Are KOLL Loans Cannabilizing Your Sales: Part Two
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.
- Do they end up a reviewer?
- Do they end up a newsletter recipient?
- 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.
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