Kenny: So as I say, we’re talking about tracking and measuring results today. So why do you think it’s so important that as a consultant, you track and measure results Andrew?
Andrew: Well, it may seem like a dry topic, the idea of getting into the numbers and trying to track a lot of details, but honestly this is where the rubber meets the road because when you launch your marketing efforts – and we talked about many different types through our episodes. We’ve talked about new websites, ad campaigns, presentations, partnerships.
With any of those marketing efforts, you create open loops when you launch them, meaning you put your best foot forward and you run with it and you hope for the best. But really every time you do that, all you’re doing is putting out your first best guess, to borrow from some Lean Startup terminology there.
It’s your first best guess and the chance of launching a marketing program and have it be highly successful the very first time out is pretty slim.
So the only way to move towards success is to accurately measure results to see how you’re doing and then make adjustments and to do that as often and as quickly as you can.
You need to close the loop. You have to launch your effort, track and measure results, define improvements to try out and then launch again. This just can’t work without measuring the results.
Kenny: Absolutely. It’s like, for an example, I can keep going to the gym week in, week out, and because I look at myself in the mirror every day, I just don’t notice much of a change in my physique even if there is a change. So I can quickly get disillusioned with my efforts.
If however I measure my waist, I measure my BMI or simply how fast I’m running, two miles, five miles, whatever it may be, then any improvement is going to be easy to see and it will fuel my enthusiasm and motivation.
So there are so many reasons that – you know, that’s just one reason why you should measure. It will actually motivate you. You can go a step further. You can get someone to help you measure. So if I get a personal trainer to help me who knows the data better than me because they look at it all the time, then they will be able to help me focus on the areas I need to work on further to get my desired result.
Also it’s an old cliché and we’ve actually mentioned this phrase before on the show but it’s a simple fact that you can’t manage what you can’t measure. So it’s important that you set up ways of measuring or analysing your data before you actually start.
Andrew: I think part of what you’re saying here is that sometimes it may feel like we’re not making progress or we’re not seeing the results we want. But if you’re tracking the right metrics, you can see that actually we are making progress and we just need to keep at it to get to the final results.
Kenny: That’s right. Sometimes if you’re not looking at – if you are looking at yourself in the mirror every day, you just look like the same as you did yesterday because the results are very tiny increments in the right direction. But you can’t visibly see it unless you actually measure it.
So what high impact insights have you got that you can share with consultants? Because this is what you do. You measure. You analyse. You have to for your clients. So can you just dig a bit deeper for us?
Andrew: Yeah, this is a big piece of what I do and I want to talk about this for today in the time we have, really from the point of view of three high level angles they should focus on for measuring results.
The first is to track as much of your sales funnel as possible. That means from the very first interaction that somebody has with your business all the way through getting checks in the bank, because sometimes it’s easy to get too focused on little things like the clickthrough rate of a particular button on your website. When you focus in on little things like that, it’s easy to lose the big picture.
So I want to talk about ways to make sure that you’re seeing the entire sales funnel, so you can have the right perspective for drawing the right conclusions.
The second high level item I want to talk about is using an 80-20 lens of applying the Pareto Principle because with all the data available to us these days, especially online, you could spend all of your time just slicing and dicing data. But you don’t want to do that. Most of your time is better spent elsewhere.
So you need to learn which 20 percent of the data analysis is going to yield 80 percent of the results and give yourself permission to ignore the rest.
Finally, the third item I want to dive into a bit more today is making sure you actually get mathematically significant data before making decisions. This is such a common mistake. If this month you get three leads from one marketing channel and none from your other marketing channels, you might be tempted to just say, “You know what? This is the one that’s going to work and I’m going to give it all my attention and ignore the rest.”
But this month’s result easily could have just been due to random variations. So you need to understand whether or not you have a significant data set for making important decisions.
Kenny: It can work the other way as well, can’t it? Where you don’t get enough leads in that month and it’s very easy for us as human beings to say, “Oh, that’s not working. Let’s try something new,” when it’s just about staying in there for the right amount of time to make sure that you’re yielding enough data to get some accurate assumptions.
Andrew: You’ve got to have the right perspective. I was on a call with a client the other day who said – we’re looking at his AdWords account. He said, “Oh my god. We went from 5000 impressions last month to just 4000 this month. What happened?”
I said, “Well, honestly, that’s just normal variation. I mean there are a lot of things that happen. You know, seasonality, the holidays, just normal variation for your particular group that we’re targeting.” So you’ve got to keep the right perspective.
