072: Tactic Tuesdays: My Conversion Rate Dropped 50% Overnight

072: Tactic Tuesdays: My Conversion Rate Dropped 50% Overnight Speaker 2: Welcome everybody to another Tactics Tuesday for the Brand Fortress HQ podcast. Today we're talking about something that is very timely that we see happen from time to time for brands where you just have one of those situations where you see a big drop in your conversion rate. And, you know, what we want to cover here is what, you know, what do you do in those scenarios and, you know, what does that look like? So, you know, with that, Mike, if you wouldn't mind, I'm going to hand it over to you. And if you can give a little bit of background on maybe, you know, the issue that you're working with right now. Speaker 3: Yeah. So, I mean, anybody who's been listening to the podcast for a while knows that we have an ongoing problem that's been, you know, a result of a problem with inventory and in the tariffs and, you know, so on and so forth. So that's been a little bit of a cascading event that we've been trying to address. But in that, we ended up end of May, around May 26th ish, somewhere in there, our conversion rate dropped off a cliff. And it seemed to be Brand wide, quite frankly, you know, and we, you know, obviously it was a huge issue because what ends up happening then, anybody who's listening knows this, but, you know, conversion rate has a snowball effect, right? Same as click-through rate has a snowball effect that, you know, there's this cascading, you know, set of issues. So our conversion rate dropped by like half. And when that happens, first of all, your ad costs begin to skyrocket because obviously your ad costs are based very much around what is your conversion rate. If I send 10 clicks to my page and my conversion rate was 20%, I normally get two sales and now it's 10%, I only get one sale, obviously the expense versus the revenue and profit generated on the backside becomes very lopsided. But then worse than that, that snowballs more because if the cost goes up too much, then it becomes not profitable. And so then you have to pull back on your bids because You can't spend as much, you know, per click. And so then you're getting less impressions. And so now you're getting fewer sales overall. And so revenue, you know, like everything just cascades in a downward spiral. And so that's kind of what we were seeing. In fact, that's actually how we noticed it initially was that we started seeing our ad costs go up and our impression share started going down. And we found out from our agency that they were pulling back on bids and ads because the cost was climbing so fast. And it turned out it was because of this conversion rate problem. And so then it was, okay, you know, what do we do? You know, like we need to find the problem. We need to figure out where we're leaking so that we can fix it. And another thing that I think is critical to point out here is for us, right now this is a massively big issue. It would be a big issue for any brand, but for us it becomes even more significant because at the moment, because we're so high priced in the category and we've had some trouble regaining some rankings that we used to have because of a lot of low priced competitors, we are very lopsided in terms of our organic versus ad share for revenue. So, we're probably 60-40 ads to organic, maybe even 65-35. This is maybe even a little closer. And so, when you're in that situation and conversion rate drops, because you have to start pulling back on ads, that is the bulk of our sales. And so, that's a really significant problem. Whereas, if you're organic-based, you know, like if we were 60-40 organic to ads or 70-30 organic to ads, Yes, conversion rate is a problem. Revenue is still going to go down, but you don't necessarily have to pull way back on ads and it's not going to drop as precipitously as it is for us. You still need to find the problem. You still need to fix it, but it's just it compounds that much faster in a situation like what we're in and so it is one reason why as a brand I do recommend that you really pay attention to that split in terms of your ad versus organic sales. And if you start pushing past 50-50, you probably have a problem. And that's kind of where we are. But you really want to be 60-40 organic to ads, maybe even 70-30 if you can pull it off. Speaker 2: Yeah, a couple of things that, you know, I think about just to take a step back that I think is important is the first thing is that, you know, thinking about this from an inputs and outputs is, you know, and this is typically what happens is you start seeing your sales Drop. And then I think you guys took a great first step in looking at, you know, what are, you know, when I think about this, what are the three kind of inputs that probably have the biggest impact to figure out what to dive in on? And you mentioned, you know, pretty much all three of them, what you talked about. So the first one is checking your impressions just to say, Hey, you know, are we just getting less sales? Because, you know, we're getting, you know, less at bats where we used to get, you know, a hundred thousand impressions a week. Now we're only getting, you know, 50,000. And then looking at what your click-through rate is, and then finally looking at what your conversion rate is, because those three metrics are kind of the main three inputs that I think about as far as what's going to lead to the output that we all want, which is more sales. And then when you talk about conversion rate, the other thing that I would just encourage people that, because I feel like this happens to every brand that's been on Amazon long enough that they go through some sort of issue like this, where things kind of feel like they fell off a cliff, is when we're talking about conversion rate, there's a total conversion rate, and then there's also an ad conversion rate. And I think it's important to split those out because we've definitely seen it with some of the clients that we work with on their accounts where their organic sales pretty much dropped to nothing for a week, but their ad sales were still super strong. And so understanding, you