Untold Secrets from Market Masters

Jon Derkits.m4a [ 00:00:00 ]Welcome, everybody, to the BDSS Market Master's Mansion. My name is John Dirkitz, and I'm here today to tell you some of the untold secrets that were shared this weekend. I have a killer hack for you, and I'm going to go through it today. I'm excited, and you should be, too. Here we go. My question to all of you is, what if you could dial up a sales spike on Amazon at any given time for any given product? I'm not talking about voodoo here. I'm not talking about dialing up PPC. I'm talking about a tried-and-true strategy. Why do I say it's tried-and-true? Because I've done it before. Over. And over. And over again. All of these sales charts come from my own brand. [ 00:00:46 ] Those big spikes, those are when I've dialed up this strategy at will and taken products like this one, which was selling two units a day to 360 units a day. And I've dialled up this strategy at will and taken products like this one, it's an incredible strategy. It's an incredible tactic. It's an incredible hack. Whatever you want to call it, but it's something that works. I don't share with many people. I'm sharing with all of you today. And here's the formula. But before we get into that, you know I'm not going to come up here and not talk about retail math. So let's give you a little refresher on retail math, because it's my pride and joy. It's my favorite thing to talk about. [ 00:01:23 ] So for all of you that know me, you know that I talk about cash flow and retail math all the time in the Amazon space. What is retail math, though? Retail math is this: Revenue equals traffic times conversion times your average order value. All wrapped up in your inventory availability. The number one rule of Amazon is don't go out of stock. But once you've solved for that, this is the key to the rest. Any problem, any opportunity you have in your business can be solved by looking at what's your traffic pattern? What's your conversion rate? What's your average order value? To illustrate how powerful this is, I want to just walk through a couple of hypotheticals so that you know and can apply this in any given business challenge you have for your Amazon business. [ 00:02:10 ] Let's say your revenue is down and you don't know why. The first thing to ask yourself is, how does your traffic compare to the prior month? How does your traffic compare to the prior year in the same month? Once you've looked at that, now you can ask yourself, well, how does it compare to the prior year in the same month? To once you've looked at that, you can then break it down even further and ask, is it your PPC traffic or is it your organic traffic that's suffering? Each of these levers individually suggest different plans of action. But if you've isolated that traffic as the problem, you can then fix it quickly. Similarly, ask yourself the same questions around conversion. Is your product converting at the same rate today that it was converting last month? [ 00:03:01 ] Or last week? Or last year? Alternatively, Amazon now offers category conversion metrics. You can benchmark yourself against your competitors. How does your conversion rate stack up against them? This is going to influence your organic ranking. Finally, your average order value. That's how many units customers are buying at any given time times the average selling price of those. Your average order value is an easy thing to influence at any given time. Increase the price of your products or incentivize customers to buy more. Retail math. Revenue equals traffic times conversion times AOV. But I'm not going to stop there because Amazon is more than revenue, right? It's about the full P&L. And as Amazon sellers, it's important for us to understand how much we're making from the business. Not just in profit, but how much is going into our bank account. So, I want everyone to remember and internalize this. This is your Amazon P&L. It's your revenue, less product cogs, less freight to get product into the country, less Amazon referral fees, less FBA fees, less your fees to get your products into Amazon FCs. That leaves you with your contribution profit. Your contribution profit is also your break-even ACoS. To run advertising at a sustainable level, this is the max ACoS that you should be using. [ 00:04:41 ] Your contribution profit, less your Amazon PPC, leaves you with your net profit. But that's not what goes into your bank account. Because guess what? Amazon is an inventory heavy business. Retail is an inventory heavy business. You need to lay out money for inventory. That's your net working capital. Your net profit, less your net working capital, is your free cash flow. This is what actually goes into your business. And what you can take home and be proud of at the end of the day. The problem is, most Amazon businesses don't spit out a lot of free cash flow. That's why most sellers make the most money when they exit. Or at least 50% of what they'll ever make from their business when they exit. The sooner you can internalize this, the sooner you can optimize this. The sooner you can optimize this, the sooner you can bring more free cash flow into your pocket, into your bank account. With that all out of the way, you guys have waited patiently. I'm going to show you the hack that I promised at the beginning. [ 00:05:45 ] So my tried and true formula for the sales spikes. The sales spikes that I just showed you right here. With my business and many other businesses that I've operated. [ 00:06:02 ] Everything old is new again. Jonathan Swift said that once. There is something that I believe at a very deep level. Which is, the longer things have been around, the more they've stood the test of time. The more they are worth leaning into. Rather than chasing the latest, greatest, fancy new object, which is their hack. Social media promo codes, when done correctly, can lead to precipitous sales spikes. You can use it to liquidate products if you need to. Or if you just want to give yourself a temporary boost in your rankings and sales of products. And if we go back to those charts, what you'll see is a halo effect. I spiked sales for my products. And then the sales stayed elevated. So to leverage this tactic, you're going to set up a social media promo code. [ 00:06:44 ] Key to making this work profitably, and again, going back to the retail math, there are a lot of costs in there. I showed you that partly because anyone can dial up a social media promo code. Such that you give away a product for free. That's not hard. What I'm talking about here is dialing it up so that you actually make money in the process. Step one: Inch up your price in the days or weeks leading up to your promotion. The key to this hack, as you'll see in the next few steps, is that these deals often get picked up by Facebook deal groups. Who are not looking at the price history of your product. They're looking at the percentage discounts. As a measure of what they want to share with their community. [ 00:07:24 ] So the larger percentage discount that you can offer, the more likely that it's picked up. And the more likely that it essentially goes viral in front of those communities. So you inch up your price so that you don't give away too many margin dollars. Step two: Offer a discount of 40% or more. 50% is what I've seen as the sweet spot, or the minimum, for a lot of Facebook groups. Deal groups to organically pick up at 40%. At 40%, you're going to need to do a lot of outreach; you're going to need to communicate with admins, sell the deal a little bit. 50% or 60% - that gets picked up automatically. Admins of deal groups love this. But that's why you inch up your price in the beginning, so that you're not giving away 50 or 60%. [ 00:08:07 ] Step number three: When you set up social media promo codes, you're going to check a box that says make the deal. The promo code available to associates and influencers. That's critical. When you do that, these deals show up in the Amazon Associates portal, and they get picked up organically. If you don't do that, you're going to need to do a lot of leg work to put your deal in front of Facebook deal groups. Step number four: Reach out, cultivate relationships with Facebook deal group admins. I have found a lot over the years not through research, but rather. Looking at who organically has picked up my deals. And then building relationships. Giving them previews. Giving their groups exclusive access. You can Google, Amazon, Facebook deal groups. [ 00:08:52 ] Or, one of my good friends in the Amazon space, Brett Burkaw, has built an Amazon Rolodex of influencers and affiliates, and Facebook groups. And you can use this to find people to seed your deal to. So that's my hack. That's my secret. From the BDSS marketing world to the Market Masters Mansion. If you want to learn more. If you want to get in touch with me again. My name is Jon Dirkits. I run an Amazon agency called Color More Lines. You can find me on LinkedIn. At Jon Dirkits. Or you can find me on Twitter. At Guy Fossil. I also run a best at Amazon newsletter. The newsletter for the top 1% of Amazon sellers. I'd love for you to subscribe. And connect with me there. So I can share more of these tips with you. Thank you.