion design) to better match distinct underlying customer needs and purchase behaviors.
- Support CLV-driven A/B testing to compare and optimize the CLV impact of different ad and product content, promotional offers, etc.
- Exploit vs. explore to determine when it makes sense to exploit what your historical data is telling you are the top profit lift opportunities vs. exploring more experimental sales strategies that are as yet unfounded in the data but may yield new insights.
So what does more data and more marketing functionality mean? The manual analysis of today that is largely driving search optimization and one-off ads targeting will evolve into a highly data-driven, more automated strategic system that takes the full customer life cycle into account. Comprehensive, data-driven customer insights will shape brand management, product design and product portfolio management, content strategy, acquisition, cross-sell and retention campaigns, and targeting and inventory management.
Finding the right partner
So, should you build or buy these competencies? For most Sellers it will make sense to partner with a specialist analytics tool. Doing so will save on costs and resources while still providing access to advanced techniques and insights catered to optimizing Seller strategies.
We at Nozzle believe that Sellers should choose their analytics partner not only for its ability to lift short-term sales but also for its demonstrable commitment to the future of selling on Amazon. Here are some attributes you should look for when selecting your analytics partner:
- Democratization through automation. Sellers should expect their analytics partner to be migrating more and more managed analytics services to self-serve and automated execution. At Nozzle we are committed to continual releases of sophisticated expert functionality on a self-service, automated basis, including algorithm-led bid updates and automated search migrations.
- Value capture along the entire customer life cycle. The profit improvement opportunities from data-driven approaches extend all along the customer life cycle (from acquisition to cross-sell / upsell and retention) and beyond (e.g., in product design and inventory optimization.) The right analytics partner will support you with established workflows to target the full range of profit improvement opportunities – and not merely be single-sale focused.
- Data management and integration. Your analytics partner may well store and manage your Amazon data for the long term. Your partner must facilitate integration with off-Amazon data, whether your own (e.g., purchases made through your own website, your email lists or customer surveys you have conducted) or third party (e.g., sales originating on Facebook / Google). The right analytics partner will make data integration and management straightforward and conduct sales analytics across the consolidated entirety of external and Amazon data.
The very success of Amazon as a destination capturing a large share of the consumer shopping wallet is driving an inevitable professionalization of sales and marketing. Sellers that remain rooted in data-poor sales analysis will increasingly find themselves priced out of their markets. To see the benefits of customer-centric, data-driven analytics for yourself, start your 14 days free trial with us and begin transforming your Seller strategies.