know, is it my ads just didn't do the job that they were supposed to, or is there something on the organic side that's not performing like it should be? Speaker 1: Yeah, I think what's important with everything that both of you have talked about is, and this is a conversation that we've had a lot of times, and it's about knowing your numbers. And I think being able to view all of that data in funnel form, in the way of a funnel. So start with impressions and work your way all the way down to conversions. And if you look at every one of those stats along the way, it's nine times out of 10, 9.5 times out of 10, the issue will We'll show itself as you start walking through that. It's either like Jon said, it's either an impressions, it's either traffic or conversions, and there's traffic click through or conversions. And those are really the main three things that it is. And if you look at all of that data, I have a spreadsheet. It's not very sexy. It's just a spreadsheet with a whole bunch of numbers on it, but it starts at impressions and then it goes to page views and then it goes all the way to conversions. And I look at every single step along the way. And a lot, most of the time you're able to diagnose what the issue is. And I mean, it's not always, when we're talking about conversion, the first thing that comes to people's minds is images and your title and pricing and that kind of stuff, which obviously all that stuff is very important, but it's not always. I think a big part of that for as we start digging into the issue that Michael is talking about is that we just switched over agencies as we talked about a couple of weeks ago. There is a learning, no matter how good the agency is, there's a learning phase and there's some restructuring of campaigns that they do. So there's going to be some sort of an adjustment up or down on click-through and conversion rate, just on how they're targeting in terms of PPC. So it's not always your images when you're talking about conversion. It's not always your title. Price is obviously a big lever, but I think being able to have some sort of, whether it's a software or a spreadsheet that you use, looking at the data in full funnel form It makes it a lot easier to figure out where the issue is and then how to address it. Speaker 3: Yeah, I think so. One of the things that comes into play here is then, okay, so what's the game plan, right? So focusing on conversion rate, let's say, then the first step is to evaluate if conversion rate is what dropped. Then that isn't necessarily, you know, a result of a change in impressions or click-through rate, although there may be a connection, you are going to want to look at click-through and impressions because if the only thing that really changed, like at that point, like, so first of all, you got to go back to the data and figure out when did the change happen? Because once you know when the change occurred, Then the question becomes, okay, well, what other metrics got worse when that conversion rate went down and how quickly? Was it simultaneous? Did one precede conversion rate? Did something else come after conversion rate? What was the sequence of the cascade? Because maybe conversion rate isn't the starting point. Maybe conversion rate happens somewhere in the middle of this cascading series of events and you just kind of work your way back to find the one that was the beginning of that cascade. But let's say conversion rate was the initial part of the cascade. Then the question becomes, okay, so my impression share hadn't immediately come down or wasn't coming down before that, so that doesn't seem to be related. My click-through is also fine. It hasn't changed at all. But one of the things that that tells you, more than likely, it's not an absolute, but For conversion rate, your images matter, your listing copy matters, your A-plus content does matter, your pricing obviously matters. But then the question is, okay, will some of those things affect other things? For instance, click-through rate. Your click-through rate is very much tied to your main image and your type. Conversion rate also is fairly relevant from a main image and title standpoint because if somebody clicks on your main image and they think they're getting something that it turns out your listing seems to indicate they're not getting, then they're not going to buy. So conversion rate goes down. So the question is, did you do something on your listing? That caused a disconnect between the main image that they clicked on and the image, which is telling them what they're going to get when they actually spend the money, right? Is there a disconnect there? Or did you change something in the main image? So in other words, let's put it this way. If you knew what your numbers were coming in, And you see, oh, my conversion rate dropped. But then you look back, again, this goes back to what I was saying a second ago, you go back and you look at, okay, click-through precedes that. What happened to my click-through rate? Well, my click-through rate jumped previous to my conversion rate coming down, right? And maybe they were fairly synonymous, but the point was I've got click-through rate going up and conversion rate going down. What happened? A logical extension of that is I changed my main image and it caused a whole bunch of people to click on my listing who aren't a good fit for what my listing says the product is. Those kind of mental gymnastics are the things that you need to run through to figure out where was the problem. To get to the heart of this, Matt and I have gone through all of the mental gymnastics that we can come up with as well as the agency that we work with. We've not found the actual culprit. So, I mean, I'm speaking of all these things and they're all important things that you need to pay attention to and you need to walk through that process and there's some other things we should talk about too. But it's also important to recognize you might not find the problem, like the actual problem. You may not be able to pinpoint it. Might be something Amazon did that you're never gonna see, you're never gonna know, and who knows, maybe next week they change it