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Episode 3 – Exponential Profit Growth with the Multipliers
Welcome to Episode 3 of the Treehouse metrics podcast
My name is Arnie Shields and I am your host, helping you with the skills and knowledge to work ON your Amazon business rather than IN your Amazon business.
In the last episode, we discussed the two fundamentals of business – Cashflow and risk
In this episode, I am going to introduce you to the first stage of a framework for understanding and running your Amazon business but in fact any business because the principles are the same.
This framework will enable you to forecast where your business is heading and make the necessary changes before it’s too late to ensure that you acheive your goals.
In today’s episode, I am going to introduce you to the five multipliers of business. Understanding these multipliers and how they work together will decide whether you succeed or fail in your business.
Understanding the multipliers will help you determine where you spend your time in your Amazon business, how to focus on the most important aspects of your business that are going to have the biggest result.
The importance of the multipliers is the understanding that it is not one big thing – product, tool or marketing idea that makes a business successful, it is the gradual systematic increases in each of the five multipliers.
So lets look at the 5 multipliers and how they are connected and how they work together.
The 5 multipliers are:
We are 4 profit multipliers and one asset multiplier
Increase just one of these profit multiplier and your profit increases linearly a straight line but if you increase 2 or more of these multipliers and you get exponential growth.
You can double your profit in 12 months just by just increasing each of the multipliers by 1% each month. so that is just tiny 1% increases.
Increasing the number of people that visit your product listings by 1% each month. That means increasing the number of sessions from say 10,000 sessions per month by an extra 100 extra visitors each month.
Amazon could deliver those extra visitors just by optimising your keywords and picking up another search term.
Increasing your conversion rate or unit sessions percentage – you can find your unit session percentage in Seller Central Business Reports.
We want to increase your conversion rate by 1% each month, So in the first month we increase the conversion rate from 10% to 10.1%.
An increase in your conversion rate in Amazon can be just due to getting more 5 star reviews by looking at your review follow up process. But 1% increase can be acheived by reviewing titles, bullet points and images.
An increase in the average price. Increasing your prices by 1% each month from $20.00 to $20.20.
Increasing your gross profit rate by 1% each month. Part of that increase will be from your price increase but lets assume that you decrease your costs by just 1% each month – so unit costs decrease from $14.00 to $13.86
This could be
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By Arnold ShieldsWelcome to Episode 3 of the Treehouse metrics podcast
My name is Arnie Shields and I am your host, helping you with the skills and knowledge to work ON your Amazon business rather than IN your Amazon business.
In the last episode, we discussed the two fundamentals of business – Cashflow and risk
In this episode, I am going to introduce you to the first stage of a framework for understanding and running your Amazon business but in fact any business because the principles are the same.
This framework will enable you to forecast where your business is heading and make the necessary changes before it’s too late to ensure that you acheive your goals.
In today’s episode, I am going to introduce you to the five multipliers of business. Understanding these multipliers and how they work together will decide whether you succeed or fail in your business.
Understanding the multipliers will help you determine where you spend your time in your Amazon business, how to focus on the most important aspects of your business that are going to have the biggest result.
The importance of the multipliers is the understanding that it is not one big thing – product, tool or marketing idea that makes a business successful, it is the gradual systematic increases in each of the five multipliers.
So lets look at the 5 multipliers and how they are connected and how they work together.
The 5 multipliers are:
We are 4 profit multipliers and one asset multiplier
Increase just one of these profit multiplier and your profit increases linearly a straight line but if you increase 2 or more of these multipliers and you get exponential growth.
You can double your profit in 12 months just by just increasing each of the multipliers by 1% each month. so that is just tiny 1% increases.
Increasing the number of people that visit your product listings by 1% each month. That means increasing the number of sessions from say 10,000 sessions per month by an extra 100 extra visitors each month.
Amazon could deliver those extra visitors just by optimising your keywords and picking up another search term.
Increasing your conversion rate or unit sessions percentage – you can find your unit session percentage in Seller Central Business Reports.
We want to increase your conversion rate by 1% each month, So in the first month we increase the conversion rate from 10% to 10.1%.
An increase in your conversion rate in Amazon can be just due to getting more 5 star reviews by looking at your review follow up process. But 1% increase can be acheived by reviewing titles, bullet points and images.
An increase in the average price. Increasing your prices by 1% each month from $20.00 to $20.20.
Increasing your gross profit rate by 1% each month. Part of that increase will be from your price increase but lets assume that you decrease your costs by just 1% each month – so unit costs decrease from $14.00 to $13.86
This could be