So diving into some of these details, first, tracking is much of a sales funnel as you can. Again, from the very first interaction when possible, all the way through to revenue and there are a few important pieces for this.
Number one, for anything you’re doing online, make sure you’re using Google Analytics. This gives you tremendous flexibility and power for tracking huge amounts of online visitor data, where they’re coming from, what they do when they arrive at your site, what they’re doing on your site, where they’re going afterwards. This plugs in easily obviously to Google AdWords and other Google tools but also to a lot of third party extensions.
I will say you don’t have to use Google Analytics. There are also a lot of paid tools on the market that are pretty good and they usually have some particular angle they specialise in.
But I still stick with Google Analytics because it’s Google. It’s their baby and they’re trying to make it as useful as possible for all of this tracking and they do a great job with it.
Second, for every campaign that you run, it could be online ads, offline ads, social media announcements, blasts, your email lists, direct mail you’re sending out, presentations you’re giving where you’re showing URLs. Make sure to add URL parameters, so you can properly attribute the source of all these visitors.
When you add URL parameters, that data comes through into Google Analytics or other Analytics tools and you can see these visitors came from this presentation I did last week. These visitors came from my email and that’s critical, again, to let you accurately track the entire sales funnel or your visitors.
Kenny: Can you just – for someone who doesn’t understand the term “URL parameters,” can you just explain that?
Andrew: Yeah. That’s just the set of extra text that you see at the end of a URL. If you look closely, you’ve got the domain name, then the path to the page you’re viewing. Then you will often see a question mark followed by blank equals blank, blank equals blank. Those are URL parameters and they allow you to pass information from one source to the next.
Now a lot of third party tools you might use will do this for you. Some email programs like MailChimp can pass this information for you, so you don’t need to worry about it.
Sometimes you do need to do it yourself. Like if you’re, for example, giving a live presentation, you can create a shortened URL that you give people to use that then expands into a URL that has these parameters that you pre-build. There’s a tool that makes this very easy.
Google again offers a free URL builder to help you create these URLs, so you can track the campaign source, track where these people are coming from.
If you just Google “Google URL builder,” it will pop right up and it’s a very easy way to create these necessary links.
A few more things that you need to do to again get as much of the sales funnel in here as possible for your tracking. Make sure you’re tracking conversions. This is a big oversight I see in a lot of AdWords campaigns that I take on for clients. They’re tracking clicks. They’re tracking visits to the website. But they’re not actually tracking conversions. That’s where somebody takes the action on your site that you really want them to take whether it be contacting you, submitting a contact form, downloading some content that you have, buying something on your site.
Those are all conversions and that’s critical to track in order to see the value of these visitors who are coming. In taking that a step further, there are also ways that you can assign individual conversion values to conversions. So for example, on my own site, I assign let’s just say a $500 value to every time somebody submits a contact form and say a $100 value every time somebody downloads my lead magnet.
In this way, I can ascribe different values to different visitor interactions and I can see the sources all the way going back to where they came from. Which sources are giving me more numerical value down the road?
This does get a little complicated as far as how you track all this. It can all be done through Google AdWords, through Google Analytics and once you’ve set it up, really it’s just an initial setup process. Once you set it up, now you can easily calculate your return on investment because you can see the conversion value and you can see the cost, what you’re spending to get these people in and that’s your ROI. That’s your return on investment, which is a crucial number to have for comparing your marketing channels.
You of course can track the number of conversions and really, those are the two key metrics you need to see the performance of your online marketing. How many conversions are you getting? What’s the return on investment for those conversions?
Once you have that, you can compare conversions and ROI across all your marketing channels and then it becomes obvious what to do next. It becomes obvious where you want to spend more time and money.
It’s a critical process to go through for any business and you just can’t do it if you don’t measure your results.
Kenny: That’s great. Where can people go to get more information on how to use Google Analytics, that they can set all of this funnel measurement up for their website?
Andrew: So I would give two recommendations there. One is to always start with the Google website directly. They have a fantastic wealth of help pages that explains a lot of this and when you get to a point where you – if you’re stuck, if you’re not quite sure based on what they’re saying what you need to do, just try Googling that particular phrase such as “how to set up conversion values in AdWords,” and more likely than not, you will find half a dozen respectable blogs that have tackled this exact problem. Of course you can also ask Kenny or me if you need additional help.
All right. So this leads into the next topic which is using the 80-20 lens and this is really about trying to get the most bang for the buck, the most value for the time that you’re putting in.