back and all of a sudden things are rosy again. Could be something a competitor did that you can't see and you don't find. So at the end of the day, recognize you need to look for it. You definitely need to dig into the data and see if you can find it. But if it becomes fairly clear that you're not going to find it quickly, then you need to find another solution because realistically, although the problem is conversion rate, the real problem is that means less money coming into your pocket, right? Cash flow is going to decline, profits decline, you know, like all That's the end point that becomes the actual issue, right? So you need to find another solution that's going to address that end pain point. And that's where we are in this process. We didn't find the actual problem that caused that precipitous decline. So we're having to find a different solution. So at least we can solve the problem of revenues down, profits are down, cash flow is down. You know, we're screwed if we don't figure, you know, what the solution is. Speaker 2: Yeah, I think that's such a good point is that sometimes, you know, as much as we'd love to find, you know, that one thing that was the problem that if we just, you know, flip that switch again, everything will go back to, you know, being hunky-dory and rosy again. The reality of it is that Sometimes there are those simple fixes and sometimes there just aren't those switches to flip. So you have to find, like you said, Mike, another way in order to win. And sometimes that means putting in significantly more time to make up for the sales velocity that you lost and the momentum. Speaker 1: Well, I mean, sometimes it's not a lever that you can pull. And I think that's what Mike was alluding to is that, I mean, sometimes it's Amazon. Sometimes you get unindexed from all of your keywords. Sometimes you are placed in a separate subcategory, a different subcategory than you were. Like sometimes it's something that Amazon did that Like Mike said, it's not easy to, and that's the challenge that we run into as sellers on this platform, is that there's not always a smoking gun. And you can spend your days chasing smoking guns, which is what Mike and I have been doing the last couple of days. Or you can start coming up with an action plan. And that's for us is that the one constant on Amazon is that things change all the time and you have to be prepared for that as a seller on the platform. And I think that our skills combined and the knowledge of the platform combined, it's going to end up We're going to get back to where we were. Who knows if we'll ever find the smoking gun, but I think, you know, knowing your numbers, understanding how to find the data and how to look at the data and how to let the data tell you the story, but then also keeping in mind that there's not always going to be a smoking gun with an easy lever that you can pull. I think those are super important things to keep in mind. Speaker 3: Well, I think too, you know, it's, it's reasonable to say that. If you're not tracking the changes that you make, Then, it really makes it difficult to go back and pinpoint what the change was. If it's something that you actually did that caused this precipitous decline in click-through rate or conversion rate or whatever it is, you might be able to go back to the data and you might be able to pinpoint, oh, hey, it's click-through that's the problem, and it happened on this date, and we're pretty sure it's related to either the title or the image, whatever. But if you have, say, numerous people on your team that maybe do listing updates or image updates or things of that nature, and you are not adequately tracking who does what when and why they did it, then that becomes an additional problem. And I'll fess up to the fact that we weren't tracking well enough. You know, what things were happening, who was doing it, when did it happen and why did they do it? And so I literally have created a spreadsheet that we didn't have before that its only purpose is on a SKU basis or ASIN basis. You know, it has, you know, you check a box to say, what did you change? Main image, one of the secondary images, which one, you know, title, bullets, description, price, you know, all the number of things that you could change related to a product detail page. It automatically enters the date and the time of the change and then we're entering in, okay, why did we make this change? What were we trying to improve? Were we trying to improve click-through or conversion or whatever? What was it if we change the image? What did we change about the image? And then I actually have a link. Because we've started doing a lot of our design work actually in Canva, I have a link to the actual page within our Canva document that has all of the main stack of images for the product and it links directly to a particular page that is this design element. So it has what was the previous and what is the new. And then there's a results tab. And so now going forward, it doesn't help us with this problem that we just ran into, but at least going forward, if we see a precipitous drop on June 15th, Well, I can go back to this spreadsheet, look at the dates, find out what changed on June 15th or 14th or whatever, and I can see, oh, well, we did this, or at least these are the things that we did. Would any of those things, you know, have affected us in that way? If not, well, then it probably wasn't something that we did related to the product detail page. So, it gives you a lot more visibility that you don't have and Amazon doesn't track that. You don't have a history, you know, who did what when on Amazon to know when did those changes occur. So, I think if you're not tracking those things, I would create a spreadsheet and an SOP to make sure that whoever on your team is making changes like that that it's being logged on that sheet so that you can tie the data together with the actions that have happened on your account. Speaker 2: Yeah. And depending on what software you're using for ads management or other things, some of those softwares do have some of that capability as well. The only ones that I've seen it on are, you know, fairly