Building an optimization culture is hard and it seems that it might be getting harder. My friend Avinash Kaushik, the analytics evangelist at Google, recently shared an important stat and his observation on Google+:

Only 22% of companies have a strategy that ties data collection and analysis to business objectives. Down from 25% last year. [Source: Econsultancy Online Measurement & Strategy report http://goo.gl/OGscu]

The problem is not the tool. The problem is you and me and our management.

Think of it another way: 78 percent of companies are just hoping for success by guessing how well they are at providing their customers quality experiences. While we may all be suffering from data diarrhea, making decisions based on analysis of our metrics is just unclear, and they fear failure. Some call this assumption marketing. For over a decade, I’ve called this a symptom of accidental marketing.

One key question is why did the numbers go down from 25 percent last year to 22 percent this year? My answer stems from a simple economic theory that holds true in most marketplaces. The rich get richer! It happens in finance, it happens in SEO with the Filthy Linking Rich, and it happens in data-driven cultures. Companies that have a culture of analytics and testing seem to pull in those individual talented people who show up at the odd company and get frustrated that they have no impact or value there. I have seen this countless number of times with friends in this industry. It’s frustrating, like pushing on a rope.

When leadership’s ability to focus on optimization is dysfunctional, they keep relying on the next “big idea.” They favor long CYA meetings instead of managing to the metrics that impact their business. They continue to do business largely the way they have for the last 20-plus years, even though everything around them tells them the world has changed. Meaningful change is not just releasing a cool mobile app and launching a new HTML5 website. It’s not the medium but a management and business cultural issue that needs reexamining.

As Marc Bruns commented on Avinash’s post:

The fact is becoming an optimization culture is hard. In my experience, implementations of any kind of data-driven metrics, analytics face the hurdle of an ‘irrational exuberance bubble’ when they begin … early on it seems like it will be easy to change the world, the tools seem so powerful … but then people, politics and turf battles enter the picture; [when times get the least bit tough] management tends slips [sic] into old habits, ‘the old shoe is comfortable.’

I’ve harangued many and even written before about what it takes to build optimization into your business culture. What’s the first step?

Focus! Pick your key performance metric and get your team obsessively focused on continuously improving the marketing efforts and time spent achieving those numbers.

Web analytics industry pundits have suggested that the key to success is better investments in people and process and less on tools. That’s wonderful! Nevertheless, neither of these matter if the investment isn’t on changing culture first.

So companies bring in the tools and assign someone inexperienced to start distributing reports and they start to believe that they are data driven. Surprise! There’s no profit from having a web analytics report; you make money from making changes and experimenting based on the insights available from the data. In order to do web analytics correctly, it needs to generate a to-do list for you.

However, as Philip Walford, another commenter on Avinash’s post adds:

You’ve been scrupulously data-driven in identifying where problems and inefficiencies are located, but now you have to switch and start to hypothesise about why those problems and inefficiencies exist. Two entirely different disciplines: rare to find them in one individual, almost impossible to find them in one organisation.

It is this sluggishness of corporate metabolism to change that has allowed many in the retail industry to forfeit their sales to Amazon.com, which now dominates approximately 30 percent of all U.S. e-commerce.

Noted author Stuart Wilde says “Poverty is restriction and as such, it is the greatest injustice you can perpetrate upon yourself.” Are you condemned to be data rich but optimization poor?

I don’t think it is because companies don’t care or haven’t tried. Are the tools to blame? Partially! First and second generation tools flourished by the promises of riches to come by just tracking the data. Many invested significantly in these tools, but couldn’t find the people to support it. Now many free tools exist and more people are used to using these tools. I’ve always said get good at free and then pay. So are free tools the answer? Nope! Just because someone knows how to use the tool, doesn’t mean they can “convert” management into a data-driven culture.

It’s increasingly harder to hire truly qualified candidates; not that many exist in the first place. When my brother Jeffrey and I built our agency, we’d hire young college graduates who displayed tremendous amounts of curiosity and trained them in our processes and they were turning out insights that rivaled their high-priced MBA alternatives. Training certainly is one option, but it doesn’t work if it cannot be evangelized throughout the whole organization. It fails if all it does is make one or two optimization/analyst employees smarter, because in the long run, those employees will find work elsewhere.

Will you commit to optimization riches or will you remain poverty stricken? Isn’t it time to focus on what the numbers are already telling you?

