Are KOLL Loans Cannabilizing Your Sales: Part Two

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In part one of this series, we discussed the mathematical nuts and bolts of the differences in royalties for KOLL Borrows versus Platform Sales. If you have not read the article here, I strongly encourage you to do so before diving into this one. :-)

In the previous article, I showed mathematically how anyone selling his or her book for $2.99 or less is either essentially breaking even or making money on KOLL royalties.

Where the possible cannibalization of your book sales may come in is at a royalty of $3.99 or above.

However, factors beyond just royalties themselves need to be considered when deciding if KOLL is “stealing” royalties from your sales base.

This brings up the concept of the “quality” of a purchaser. Besides the initial royalty of a book, we look at several other behaviors of a purchaser.

  1. Do they end up a reviewer?
  2. Do they end up a newsletter recipient?
  3. Do they purchase any of your other books?

A good review is nearly worth its weight in gold on Amazon. As unknown authors (and anyone who ISN’T Stephen King or Janet Evanovich is unknown) we must prove to the buying public that our books are worth a) the purchase price, and b) the time spent reading them.

On average, you should normally receive about 1 percent of reviews from your purchases.

But let’s break that number down…

On average, at the FREE price tag, you are only going to get .02 percent reviews. A very, very, very low number.

However, since KDP Select rolled out, my average went up from 1 percent reviews to 1.3 percent reviews.

In the world of reviews, that is a HUGE increase. This indicates that the KOLL borrowing population is not just reading the book, but also following through at a higher rate in reviews.

In addition, those reviews are usually more positive and cogent than the average review (many times, people either note in their reviews that they borrowed the book, or write to tell me they have, so these KOLL reviews are easily identified).

And since reviews help drive future purchases, those KOLL borrows help your bottom line long term.

Next, let’s look at newsletter subscriptions. Newsletter subscriptions are perhaps the single best way to capture future sales.

On average, I had a 3 percent newsletter sign-up rate through links in my back matter. That number has nearly doubled to 5.8 percent since joining KDP Select. This number holds for books in KDP Select that have not yet been offered for free.

Doubling a newsletter subscription rate is no small task, yet that number holds across all of my books—and the books of my clients—who have joined KDP Select.

This also indicates that the KOLL reading population is a more dedicated, thoughtful pool of readers eager to find new authors and follow through with tangible actions.

Which leads us to the question of whether or not KOLL readers are more or less apt to buy other books in your backlist.

The answer is a definitive “yes,” across the board. Pre-KOLL, on average I had a click- through rate to at least one of my backlist titles of about 17 percent, which translated to approximately 12 percent in sales of those backlist titles.

Post-KOLL, my click-through rate is up to about 23 percent, with a sell-through ratio of 18.5 percent.

Again, a significant increase in backlist sales because of KOLL borrows rather than purchases.

So, from part one of this article, we know that at a $3.99 price point, we showed a dollar loss per borrow.

For me, factoring in the increase in number and higher-quality reviews, increased subscription rates, and higher sell-through to my backlist, KOLL makes up that $1 difference easily.

Each author must weigh these factors along with simple revenue streams to decide if this holds true for you. Does your book have plenty of five-star reviews? Well then, that aspect of KOLL may not factor in heavily for you.

Maybe you don’t have a newsletter (which is crazy to me, but hey, that’s another blog). Or you don’t have a backlist.

In that case, these value-added perks of KOLL are not really value-added for you, and you should look solely at your revenue stream when evaluating your KOLL experience.

However, if you do have a backlist, do market through a newsletter, and want as many honest reviews as possible, KOLL, even at the $3.99 price tag, is still value-added.

At the $4.99 price point, the difference between purchase and borrow is about $1.67.

Do these value-added perks (increased/better reviews, increase in newsletter subscriptions, and increased backlist sales) add up to $1.67 in revenue?

That question really depends on too many factors to list here (how many backlist titles you have, your release date schedule, outside advertising, and so on).

However, we must remember that KOLL does not exist in a vacuum. KOLL is not the only marketing tool that KDP Select gives you. There is also the FREE promotion.

Since “free” is a large-enough subject for a series of blogs, let me just say that Amazon reports an overall 26 percent increase in royalties from KDP Select. I experienced a much higher increase than that initially (I was one of the top ten KOLL authors for December), which has now settled down into a 50 percent increase in revenue since KDP Select rolled into town.

For the month of February, that increase of 50 percent in sales was only due to 13 percent revenue from KOLL. The rest was a result of the free promotions.

So, for the $4.99 price point and above, you must evaluate not just your KOLL royalties, but also factor in any earnings from your free promotions to see if KDP Select works for you at that higher price point.