So let’s say for example that you’re running five marketing programs. You’re running an AdWords campaign. You’re running a Facebook ad campaign. You’re hosting a weekly webinar. You’re doing search engine optimisation for your website and let’s say you’re putting out a monthly YouTube video. So that’s five different marketing programs that you’re focusing on.
Should you divide your money and time so that each program is getting exactly 20 percent? Well, of course not. You need to look at the value those programs are providing and apply more resources to the channels that produce better results.
Obviously to do that, you have to measure the results and you may well find when you do this, that just two or maybe even one of your marketing programs is producing 80 percent of your results. That is critical information to have. That tells you that those are the programs where you want to invest more of your money and time.
So for example, for me, I know that I get most of my good leads through just two channels, my AdWords campaigns and my blog. So that’s where I invest most of my time.
But again, I wouldn’t know this if I wasn’t tracking and measuring my results. Another way of slicing this, you might find that just one of your channels is consuming 80 percent of your marketing budget. That can certainly happen. For example, running paid ads is expensive. If that’s the case, you better make sure you’re spending most of your effort optimising that one channel in order to yield a return on investment that’s going to work.
It’s so easy to get lost in the weeds. It’s easy to spend hours tweaking keywords and AdWords accounts or to spend hours perfecting fonts in that next PowerPoint presentation or to spend hours cutting and re-cutting a video to try to make it perfect.
Sometimes you need to do that. But just make sure that you only do that when you’ve already measured the results and you know that this is where your time and money is being best spent. Otherwise, you end up on the wrong side of the 80-20 rule.
Kenny: Very, very powerful information and it’s so easy when you’re a busy consultant and you’re busy dealing with clients, to just forget about measurement and to just go – well, there are leads coming in here and there. I’m just going to do a blog post today because somebody told me that if I do blog posts, then it’s going to drive some traffic.
I know so many of my clients who don’t measure because of that, because they’re overwhelmed with just dealing with their clients.
Andrew: Well, you mentioned another trap that people fall into. They say, “You know what? Things are going great right now. I’ve got a lot of clients. I don’t need to spend time on this.” Well, what happens if that changes? What happens if something in the market changes or your competition changes and suddenly you’re not getting enough clients? If you haven’t been measuring results, you have no idea what to do next.
Kenny: That’s right. That pipeline dries up. You could end up a dead end.
Andrew: So think of it as a long term investment in your business to always know what is working and to do that, you’ve got to track.
So the last piece I want to dive into here is making sure you’re getting significant data from making your decisions.
This one is a tough one for a lot of people because number one, you might not understand how to interpret statistical data. It’s not an intuitive thing at all and number two, you might feel like you want to move more quickly than the data would indicate.
This is something I’m constantly coaching my AdWords clients on. Given the amount of traffic available to us for your particular business, we have to wait weeks or months to see really significant data for making big decisions and not everybody likes to hear that, right?
They want to move more quickly and so here’s where you’ve really got to check yourself and be careful that you’re waiting long enough, that you’re getting enough data to make a good decision. If it’s a big decision, really make sure you’ve got the right data.
Data can easily fool you and data that isn’t statistically significant can lead you in terrible directions that can be hard to recover from.
So I want to mention a couple of tools that can help you with this. The first is that if you are using Google Analytics, they’ve got a great feature set up. It’s Google experiments that allows you to run experiments on your website.
So for example, create two versions of an important landing page and show half your visitors one version. Show half your visitors the other and then collect data as to which is performing better.
When you do it through Google experiments, they do all the statistical analysis for you. They will tell you how long it needs to run. They will tell you when you get to a point of statistical certainty, that this page has outperformed the other page to a 95 percent confidence level. Then you can take that, make the decision, choose the new page, set up a new experiment and do it again.
So that helps make it very easy for you. I will put a link on our podcast page so you can learn more about Google experiments.
But the second piece is maybe you’re not always doing tests just on your website and you may be testing things offline, testing things on other sites, other – your email newsletter for example. For general experiments, there’s a really handy online tool that I use. It’s an A-B split test calculator and this works for any experiment where you’re running two variations against each other.
Typical examples again could be running two landing pages against each other, running two pay-per-click ads against each other or if you’re doing a live presentation, maybe there are a couple of different – very different ways you can present your offer at the end where you want people to engage with you and take the next step with you. You can use this to test the significant difference between these two different types of presenting your offer.
So the tool – and again, I will put a link to it on the podcast page. But just to mention it here, it’s www.thumbtack.com/labs/abba.
This is just a very easy-to-understand tool. You can put in the number of trials that you’ve run, the number of winning scenarios from each of the two variations and then it will tell you whether or not you’ve reached a significant result or not.