P.S. If you are a business that is committed to driving a data driven/optimization culture, please reach out to me I have a handful of individuals looking for great opportunities to bring their talent. If you are a business that wants to become data driven and optimization focused let me know and I will see how we can help you.

I was recently discussing online retail with a colleague  and the challenge online retailers face in proving their value to their traditional brick-and-mortar counterparts. It made me wonder why no ecommerce platform (that I know of) has added the ability to send a shopping cart to someone’s mobile phone.

Imagine you are on the Nordstrom website and you are looking at a number of outfits but you don’t want to commit to purchasing them until you can touch and feel them or even try them on. You click on a button on the website, provide them with your email address or mobile phone number and the ecommerce platform sends you a QR code with the contents of your cart. Maybe they can even schedule when they can come in to try the outfits and they could be all ready for them if not then they can just stop by one of the retail locations, walk up to a staff member to have the QR code scanned and then they could bring you the outfits you selected. This allows you to close the loop from online to offline. You could even offer them incentives to show up to a store at a particular time or day.

QR code use is growing and this may make it grow even further.

Do you know anyone trying this yet? Are you willing to be the first?

P.S. Feel free to scan in the QR code in this post

Is yours the typical company launching 2-5 tests a month, struggling to eke out more from your marketing optimization program, and wasting critical marketing resources of your team and website traffic? That’s the result of not focusing in on the Big Idea!

How much should you be testing?

A mid-size company can easily handle 30-50 tests a month. The reason most companies never get there is because they waste so many cycles on what I call “slice & dice” optimization on poorly designed landing pages.

Let’s consider the following test which I found “in the wild” — and which I find ironic because it is for a service offering a marketplace of landing page designers.

Version A

Version B

Depending on how you want to define your testing variables these two landing pages have around a dozen changes. I hope this is not what you want from your landing page designers. You don’t need someone to create endless variations of every variable in order to succeed in your marketing optimization efforts.

Can you identify all of the variables being proposed for testing? (I’ll share with you my list next time.)

For now, let’s assume that for each of these variables on these landing pages, you test just 2 variations even if more may be warranted. I’ll show you what the problem with that approach is. (Note: I’ll make use of Google’s Website Optimizer “Test Duration Calculator” to estimate the numbers, but you could easily do this by hand or with a calculator or simple spreadsheet):

I don’t know the true stats for this page but they don’t really matter in order to illustrate the challenge.

That means it take more than 108 days — over 3 months! — to complete this test for these simple landing pages. That’s a whole-heck-of-a-lot of visitors and a whole-heck-of-a-lot of time consumed to get one test completed.

Testing Landing Pages: A More Efficient Way

The way we teach testing, there are probably 3 variables worth testing (variables that communicate to a visitor) on this page. Let’s assume the same 2 variations for each, though to be frank, for one of the variables I would want at least 3 or 4 variations if we were doing this test for an actual client. But for the sake of simplicity let’s keep everything the same.

This test would be over in just under 18 days, a scant 2 ½ weeks.

Which way seems more efficient?

Suffering from Conversion Optimization Fatique

Should you test for variables that seem to really matter to visitors versus testing virtually random variations of elements in the hope something gives you a little lift? You may achieve some gains — that’s why this practice is so common — but you’ll burn out waiting for the results. This is why so many marketing optimization efforts fizzle out over time.

Next time I will share the variables I found comparing these landing pages and discuss the 3 elements I would test on this current page.

In order to give you a leg up on identifying the variables on your own, I’ll give you a question as a framework. When was the the last time you looked at a page and said to yourself, “The layout is horizontal and not vertical, so gosh darn it, I can’t buy from this page?” Vertical vs. horizontal layout on landing pages could matter as a display of information issue if you are trying to change a lot of what is above and below the fold. But that really wasn’t the case in this example. It’s just a waste of time and effort unless or course you have no real idea what will move the needle for customers – and in that case ANY test is better than nothing. Maybe.

Instead of trying to test endless variations of minutiae we teach companies to look for the big ideas that impact customer experience and buying process. The smaller variations we can always come back to after the Big Ideas establish directionality.

Can you find the big ideas for optimization (or that should be tested) in this example?

Let’s play a little game of what if…

You have the choice in building your organization; you can:

A. Recruit and hire some of the world’s best analytics, customer insight, marketing and testing team members.

B. Recruit average team members but provide them with superb technology and processes.

Many industry pundits would agree (including myself) that you must invest in people before tools. But is it just talent that is required or having the man hours available to get things done that matters?