expensive. So that might be something that if you're working with an agency that they have, otherwise as a brand owner, Those things do, you know, that software can be kind of expensive. And so I think, like you said, Mike, having something, sometimes, you know, having a Google sheet is much better than having nothing. Speaker 3: Yeah. Speaker 2: The other thing that I would say is that, you know, very big on, you know, analyzing data in order to kind of figure these things out. I think it's important for Amazon specifically to make sure that when you're looking at the data that you're looking at, Search query performance data differently from what you're looking at from like your ads data and that type of stuff because those things are calculated differently. And I'm not going to go into all the details on that because I don't think it's really necessary. I think people can find plenty of material out there on how those things are calculated, how they're calculated differently. But I think it's just important to know that those numbers, how they get to that total is different. So just to be aware of that, of make sure that if you're looking at, hey, what was What was our data before? What was our impressions? What was our conversion rate? Those types of things. If you were tracking that on your using search query performance data, that's what you should look at, compare it to, or if you're looking at based on your business reports and your ad reports that you use that data. It doesn't mean that you can't use your search query reports to troubleshoot it because you absolutely should, but just make sure that when you're comparing data that you're comparing apples to apples and oranges to oranges in those scenarios. Speaker 1: Yeah, I think another important stat that you need to be paying attention to in this conversation is something that Mike mentioned in the beginning. When your conversion rate drops, there's a cascade of things that happen, bad things that happen. And one of them is your organic rank. And that's one of the easier things, especially with the tools that are out there on the market now to track your organic rank. That's one of the first things that I checked when we noticed our conversion rate was organic ranking. That was one of the first things that I was concerned about. And your BSR and your ranking, those are other stats that I think are important to be paying attention to because those are what are the most affected when your conversion rate drops. So I think that's also an important thing to track. And the amount of sellers that I talk to that aren't tracking organic rank is pretty astounding. Because I mean, for me and the way that I think about advertising is Advertising is a way to increase my organic rank on the keywords that matter. And if you think about advertising in that way, then you will start to draw that connection with how advertising affects your organic rank, but then also how conversion rate affects your organic rank. And when you see a drop in your conversion rate, you're almost assuredly going to also see a drop in your organic rank, which then has amplifying effects on the rest of the things like advertising, for example. Speaker 2: Well, yeah. And I think it's a little bit of a tangent, but I think, you know, personally, I think organic rank is a little bit of a misnomer in the sense of, I think at this point, it's pretty much, it's more accurate to call it earned rank. Because really what you're doing is, is that you're, you know, you're spending money on ads and you're, you know, making sure you're building up your listings and those types of things in order for Amazon to give you more visibility to prove to them that they're going to make more money off of showing your product ahead of your competitors. And I think at this point in the game, in 2025, you really have to earn that spot. It doesn't come to you for free. At least that's what I see with the vast majority of the clients that we work with. Also, I'd say something, and I don't know if this is true in your case, but when we do see this, one of the things that I would encourage people to check right away is to look at if you've been running any sort of promotion and you're used to, especially if you're tracking this week over week or something like that, and that promotion ends or you lose something like strikethrough pricing, it could be that you didn't change anything on your listing or didn't change anything about your ads. But with that change in kind of perception and pricing and badging, that can have a pretty significant effect on your conversion rate. And so, you know, you might be driving yourself crazy to figure out, hey, what did we do differently? And the reality of it is, is just, you just lost price through striking or strike through pricing on your listing. Speaker 3: Yeah, that's a really good point, Jon. To be honest, I hadn't actually looked at that. I see that most of our hero SKUs, I believe, still have our strike through pricing. So that may not be it. But that is a valuable piece that hadn't really occurred to me. Because we know, I mean, it's obvious that strikethrough pricing does have an effect on conversion rate. And so if you lost that, that would definitely be relevant. I think a couple other things to pay attention to here, and then I think I actually kind of want to change gears just a little bit because I think the last half of this conversation might be better served down a slightly different road. We'll see if you guys agree on that. One thing is, one of the things that we did fairly early on here was I ran a pick food test just on our landing page on our PDP because, you know, one of the things that You just don't know if you made a change. If there wasn't any change to your product detail page and you know for certain that that's true, maybe this isn't a valuable piece. But I would say it's a valuable piece regardless because it's always good to get feedback. PickFu has one of their testing is just straight up go to this page and tell me what you thought about it. Would you buy this product? If not, why not? If so, why so? And so I sent out a PICFU on it and just sent them directly