Which marketing metrics, keywords, products and funnel steps should I track or ignore?

You CAN make your testing and tracking MUCH simpler!

Let me give you an example of where you might be over-complicating things.

Suppose you have four products, ranging in price from $100 to $250 to $500 to $1000.

Suppose you have a three-step funnel for prospects to go through, step 1 is an opt-in, step 2 is a phone conversation, and step 3 is sending them a free trial sample.

And suppose you have 12 keywords you are optimizing for search and to which you can drive traffic. That’s 4 products x 3 funnel steps x 12 keywords = 144 different things you are trying to track in a spreadsheet.

I’m suggesting it is a trap to track each of those 144 little “boxes” in the spreadsheet as though they are of equal importance. 144 boxes worth of data is way too much for you to manage, and with small samples, false winners and losers will begin to emerge. You may see in box 142 a huge ROI from one single one-time buyer. Whereas in box 143 there is none. So you kill 143, when the reality is 142 was luck and 143 might have worked.

The reason? In a spreadsheet, every box in the table is the same size. The reality is that they never are. There is never equality between the boxes. Whatever is going on, its causes and effects are always lopsided. 80/20 is not a catchphrase from business school. It is a law of nature.

Now. Quick quiz. How many keywords? 12.

Of those 12 keywords, three or four are probably going to be responsible for most of your traffic. If you had 2000 keywords, the number responsible for most of your traffic would probably be less than 20, usually bringing you something in the neighborhood of 95% of your traffic. Do you really need to track all the others?

The answer is: No! It would be foolish to spend time developing elaborate tracking for those small potatoes.

The same inequality and skew will be true with your products and your funnel steps. Of your four products, you will probably find that one or two bring you most of your sales. And since opt-in is a prerequisite for each sale, there are only two steps in your funnel which actually convert buyers. So your shortlist should look like this.

• The 3 keywords out of 12 responsible for most of your traffic
• The 2 products out of 4 responsible for most of your sales
• The 2 funnel steps out of 3 responsible for converting most of your buyers.

Do the math. 3 x 2 x 2 = 12.

Instead of tracking 144 things, you only have to track 12. And that is manageable.

80/20 Sales Matrix

Here’s how you should lay the grid out: it’s called the 80/20 Sales Matrix.

For your purposes, the columns are keywords. The top three columns in your matrix are your heavy traffic drivers, pulling in more than half of all your traffic.

Your rows are each of your products matched up with a sales step. As above, these top three product/sales-step combos are responsible for more than half your traffic.

Now look at how few cells you need to monitor in order to monitor most of your business. If all you did was watch cells 1, 2, 13 and 14 you would have accounted for more than a third of your business. To get more than half of it, just monitor the twelve top-left cells: 1-4, 13-16 and 25-28. You account for more than half of your entire operation by managing only twelve items.

Where should you spend your time? Where the squares are the biggest. If you could double the size of all the big squares in the matrix, you could grow your business by 50% with just a tenth of the effort it takes to grow the small squares. Suppose it takes a week’s worth of effort to double each square.

Would you rather double the size of square #1 or the size of square #77? You have four weeks. Small gains, or big gains?

It’s your call.

You put everything you have into the big squares. And you track the activity in the big squares to the penny. And for illustration purposes, here is a real example, a Google campaign by Julie Brumlik for Dremu Skincare.

Sorting by clicks, you can see the top keyword “skin care” accounted for 4,216 clicks out of 7,576 total — 56% of the total traffic. The three top keywords drove over 80%.

Meanwhile, keywords with fewer than 100 clicks are not worth talking about. Pull the top 2-3 keywords out and create separate ad groups for them. “Skin care” is costing $2500 per month in advertising. It’s worth tracking sales conversion for each ad by itself and not just click-through rate. If you use the special reporting function in Google, you can actually see which ad is converting sales. (This is very granular — but most people won’t bother to do it.)

You might even want to give the top keyword its own landing page, with tracking also in place. True, this can seem like more stuff to keep track of. But with it, you can forget about hundreds of other things.

What I want you to get out of this is something far more general. At any given time, the growth of your business depends on the health and focus on only 3 or 4 things: 3-4 keywords. 3-4 web pages. A couple of funnel steps. A couple of products. Everything else is secondary.

I’m not saying the other things are unimportant. You give the minority of your attention to the other stuff. But your job is to find what is most important and to make sure it stays the most important.

Go Find the Next Big Thing

But what if, you ask, I have optimized the big square as far as it will go? What then?

No, you do not start buffing up the little things. If you have a six-word phrase on a page that gets 15 impressions a month, it will be four years before you have any meaningful numbers. No, you go find the Next Big Thing. I don’t know what that is in your business, but here are some things to look at…

• A “deluxe” version of your product at three times the price.
• An unmet need in your market that nobody is filling. There is usually pent-up demand for that.
• If you offer a service, maybe you should sell a how-to product showing how it is done. Or, if you sell how-to products, maybe you should sell the service directly.
• If you sell services, a physical product. If you sell physical products, a service.
• If you’ve wrung your market dry, it may be time to take your skills and enter a new market.
• Widgetize your product, breaking it down into modules to open up new dimensions of value. This is what Microsoft, Apple, and Google have done.
• You could turn a one-time sale into a membership that has repeat purchases.

Well, that’s almost too much to choose from, isn’t it?

The Principle of RFM

This next point was prompted by Ken McCarthy sending the members of his System Club an interview with direct marketing analyst and financier Don Libey. The subject was “RFM”. The thing is, Libey believes the principle of RFM is sort of like a set of health indicators for almost any kind of business. You don’t hear about this much in internet marketing teaching.

Now, let’s take the same 80/20 concept and use it to understand your customers.

RFM is about who you give your attention to based on who is giving their attention to you. And just like testing and tracking is a feedback loop, RFM is a feedback loop. You pump your energy into what works, you pull it back out of what does not work. (More on this next time.)