A. For example, imagine you had a testing team consisting of some of the best in the industry (you could hire Tim Ash, Avinash Kaushik & me) to run your analytics and optimization team. However, if your organization is like most organizations we could only test 2-5 things a month. Don’t get me started on why this happens.

Or

B. Your team had the processes to eliminate many of the traditional bottlenecks and was able to knock out and complete 30-50 tests a month using better processes & tools (yes, these exist today). Of course, these tests would still have to be intelligently designed not just random tests (and this comes from learning appropriate process).

At the end of 2 years which team do you think will drive more incremental revenue, team A or B? Should your goal in your organization be focused on talent or on being agile?

It is the best of times and the worst of times for some businesses. Many look at the world and see the opportunities of being data rich, customer centric, and nimble while others imagine they can bring their old school thinking to the new media, always-on connected customer. They sit cross-fingered hoping that putting lipstick on their pig will improve their results. Let’s explore two publishers making news recently and learn how one is failing while the other has become quite successful.

We will learn from this comparison no matter what type of business we are in.

I love to consume and share content on my iPad. Ask any of the nearly 20-plus million people who have one and I am pretty sure they’ll respond the same way. So you figure when a publishing powerhouse invests an initial $30 million dollars and another $500,000 an issue into an iPad-only publication, how could it go wrong? Well, not all the numbers for The Daily have been revealed (for that you would have to speak to Rupert Murdoch or his Daily staff), but based on recent data and calculations, the results are not very promising. It has been estimated that the app had been downloaded 500,000 times and that 75,000 people have become “regular users” of the app, at least during the extended free trial period. Nevertheless, the tweets per day from the app are on the decline.

If I had to explain to Mr. Murdoch and his team why their paid subscriber to application download conversion rate is so low, I would tell them that while their content is beautiful, the experience of consuming it was painful and slow. People want speed, freshness, and variety. It’s painful to watch all these little boxes on screen while my issue was being delivered and to watch my beard grow as thumbnails of pages loaded. Mr. Murdoch, your publication is obese and crippled.

What has been your experience with The Daily? How would you fix it at this point?

By now I am sure you have heard about the acquisition of The Huffington Post to AOL for $315 million and all the change that has followed that acquisition. The Huffington Post’s news, analysis, and lifestyle website was founded in 2005, which now counts nearly 25 million unique monthly visitors and boasts an affluent, influential audience that is growing at a rate of 22 percent.

You may have heard how The Huffington Post uses  real-time testing to write better headlines. Or maybe you heard The Huffington Post’s CTO Paul Berry speak about its Google Analytics deployment and how it uses it:

When the HuffPost publishes a front-page Quick Read or other feature story, Berry and his team can use Analytics to quickly gauge traffic spikes and update the content in minutes to drive the publication’s editorial direction. The editorial calendar stored on Google Calendar is then updated accordingly, giving staff easy access to any changes even if they are on the road. “Overnight, we can shape our feature stories or Quick Read columns and share any changes with everyone on staff to create more targeted, relevant content and attract more viewers.” says Berry.

As important as these data-driven pieces are to the formula, it was only recently when I heard The Huffington Post’s CFO Eric Ashman deliver the Web Analytics Association Gala Awards dinner keynote that I realized how hard-core, data-centric, real-time-enabling, and customer-focused their business was as he spoke about the primary drivers of The Huffington Post business model.

He spoke about the critical importance of having the right reporting structure in place with web analytics data including real-time stats as they relate to the “product” and marketing stats as they impact sales and marketing flowing directly to the office of the CFO and the board of directors. My brother and I have been advocating that for a reporting system to be meaningful, every piece of data must flow into the financial statements since 2001. Eric, as I do, believes “traffic analytics are as core to strategic planning, decision making and building shareholder value as financial statements.”

Several other critical success factors he shared included:

• Getting the technology team support and the importance of being nimble.
• Getting real-time data in the hands of people who can react quickly.
• Starting simple and building from there.

Mr. Murdoch, I truly wish you could have been there to learn.

Do you agree that we can learn from these two very different publishers?

Create relevant and delightful experiences people want to share. Speed up your site, speed up your corporate metabolism, enable everyone to make decisions based on data, and execute rapidly; that is going to be a winning formula for the next several years. Will you be able to keep up?