to, you know, some of our pages to find out what Did anybody say, hey, I hated this, or this didn't make sense, or this didn't line up, or it looked fake, or whatever? That didn't happen. We got the results back. Most everybody said, hey, I would buy that. Which, by the way, slight tangent here, I did determine that when you run a victory test, you can actually include an attribution link. You can use an Amazon attribution link in there. It goes further. It goes further. If you use Switchy, which we use to create short links, you can put your attribution link into Switchy, create a short link out of it, feed that into PickFu, and you can pixel them. So you can pixel people who actually click the link to go to your listing. You can attribute them so that if they actually buy, you get back the referral bonus. So you might even be able to get some sales out of it and make back your pick food fees. But anyways, we sent that out. A whole bunch of people said no, I would buy it. Very few people said no. And the people who said no, it wasn't really any major thing with the listing that we could really fix. So it became fairly clear that wasn't the problem. But I would recommend that. I think it's a great idea. Consult with other sellers. If you're not a part of some chat groups on WhatsApp or some pay-for groups that maybe you can be a part of, some small masterminds, things like that, where you're shoulder to shoulder with other sellers at and above Some below two so you can actually help other people, but there need to be some sellers in there who are at least at or above your level of play on the platform so that you can consult with them and see what's up. Consult with ChatGPT or some other AI, Claude or something, and ask it questions. See if they can find the problem. Put your data in there and have it analyze the data. See what it comes back with. Those are all tools that you should be using to analyze the situation. But I think at the end of the day, going back to something I said earlier, which is you may not find it, then the question becomes, how adept are you? And we're going to be looking at figuring out other ways to make an end run around whatever this problem is so you can get your revenue and profits back up again. What are the levers that you can pull and how can you pull them? And so I think it would be really useful to kind of focus on, you know, some of those strategies and maybe what we're doing right now to, you know, get around this problem because we're there. Speaker 2: Before we dive into that, would you be willing to spend a couple minutes on just maybe, you know, at a high level, You know, you and the agency you work with and your team have done to try and troubleshoot this because while it may not be the answer for you, I think for our listeners out there, you know, something may ring in their, you know, in their head and go, Oh, you know, that's something that, that is the issue for me in order to resolve the problem when they run into it. Speaker 3: Well, I would say a couple of things. One is, we'll stay focused on conversion rate at the moment and you can extrapolate to other areas as you need. But on the conversion rate side, we know the specific parameters that we have control over that will affect conversion rate. So, if you can't find the ultimate problem, the question is, I still have to get my conversion rate back up. Like, I can't, there's no way I can continue like this with the conversion rate being where it is. How do I do that? And so, what are your levers? Your levers are price, which either means changing the regular everyday price, or sale pricing, or deal pricing, or coupons, or any combination of those three. So, pricing is an optional lever that you can pull. We'll come back to that in a second, but it's there. Your image stack, and in fact, your main image is, I would say in a lot of ways, your main image and probably your second image are the ones that are the most critical ones because one, changing your main image And again, paying attention to the connection between the main image and the listing, right? Make sure that both of those are speaking to the same avatar. They're speaking the same language. They're promoting the same thing, like there's no disconnect between those two things. But adjusting that main image, if it increases your conversion rate, as long as, you know, As long as you haven't created some sort of a disconnect, it probably will also increase your click-through rate, and so then you have a compounding effect there. So I would definitely focus in on that and make sure that you're doing split testing on that. You can use PickFu or something like that for quick testing, but then obviously you're going to have to use Amazon Experiments. So that would be one. Title is another. Same as main image. It affects both click-through and potentially conversion, so focus in on it. The rest of your listing is relevant, but as you move down the page, it becomes less relevant. Pay attention to mobile versus desktop. Because sometimes you make a change that works really well on desktop, but if your product is one that generally sells far more on mobile than desktop, and I would say in this day and age, most products are that way, make sure you haven't done something that made the experience less useful on mobile. Like maybe you changed out some image, and on desktop it's great. You know, it's a really good conversion driver, what you did, but it's a little text heavy or something, and it can't be read on mobile, and so it's not producing. For us though, where we have ended up is on pricing. Now I'm going to issue a caveat here because I've said this a million times and I still agree with this perspective and that is don't go to price first. Far too many sellers go to price first as the lever that they pull in order to increase click-through or conversion or whatever it is. I think that's problematic because there's a lot of other levers that you can pull. But I will say this, if you're in a situation where you need to pull out of a nosedive really fast, Unless you really see clearly some specific change that you are convinced is going to have a drastic effect via your