That is to say, you might be losing royalties on those KOLL borrows, but more than making up for it with your royalties post-free promotions.

Hopefully, this article has helped open up your view on the varied benefits of KOLL so that you can determine if these value-added perks apply to your books, allowing you to make a fully informed decision on whether KDP Select is right for you.

Afterword:

Since the writing of this blog the February KOLL royalties posted at $2.01. Obviously this now makes even a book at $2.99 at 70% royalties profitable to loan :-)

Carolyn McCray

About Carolyn McCray

Carolyn McCray is a social media and sales consultant to writers and publishing houses alike. Her own "marquee" title, 30 Pieces of Silver sat at #1 in Men's Adventure and War sub-genres for most of the 2011 Holiday season selling over 20,000 copies and landed her in the Top 10 Kindle Owner's Lending Library authors. Carolyn was one of the featured authors in Amazon's official press release regarding the success of KDP Select. Carolyn is also the founder of the Indie Book Collective, an organization dedicated to helping writers utilize social media to market their books.

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14 thoughts on “Are KOLL Loans Cannabilizing Your Sales: Part Two

  1. I am not 100% convinced yet, BUT you have caused us to schedule a Kindle Select trial for our next couple of titles before releasing them to any other outlets. After the initial 90 days, we’ll evaluate and decide how to proceed with those titles. After another couple of months, we’ll reevaluate and decide if it makes sense to run a trial with existing titles (which would necessitate pulling them out of the other outlets).

    Contrary to your opinion, posted in response to my comments on your previous post, I am never reluctant to switch gears. Prior to Kindle Select’s availability, we had begun to see major upticks in sales at non-Amazon outlets and felt it was premature to lose all that effort by suddenly making those titles unavailable there.

    Thank you for all this food for thought. Maybe I’ll be a convert yet.

  2. Also not sure this works for technical non-fiction. I’ve had many people tell me they want an epub or a pdf. I’m currently in KDP Select for two of my books, but will not be for the next to evaluate the differences. Fiction and (technical) non-fiction are quite different beasts.

    • Yes, technical non-fiction strangely has not embraced the whole Kindle app option. Basically if you have a device with a screen, Kindle has an app for it :-)

      The Indie Book Collective does a bunch of reader education around this, yet some are still resistant :-)

      That is why every other needs to evaluate if Amazon exclusivity is the best option for them.

      And that could change over time. The more times you go free the less results you usually see. One of my books so far has done horribly free and it is a higher priced book so KDP Select may not be a good match for that book long term :-)

        • In terms of free, your backlist (KDP Select or not) always gets a lift. However this is short lived and really doesn’t create the kind of long term lift that the KOLL borrows and free downloads do. :-)

    • Go to bit.ly

      You can not just shorten links there but also customize them.
      For instance if I have a link driving from 30 pieces of Silver to Encrypted I will customize that link to amzn.to/30Pieces2Encrypted

      That way I know FOR CERTAIN how many times a reader goes from 30 Pieces pages to Encrypted’s sales page. Does each click represent a sale? Probably not, but my feeling is that the number is pretty close since my backmatter promo is nearly identical to my Amazon Produce Description :-)

        • Your total sales per book is a start, however remember that no all purchasers ever open the book.
          There is also a sub-population that does not finish the book.

          Only Amazon knows those numbers.

          For me those links give me an average of readers who read and like the book in question enough to click through to another title.

          I also use the links to help me evaluate my backmatter. Which promos work best? Which don’t?

          These specific to each book’s customized links allow me a far better insight into my readers than I can get from any other method :-)

          • Carolyn,
            Hope I’m not being obnoxious. I’m still not quite understanding how you calculate your click through rates. So you use bit.ly, and I gather bit.ly will tell you that, say, 100 readers clicked on that link. Myquestion is, how do you get from the “100 people clicked on the bit.ly link,” to “I have a 23 percent clickthrough rate to my backlist titles.” Or I guess my question is — 23% of what?
            Livia

            • Not at all! I was not clear.

              I based that percentage off all books sold for that title :-)

              I tend to go a step further and put in a specialized link just before I go free and replace it with another link once I come off so that I can compare the different price point sales :-)

  3. Any advice on how to actually drive up the number of KOLL borrows per book? I find that I am actually making more money on those than I am on sales per book (and my income from sales is more than a little). Are there any rankings or categories based on the KOLL?

    • KOLL has an algorithm very similar to the sales one. Your ranking is based on number of loans plus some mojo from the paid side. There is no way to drive loans except to drive sales and increase your sales rank :-)

      Hopefully that explains things a bit better :-)

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