With Major League Baseball’s spring training under full force, it inspires me to look at how we approach our “online marketing game.” We can learn a lot about winning “conversions” from how the game is played. Most baseball people will tell you that you can win the game with the “long” ball or with the “short” game. When you convert a visitor to a sale or to a lead, hopefully you have scored a run your competitor won’t. Pete Rose liked to say  “Somebody’s gotta win and somebody’s gotta lose and I believe in letting the other guy lose.” You should adopt the same philosophy.

Pete received the nick name “Charlie Hustle” for his unique playing style. He may not have been the athlete with the most talent but he worked harder than anyone. It is about getting rock solid on the fundamentals and executing regularly. Even when being walked, Rose would sprint to first base, instead of the traditional trot to the base. Rose was known for sliding headfirst into a base, his signature move. He played his heart out and would do anything to score runs on the board. Pete understands what it takes to be a winner. Some of his accomplishments:

Major League records:

• Most career hits – 4,256
• Most career games played – 3,562
• Most career at bats – 14,053
• Most career singles – 3,215
• Most career runs by a switch hitter – 2,165
• Most career walks by a switch hitter – 1,566
• Most career total bases by a switch hitter – 5,752
• Most seasons of 200 or more hits – 10
• Most consecutive seasons of 100 or more hits – 23
• Most consecutive seasons with 600 or more at bats – 13 (1968-1980)
• Most seasons with 600 at bats – 17
• Most seasons with 150 or more games played – 17
• Most seasons with 100 or more games played – 23
• Record for playing in the most winning games – 1,972
• Only player in major league history to play more than 500 games at five different positions – 1B (939), LF (671), 3B (634), 2B (628), RF (595)

When he struggled, he’d continuously experiment with his technique until he would find a winning combination. Businesses and especially marketers love the excitement of the home run. Hitting the long ball is definitely one way to win ball games. Moneyball: The Art of Winning an Unfair Game, by Michael M. Lewis, published in 2003, looks at the Oakland Athletics baseball team and its general manager, Billy Beane. Its focus is the team’s modernized, analytical approach to assembling a competitive baseball team despite Oakland’s disadvantaged revenue situation.

Rigorous statistical analysis had demonstrated that on base percentage and slugging percentage are better indicators of offensive success, and the A’s became convinced that these qualities were cheaper to obtain on the open market than more historically valued qualities such as speed and contact. I think the same is true today in online marketing. It is not about having the greatest creative talents and who can hit the most home runs but who has the ability to keep moving runners to the next base. This is about consistent, and persistent execution.

In more than a decade of helping companies improve their marketing and increase their conversion rate, one of the key characteristics that determines success is the ability and speed of execution and change plans on the drop of a dime. It is better to get some thing up and out the door even if it is flawed (and it always will be) than to wait and deliberate and evaluate to consider doing something. You can win games even if your are less innovative, less powerful and less talented just by mastering the hustle.

Get things done. Continuously optimize later.

So which organization would you rather have, a team of high paid superstars who don’t deliver consistently, or a bunch of charlie hustles?

If you need some guidance on what tools, talent and techniques you need, we’d be happy to coach you.

Few would argue about the impact of social media. The voice of the customer has never been so powerful, so connected, nor so frequently measured before. Customers are obviously engaged in conversations with brands. Customers choose to affiliate themselves with brands and businesses they “Like” while others consume the content (i.e., reviews, videos, etc.) produced by their fellow customers before and after they make purchase decisions. Social media has tremendous impact on brand perception.

Click here to view the embedded video.

One trend concerns me. So many marketers obsess about the return on investment of social media. I’m a big fan of ROI – always have been – always will be.

So what is the return on creating and strengthening a relationship and over what period do you measure it? Here is how it’s broken down:

• What is the investment (true cost) of listening and engaging in conversations?
• Can the returns (incremental revenue) really be measured using direct response metrics?
• Over what period do you measure the impact and how does that relate to lifetime value of a customer?

Measuring the short-term sales attributed to a tweet, YouTube campaign, or Facebook “Like”-athon might demonstrate “return,” but it is the wrong end of the telescope to be looking at measurement from.

Social Media Can Not be Measured in a Snapshot

Social media is about relationships. And anyone who has ever had one can tell you that you cannot judge a relationship from a snapshot; you need to observe a relationship over months or even years to get any sense of the quality and value of that relationship. Sadly, most of the social media analysis tools in the marketplace don’t provide this viewpoint.

When a brand chooses to participate in social media it is an investment in customer experience. Any investment in customer experience should be part of the cost of any marketing program today, but its costs should be amortized over the long term.