main image or your listing or other factors that you can employ, price literally is the fastest lever that you can pull and the one that will likely have the most drastic and immediate effect on both click-through and conversion rate, both of which are then going to have an end reflection on profit and revenue. The question is, where is your price already and how much room do you have to move? And I would say two things are true. If you are a low-priced product in your category, you probably don't have any room there. It's just a reality. And so then you're going to have to look to other levers because you can't afford for it to be unprofitable. Maybe you could afford it in the short term, but since you didn't find the actual problem that caused the conversion rate decline, chances are if you change pricing and maybe your ranking climbs a little bit and you know, like, but those are going to be temporary because if it's not profitable, you can't sustain that. And once you turn that off, then you're back to square one again. So it didn't help you. You just lost money and then you're going to lose those rankings. So, if you're low-priced, price is probably not the lever. If, however, you are high-priced in the category, as we are, really high-priced in the category, then what I did was, and again, we always say know your numbers, but I think, you know, what's interesting about that is that there's degrees of knowing your numbers, right? And sometimes you know some of your numbers, but you don't know all of your numbers, or you don't know your numbers well enough on a SKU basis, or you looked at your numbers three months ago, but the numbers aren't the same now as they were then, and if you're basing your impression on what to do on those old numbers, you're going to make bad decisions. So I just went back to the drawing board, and I just brought up a spreadsheet and started plugging in, and I was looking at all of our SKUs. I was being very careful to make sure that I had very updated numbers. What is our land of cogs? What is the royalty that we're paying? Because we do have a product that we have, an inventor that we pay a royalty to. Looking at, okay, what's the most up-to-date pricing on our FBA shipping fees, our fulfillment fees, that sort of thing. So I put the spreadsheet together and then I started crunching numbers because the thing that we discovered recently, and it's not This isn't rocket science, but I think we sometimes get ingrained like, oh, our brand, Tacos, tends to be X, Y, Z, right? And so if I lower my price on the product, it's kind of like government, right? Like when they say, oh, hey, we're going to raise taxes and that's going to bring in all this extra revenue. But they don't pay attention to the fact that if they raise taxes, business owners are going to change the way that they do business. And so you can't directly, you know, extrapolate what those numbers are going to look like just because you raised, you know, the tax percentage. Well, the same thing here. If you look at it as these are kind of my baseline numbers. If I lower the price of the product, then my end profit drops by that amount. Let's say I drop my retail price by five bucks. Well, you can't look at it as, well, now my profit dropped by five bucks because that's not true. One, your referral fee goes down because it's a percentage of the retail price. And also pay attention to It's different. The referral fee is 15% of your retail price. But the referral fee is, you know, let's say your profit margin, let's say your CM3 is like 30%. Well, if the referral fee is 15%, which we know it is, then even though referral fee is only 15% of retail, it is half of your profit. Like if you compare the numbers, right? So when you make a change to your retail price and your referral fee goes down, your profit doesn't go down nearly as much as your retail price did because you make up for it somewhat in your referral fee and it's pretty significant on the other end. The other thing is your tacos is going to change because if you change your price, it is almost a guarantee. I mean, depending on how much you change the price, of course, that your click-through rate is going to change. It's going to go up. Your conversion rate is going to go up, which means your ad costs are going to go down in relationship to how much you make. Your ROAS is going to improve. Your tacos is going to improve. The thing I would highly recommend is taking a spreadsheet and then start calculating out and estimating some changes. You know, if my taco starts to drop, And my click-through rate goes up a little bit and my conversion rate goes up a little bit. My impressions probably go up a little bit because of all of these other confounding factors. How does that change the end point? Is my profitability still okay? And what I found was that when I started playing with those numbers with very conservative estimates, remember that all of this stuff compounds. Your tacos goes down, your referral fee goes down, your conversion rate goes up, your click-through grows up, your impressions go up, and you start looking at those end numbers, you'll be amazed at how much that compounds at the end point. So we've got products where I am nearly convinced that we can lower the price on the product by 20%. And we still end up with a CM3 that's 30% plus. And our profit margin, although it goes down, does not go down nearly as much. We still have an ROI of basically 100%. And from my perspective, If I can have a CM3 that's in that 30% range and an ROI that's 100%, I am totally okay with that. Those are good numbers. I just found out that we can make a significant change to our pricing structure. And we can have a drastic effect, I think, on the endpoint and our overall profitability. So I just think that's the lever that we're pulling right now. It's not as if we're not doing other things. We're looking at main images. We're making adjustments there. But price is the one we can pull quickly. And what I discovered was I can actually pull that lever a lot harder than I thought I could pull. Like I had in my brain, this is where our profit margins are. There's no way I can make that