This just makes it a lot easier. Again, it’s not something that’s intuitive. You can’t just look at numbers and say, “Oh, yeah, that’s significant.” You’ve really got to run the analysis. So these tools make it very easy and then you won’t have to worry anymore that you’re making decisions based on too little data.
Kenny: Great. These tools are getting better and better all the time and they’re becoming more intuitive and easier to use for non-techies as well. So keep your eye on those tools. Have a look at those tools and all I would say and add to that, because Andrew has covered it really well there, I would just say that if you’re not measuring now, then you should not let yourself get overwhelmed by trying to do everything at once here.
So you know there’s a lot of information that Andy has just given you there. Don’t get overwhelmed by all and try and do everything at once or even worse, do nothing at all. Just start simple. Start very, very simple with – even if it’s just a number of people visiting your site, to the number of leads you get.
Then you might want to get a step further to the number of conversions as Andy said before. Then work out how much they’re costing you, those conversions or how much they’re making you, those conversions. What’s the ROI of those conversions?
Then just work your way from there and start trying to do one step at a time.
Andrew: Yeah, that’s the right way to think about it. Hopefully I gave a lot of tidbits here that some more seasoned measurement trackers out there can leverage. But if you really are just getting started out, the easiest way to get started very effectively is just to install Google Analytics on your website. Just get it set up. They make it very easy to do and once you do that, you will have a wealth of data at your fingertips. You may never access all of it. You certainly never access all of it, but at least now it’s there. It’s tracking for you automatically 24/7 and you can revisit the data whenever you’re ready to.
Kenny: Absolutely. So that finishes that section off there. Thanks Andy for that, for all of that in-depth information there. What we’re going to move on to now is questions from clients and this week, it’s a question from one of my clients. He said to me this week, one of my clients, “I offer a financial incentive for my clients to pass on referrals,” because we all want more referrals. They’re great. They’re really powerful. He offers a financial incentive, but because of the nature of his business and the nature of his clients, he feels that they would feel fairly incongruent or even unethical receiving referrals. So what advice could you offer?
Mine was simple really because I’ve seen the new way of getting referrals first of all by Dropbox. They did it really well. But I see Uber doing it really well. If you’ve ever used Uber and taxis.
The way they do it is they say, “Listen, if you refer somebody, you will get $10, $20 depending on where you are in the world, and also will pass on $10, $20 credit to the person you’ve referred to.”
So it’s a win-win for everyone. It’s just a nice – everyone is winning. It’s a happy kind of referral and that takes away any kind of feeling of gain on behalf of just the person who’s making the referral. So it just disappears all of that incongruency and any kind of thought that it could be unethical, because hey, if I refer you on, you will get an actual discount going forward. You will get a discounted version of the product or service, which I just think is genius.
I think it was – I’m sure companies have done it in the past but in our day and age, it has been Dropbox and Uber that seem to kind of play in any of this and I really highly recommended that. It kind of opened up his eyes and he was like, “Yeah, it’s just a simple, simple way of taking away any kind of incongruency and any kind of feeling of awkwardness about referrals.”
Andrew: Yeah. A simple change like that makes a big difference. It changes it from, “Please try this so I can get some money,” to “Please try this so that you can get this great benefit.”
Kenny: Yeah, absolutely. You can even be honest with them and say, “We both get a benefit. Isn’t that great?”
Kenny: Then if you refer someone, you will get a benefit and they get a benefit. Isn’t it great? I love it. I love passing my coupon code for Uber. I only get – it’s 10 pounds here in the UK, which is about – probably about $17 and they only get that. But it pays for a journey for me. It’s just great and they get the credit as well, whoever I pass the coupon code on to, which is fantastic.
Andrew: You still have positive feelings toward Uber Kenny, even though that last driver got you lost on the way to the MIT seminar?
Kenny: I know. Can you believe that? I got there by the skin of my teeth. My first time ever speaking at MIT and I was due to speak at 6:30 PM. I arrived at 6:26 PM even though I set off in good time, because the Uber driver got me lost.
But that’s the only bad experience I’ve had with Uber apart from when I switched it on – I think there was a football game on or a baseball game on in Boston on a Thursday evening and I switched on to use Uber and they said it’s three point – no, 2.7 times the price. I’ve never encountered that before. I just thought I don’t like that. So I just went outside to my hotel forecourt and jumped in a cab there.
Andrew: Well, I’m just glad you got there, so I didn’t have to do the presentation myself.