Irrational Hype Will Lead to Irrational Expectations

“If you torture the data long enough it will confess,” is what we learn from British economist Ronald Coase. The question to ask is what are the “social media pundits” trying to get it to confess to?

The McLie of Foursquare

McDonald’s first reported a 33 percent increase in overall foot traffic (and later clarified it was actually a 33 percent lift in check-ins) on a $1,000 Foursquare campaign. Have you seen this story? There has been quite a bit of analysis on this already by others, but here is the summary:

• This was a contest with gift cards. Long-term impact: zero.
• Measuring check-ins doesn’t measure increased foot traffic.
• To measure foot traffic, measure actual foot traffic. Metrics are not randomly interchangeable.
• If you cannot measure the financial impact of your campaign, all you know is its cost. You didn’t measure the outcome.
• Measure conversions: reach > response > visits > check-ins > transactions > revenue > repeat.
• McDonald’s has about 26 million customers per day, so a 33 percent increase equals 7.8 million Foursquare users. But, Foursquare only has a total of 3 million accounts and 1 million active users.

Even if this case study from McDonald’s was misunderstood, the point pundits are pushing is the same. Too many people are trying to look at these relationship building tools as a direct response vehicle. Can you get a direct response from a relationship medium? Sure you can. So why not put your customer relationship management (CRM) initiative on commission and then insist that any communication with customers that doesn’t directly contribute revenue be cancelled? No more smiles for you! Online, those virtual smiles are visible to everyone. Do you want to be that company who only smiles to those customers transacting right now?

Take it from someone who loves measurement, conversions, and improving responses, you ain’t going to get any satisfaction trying to measure the short-term impact. You will get a lot of noise, false signals, and opinions.

Measuring the long-term impact is what you need to look at and hopefully the tool vendors will catch up with this. However, it’s not probable. It is especially challenging considering the volume of data they would need to go through to do this properly, the false hopes they’ve spread, and the “experts” they’ve endorsed.

There is a ton of value in engaging with your customers in social media. No doubt about it! Please get realistic about what it takes to build real value. Only then might you deliver the type of happiness Tony Hsieh, the CEO of Zappos.com, has acheived by leveraging great customer experiences and nurturing real brand evangelists. That is how you can experience the true ROI of social media!

Just last week, I had the pleasure of keynoting the fabulous eMetrics Conference in San Jose. While there I had a chance to sit down with my good friends Jim Sterne and Avinash Kaushik to discuss Jim’s latest book Social Media Metrics: How to Measure and Optimize Your Marketing Investment. If you are doing anything in social media, planning on it (and if not why not) then you should get a copy right away. Take 8 minutes and watch the interview below, there are some juicy nuggets in there.

Click here to view the embedded video.

You’ll laugh, you’ll cry, you might even kiss your money good bye. Google AdWords is one of the most remarkable advertising vehicles in the history of marketing. No matter how simple 95 characters seems to be, there is no denying the complexity of executing well. Of course, the fact that not all the rules or all the data are presented well doesn’t make it any easier. What amazes me is how most people don’t take full control over what they do control.

My associates and I have been doing several Pay Per Click (PPC) audits for clients the last few weeks and consistently we find companies have many of the same core issues:

1. Account structure – remember that they are called ad groups not keyword groups. Too many companies groups keywords together that don’t belong together; they don’t realize you can’t create an ad that is relevant for each of the keywords in the group and this can become a bigger issue if the right match types aren’t properly used.

2. Keyword, Ad and Landing Page Quality & Relevance – because the structure is off, and companies don’t maintain their campaigns well enough, the ads become irrelevant for the search queries that trigger the ads based on the keywords that were chosen. If the ads are off, I can guarantee that the landing pages are off.

3. Looking at the wrong data – It surprises me how reports are distributed and used. If all members of your team aren’t all looking at the right data you can’t make the right decisions to get the most out of your campaigns.  You can’t be making business optimization decisions if you don’t have the right data and innumeracy leads many ‘data-driven’ executives to bad decisions. They forget that statistics lie and liars use statistics.

Please don’t forget to control what you can.

The first step is understanding the PPC searcher’s buying journey and managing and optimizing the parts you can. Why aren’t you regularly optimizing your PPC campaigns from keyword management, to account structuring, to improved ads to testing and improving your landing pages? Is it lack of knowledge? Lack of resources? Lack of direction?

Why would you want to continue the drama and not enjoy lots of happy endings?