sort of adjustment, you know, of that amount. We can't afford it. Well, it turns out I'm pretty sure we can afford it. And that's the lever that we're pulling right now. Speaker 2: Yeah, I think that's why it's so important to do some forecasting with the data and also the compounding effects that you talked about, Mike. What I would add to that, because obviously we pull price in both directions as a lever, both up and down with the clients on a regular basis, is Just be careful like that. You know, think about it like the, you know, almost like the, the rocket fuel or something like that. You know, the nitros, if you will, for your business of, it will send you in one direction really fast. So make sure that it's the direction you want to go in. Cause Amazon is very kind with you as far as, you know, it'll let you lower your prices as quickly as you want. Problem becomes then if you want to raise your price, you know, back up, that can be very challenging because there is, you got to have a reference price most of the time. And then, you know, if you raise it too much, your listing ends up getting It ends up not suspended. What's the word I'm thinking of, Matt? Speaker 1: Your buy box gets suppressed. Speaker 2: Yeah, that's what I'm thinking of. Your buy box gets suppressed, which means that it's almost impossible at that point to buy your product and your listing becomes... You're going to see your sales drop on that listing by 90%. And so that's why something that we really look at is If we're doing some of that price testing, especially in bigger increments of using a coupon or within Amazon's promotions that they offer, because then what it allows you to do is, okay, let me test of what does 20% look like off my product. And then the added benefit to that is that Amazon actually gives you additional track because they know, hey, you're probably going to see a bump in conversion rate and those types of things. So like you said, Mike, you know, that can be a real great lever to pull and using a promotion allows you to pull it in more of a temporary way so you can actually measure that. Whereas if you just straight up drop your price by 30%, if those numbers don't work out the way you would hope forecasting, trying to raise your price back up, you know, something like 30% can be a pretty arduous process. Speaker 3: Yeah, no, it's a really good point. You know, that reference price point is really critical, you know, that you be careful that you don't adjust it in the wrong direction too quickly. And that's exactly what we're doing is we're running sales and promotions right now, you know, kind of test what that pricing differential looks like. And of course, obviously, the differential is going to be more extreme when you run it as a promotion or a deal or a coupon than it is if you just straight up change the price because psychologically people look at those things differently. But it does still give you an idea because it's going to be close. It's not like they're drastically different, but they will be different. But it is definitely something to pay attention to for sure. Speaker 2: Yeah. And if you're worried about, I mean, especially if you're worried about margins or, you know, If you want a way to test that out without having to give away the entire 20%, I know it's old school, but I'm still a huge fan of coupons because, you know, say you want to offer, you know, now, so I'll say two things. One, most of the brands we work with are in the premium, you know, premium area. They're high price products. So generally what I do is, you know, $10 off $100 product most of the time is going to outperform 10%. And the reason for that is because people understand what $10 is. We're not good on a search page in about a second and a half of figuring out how much 10% is off $100. Normally the numbers aren't even that round. So that's the first thing is think about how you're discounting with that coupon. And then the other thing is that typically only about 30% of those coupons actually get redeemed. So let's say you have a $100 product, you have $10 off. You know, if only one in three of those people actually click, you know, redeem that coupon, you're really only paying about, you know, three and a half bucks per unit in order to offer that, you know, quote unquote $10 off. So that's another way that we really like to test that out as well to see, hey, how much legs does pulling this price lever have. Speaker 1: Amazon recently, by the way, in terms of coupons, we just ran a coupon for one of our clients that it needed to be a percentage off instead of a dollar amount because we were adding multiple SKUs to the coupon and they changed that. Amazon changed it and actually the percentage off coupon takes up more space than the dollar amount coupon because it actually tells you in the search results, you will pay this amount if you click the coupon. So, it's changed now and you don't have to do math. It actually does the math for you and it takes up a lot more real estate under the coupon than just doing a dollar amount. So, it's changed. Speaker 3: They have to explain. Speaker 1: They have to explain. Yep. Speaker 3: So, yeah. Speaker 2: So, you get more… Well, I mean, I feel from a customer perspective like… You know, if you've got a product that's, you know, 30, 40 bucks, you're like, okay, so it's 15% off, you know, and you're like, okay, ready set 50% off on $30. I'm like, yeah. So yeah, that makes a lot of sense. All right. Well, I think this is a good place to kind of, at least for today, wrap on, you know, what advice we'd have for listeners when they run into this situation. Again, I think this is a great topic because If you're selling on Amazon long enough, you are going to run into this problem where your conversion rate, your click-through rate, or your impressions drop significantly, and you have to figure out either A, what happened, or Mike, as you brought up, importantly, hey, what am I going to do about it? And sometimes, what am I going to do about it is dramatically more important than what happened because you may never find exactly what happened. So with that, what It's kind of one takeaway that