Kenny: Yeah, exactly, exactly. So that brings us on to the Tip of the Week. So what’s your tip of the week Andy?
Andrew: Well, my tip of the week really thinking about how we’ve been trying to always encourage you to do what’s going to make the most sense with your time – limited time and resources. My tip is to read the book 80/20 Sales and Marketing by Perry Marshall.
He published this about a year ago. I read it pretty much as soon as it came out. It’s extremely well-written, very easy to read. If you don’t know Perry Marshall, he is an extremely well-known name in the marketing world. He got started in AdWords marketing but has gone well beyond that now.
This book, it’s really a rather analytical but accessible book that takes the math of the Pareto Principle, the 80-20 rule and applies it to sales and marketing.
It makes it so clear some very essential concepts like why just 20 percent of your marketing efforts deserve 80 percent of your time and money and how to identify which 20 percent it is. It makes it very clear why just 20 percent of your potential prospects are more valuable to you and your business than the other 80 percent combined and how to reach that 20 percent.
Overall, it’s why you should also think about applying your time, money and resources very unevenly if you want to achieve truly spectacular business growth and I think this is the right mindset for all of us to get into, to do the most we can with our limited time and money.
Kenny: Yeah, it came out a few years ago, didn’t it? The 80-20 Sales and Marketing by Perry Marshall. I have still not read it. It’s on my wish list. So now that you’ve recommended it, I’m definitely going to go and download it to my Kindle, because he’s a great guy Perry.
Andrew: It’s a great read. It’s pretty quick and it will definitely change the way you do things.
Kenny: Fantastic. So that brings us on to the Inspiration of the Week and sorry, it has nothing to do with my kids this week or it has nothing to do with some brilliant charity work out there or voluntary work out there. New inspiration of the week for me is I purchased my new iPhone 6 Plus this week. Now, it’s a big unit. It’s a big phone and I’m not normally into big phones and that’s because – so why would I go for a big phone if I’m not normally into big phones?
That’s because I looked at it and I looked at what I use my iPhone for these days. I try and use it for pretty much everything and I don’t do a huge amount of calls. I’m not one of these people who are on the phone all the time.
So I probably – well, I know for a fact I use it more for internet and for task management and all of that kind of stuff and that is why I went for the iPhone 6 Plus and it has been – this week, I bought it. I’ve been using it since Monday this week. It’s now Friday and it has revolutionised my life because no longer do I have to go and seek out the iPad at home anymore, the iPad mini.
I have everything I need on this iPhone 6. I can – I used to have to surf certain websites or apps on the iPad because it just didn’t – it wasn’t good enough on my iPhone 5. Now I’ve got the iPhone 6 Plus. I can do all of my surfing at home I need to do on this.
So it allows me to reduce the need for my iPad or my mini iPad. So it’s using that principle of essentialism, allowing me to remove stuff from my life. So it has really inspired me. It might not be as inspirational to you, the listeners, who are listening to this. But if you can reduce the need for stuff in your life by bringing something like this into your life, you will realise that it’s a big inspiration.
Andrew: Here’s my number one question for you about that phone Kenny. My number one concern, does it still fit in your pocket?
Kenny: It does, but it pops out a little bit at the top. So if you go home through a dodgy neighbourhood, you might want to just put your hand in your pocket to protect it.
Andrew: Another good tip.
Kenny: Yeah, and I’ve just ordered a case for it as well, a little case to protect it and this little case, you can put your credit cards in there as well and therefore I’m reducing the need to carry my wallet around with me as well.
Andrew: And now pickpockets only need to focus on one thing. That’s great.
Kenny: Exactly. If I lose everything, I lose everything. But also it has a little – it turns into a stand as well. So if I’m in an airport, again I don’t need my laptop with me. If I’m watching a movie, I don’t need my iPad with me anymore. I’ve just got this iPhone 6.
Andrew: Love technology.
Kenny: Absolutely. So what have we got coming next week?
Andrew: Well, we’ve talked a lot about different tools in really a lot of our podcasts, probably most of them, and what we thought we should do an entire episode about is automation tools, because there are a lot of great automation tools available today for so many different pieces of your marketing system that can just save a tremendous amount of time and again really help you focus on 80-20, automating what you don’t need to spend time on doing yourself all the time.
So from website setup to driving traffic to your site, to measuring results, to even doing things offline, we will talk about some great automation tools to help you out.
Kenny: Sounds good. I look forward to it and I think the way we will do that is Andy will probably cover the marketing side of it and I can cover a little bit more on the productivity side, which will be great fun.