President's Day Marketing Money Math
Presidents day is a great day to talk about money, because so many of our most awesome presidents are on US bills. If you’re on a bill, you are the president of legal tender in our book.
When we think of the kinds of data we use to make decisions, there is $1 marketing math and there is $100 marketing math. You have to get comfortable with the $1 math before you can move on to $5 math.
Don’t worry, our presidents are here to help you.
$1 George Washington
At the $1 level you have basic numbers about your site. We call these analytics because it makes us sound smart.
Knowing what is going on with your website requires the same discipline that GW brought to the office of the president, a level of discipline and ethics so impactful, that no president since has bothered to repeat it.
- “Traffic” is measured in Visitors, who generate many Visits and there can be many Pageviews for each visit. You may think you want traffic to go up, but you might be wrong.
- “Revenue” is the measure of dollars generated directly online. You usually want this to go up.
- “Profit” is the measure of dollars you put in the bank from online purchases. You always want this to go up.
- “Transactions” are the measure of how many times someone buys on your site. We don’t count recurring subscription charges as transactions.
- “Leads generated” are the equivalent of transactions for those of us that don’t do transactions online. Form fills and phone calls are typically measures as leads.
- “Sales Close Ratio” tells us what percentage of leads turn into clients. If you have a long sales cycle, it can be estimated as # new customers per year / # new leads per year.
- “Average Customer Value” tells us what a customer is worth in a lead generation scenario. It can be the average value of the first contract, the estimated lifetime value of a client, or even the lowest possible contract for the most conservative value. It is more important to consistent than accurate.
These are the basic measures that will make you Abraham Blingoln
$5 Abraham Lincoln
At the $5 level, we begin to understand the impact of a successful online transaction on our business. If we can calculate the value of a conversion, it’s not hard to make better decisions about getting more conversions.
For lead generating websites:
For subscription-based businesses:
$10 Alexander Hamilton
Unfortunately, Alexander Hamilton was never elected president, and ruins the premise of this infographic. Aaron Burr expressed his dissatisfaction as completely as we could by gunning him down in a duel.
Your $10 math problem is Conversion Rate.
For lead generating sites:
$20 Andrew Jackson
Andrew Jackson was the trouble-maker president, and perfect for the $20 math problems. These are trouble-making stats because they don’t hide the truth of what is going on with your site.
Revenue per visit (RPV) tells us exactly how much money we’re making every time someone visits our site. If you increase your conversion rate by reducing your prices by 50%, RPV will reveal your Jacksonian folly.
For lead generating sites:
$50 Ulysses S. Grant
Our $50 math looks at the dark side of eCommerce, like U.S. Grant did during the Civil War. These metrics can be very helpful. Don’t take them for “granted”.
This heartbreaking stat shows us all the people who started checking out, and never made it through. Oh, the humanity.
If your “CAR” is going off a cliff it means your visitors are leaving items in their cart and leaving. Imagine if this happened at your grocery store.
For a lead generation site, you would calculate Abandonment for a landing page as :
For lead generation sites:
$100 Benjamin Franklin
Yet another bill with a non-president on it. Nonetheless, many a famous rap song has been written about getting more “Benjamins.” We like them, too.
Franklin was an inventor and tinkerer, and our $100 math level is about segmenting. Different people behave differently on your site.
All of the above should be calculated for the important segments of your business. Which methods of segmenting make sense for you?
- Will “new” visitors behave differently than “returning” visitors?
- Do you have a large number of Mobile visitors? if so, is their RPV higher or lower than desktop visitors?
- Does PPC traffic have a higher RPV than Organic traffic?
- Is email traffic have a lower abandonment rate?
- When you’re asking these questions, you have to be a frank as Franklin.
Where are you in your marketing math journey?
Which of these things are you looking at every month (or more often). Are you just getting some George Washington discipline or are you asking segmenting questions that bring the Benjamins? Have you looked at the bad news of abandonment rate?
Your success depends on making high-dollar decisions. With the right numbers, you can go form being Alexander Spamilton to Benjamin Bankin.
I really enjoyed this article. So much so, that I would like to take its concluding questions and place them in my forthcoming guide to CRO with a link to this article — I request your permission. Guess who’s book is also referenced in the Guide (among others, of course)? Mr. Massey’s. Thanks Brian for providing excellent free and paid resources for marketers to learn about CRO. The landing page (any tips? :) ) for the guide (in about its 12th iteration so far) is here: http://webdirexion.com/cro-guide
Please reuse the questions with attribution. Be sure to send us a link. For the landing page: Does a book need so much space to be sold? I’d like to see a table of contents on the page.
Thanks. I think what you propose (a more concise page layout) would make a great A/B test. We will try that and report. Cheers – Scott
Sorry to confuse you… Liberty Patriot is another “persona” I use sometimes on Disqus. Questions are in book with attribution. Thanks.