you would give for listeners when this happens to them as they're working on growing their brands on Amazon and beyond. Speaker 1: For me, it's already been talked about a couple of times. First of all, don't panic. Second of all, look at the numbers and have a way that you can look at the numbers in a way that you can see the full funnel. Impression all the way down to conversion and everything in between because in most cases, maybe not the issue will surface itself, but at least the direction that you need to go in your troubleshooting will definitely surface itself as long as you have the data in front of you. So yeah, just make sure that you understand your numbers, but then also know how to look at your numbers to be able to diagnose things like this. Speaker 3: Yeah. And I think be open-minded. I think it's easy. We like to think as entrepreneurs that we're open-minded and creative, right? And to some degree, that's true. I mean, probably, you know, in a lot of ways, more than the average person. But at the same time, we still get set in our ways. We still get kind of locked into certain viewpoints about our business, about our brand, about strategy, about, you know, all these things. And so it's kind of like, I mean, a lot of people have heard this story, you know, but the lady who's, you know, she cuts the ends off of her roast every time she cooks it and puts it in the pan, you know, and finally, you know, somebody asked her, well, why do you do that? And she was like, well, my mom does that. That's just how you cook a roast. And she asked her mom and her mom's like, I don't know. You know, my mom always did that. That's what she did. So that's what I did. And finally she asked her grandma and her grandma says, well, my pan was too small. I always had to cut the ends off the roast, you know? We have these things that we think are true, that we think have to be done or have to be this way, and I think the reality is oftentimes that's not true. For instance, price. I literally was kind of in this space where we don't have the room. We don't have the margin. There's no way we can make those adjustments to our price that would be significant enough that it would kind of overcome some of these problems and start moving the needle in the right direction. As it turns out, I'm almost glad that our click-through rate dropped because it forced me to investigate that issue further. And I actually feel that for our brand, that is the most critical and most useful lever that I think we're going to be able to pull because I think it's actually going to have massive downstream effects. On our organic ranking, you know, on our overall ability to cross sell products and all of those things. So, you know, I mean, stay tuned, you know, for our next reports to see whether it actually has the effect that I think it's going to have. But so far, we're seeing drastic reductions in our tacos. Our tacos have climbed up to like 23, 24 percent. And with these modifications to our price points, and we haven't even made all the changes. We actually only we ran a sale. We're running a sale on all of our products, but then we also have, well, we're running a coupon on all of our products, and then we have a sale plus the coupon on one of our products that we actually had room to move on. We actually have more room to move than that, and I think we may take advantage of it, but even where we are right now, our tacos dropped almost immediately from 23-ish percent to 14, 15 percent. So it's a massive decline and for us, because we're so ad-based right now, that's a big jump because it means that we can actually keep our ads running and be profitable enough, you know, and move forward with this. So just be open-minded. Know that there's solutions that you probably thought weren't solutions in the past. You might need to consider them this time around. Speaker 2: Yeah, and I'll leave with this because I think, you know, what you're touching on there is so important, which is, I think, you know, as entrepreneurs, when we run into that problem, first thing, you know, the first thing we feel is, man, this sucks. And that's, you know, totally rational and totally normal to feel that. And it's okay to feel that for a moment and then say, okay, how are we going to fix it? And how are we going to be stronger on the other end of it? Because each one of these, you know, issues that you run into is an opportunity to make your brand and your business even stronger. And I think if you look through that lens of like, how do I solve this in order to make And if you want to make the business and the brand even better, then it's a lot easier to put into that, you know, significant amount of work that in a lot of cases, you know, there's not the quick fixes because if there was, you would do them that to have that mindset going in when you put in a significant amount of work to figure out how the heck are we going to fix this thing? And then the last thing I'll also say that, again, I just want to double click on what you said, Mike, which is having. People that you can reach out to that are at your level or ahead of you is so critical in these types of situations because that's why I was excited to do this episode is because I've seen it happen. I've had it happen to myself and brands that I've owned. I've seen it happen to clients multiple times. I think it happens to everybody at some point that spends any significant amount of time, you know, selling on Amazon or quite frankly, any other platform. And so being able to reach out to people and say, okay, what are, you know, what are the common things that cause this? So that way I can either, you know, fix it using those or, you know, identify that that's not the problem. Just makes things a hundred times faster than trying to figure it out yourself. So yeah, if you don't have that community, find some people, reach out to myself or Mike or Matt, and we'll be happy to plug you into a great community. So with that, I think that's a great place to wrap for this Tax Tuesday, and we'll see you next time. Thanks for tuning into the Brand Fortress HQ podcast. 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