Intro
These products are the backbone of your business and represent your customers' choices. They are a smaller part of your product inventory but are usually responsible for the biggest part of your revenue (e.g. 20% of products bring 80% of revenue).
Setup
Two inputs are required to setup the Bestsellers: Date Range and Revenue.
Date Range: Defines the time window from the revenue (or any other metric used in the filter). The useful range depends on how fast your business operates, and how often your assortment changes. The recommended value is
Last 30 daysbut if you want to capture trends faster, then set fewer days for a shorter lookback range.Revenue: Recommended to be set to a dynamic value using the operator "TOP" % of products. This returns the percentage of your products generating TOP revenue.
Check how many products don't have ZERO revenue in a given date range and avoid their selection to Bestsellers. As the Date Range decreases, so does the amount of products that get revenue (and therefore, the range for a suitable top % threshold is also lower). So first, check products with Product Revenue ≠ 0.
In the image below, only 32% of products have revenue, so the Bestsellers would perhaps be defined as A) definitely not anywhere close to 30% and B) 5-10% of products generating the top revenue.
How to Segment
Best Practice Tips
While the 80:20 rule is in general regarded as a good practice, it is not always the case. Ask yourself, what's your perception of your best-selling products?
If the number of products filtered through Total Spend is considerably lower, you can dedicate larger budgets to this group of products.
When promoting campaigns, It's useful to exclude fragmented stock from Bestseller campaigns, since popular and promoted items sell out quickly. Through this restriction of the segment parameters, you can be sure that only in-stock Bestsellers are promoted. Create a "Fragmented Stock" segment and exclude it from the campaign(s).
Success Stories
Evaluation
Questions that you can ask about Bestsellers:
How well are my Bestsellers actually doing?
What is their development over time?
Are we actually putting the right amount of money into our bestselling products?
Comparison to Promoted Products
At the beginning, the simple yet effective way to illustrate the value of Bestsellers is to compare them to Promoted Products. This immediately indicates that the majority of the invested budget and revenue comes from this segment.
If you optimize for ROAS and the ad spend for Bestsellers is not reaching 70-80% of the total, it is likely that there is room for scaling.
Looking at Bestsellers’ Overall Health Over Time
Usually, the top 20% of products are responsible for 80% of revenue. That may be true for any given product strategy but businesses are constantly changing and so too are segments constantly evolving. They can reflect different fragments of small decisions and the subsequent impact on the whole business. Consider the MoM comparison of Bestsellers below:
Looking more closely, there is an increase in spend and a significant increase in Product revenue from all sources. Revenue from DPAs is also seeing an increase but at the expense of lower ROAS and CTR.
What does it mean for performance marketing activities? Was there a special discount delivering a higher ROAS and CTR before? How did Google do?
Diminishing Returns of Bestsellers
Higher spend may not bring higher ROAS indefinitely. When you keep increasing the ad spends, at some point the efficiency goes down. This means that with each investment of money, you get less in return.
In this case, ad spend grew over the months, and so did ROAS. Halfway through January though, the inflection point happened where more spend did not translate into more revenue. Spotting the trend early means that you can decide to spend less aggressively while maintaining reasonable results.