It may not be the sexiest topic, but regularly checking your business’s analytics can mean the difference between putting money in your pocket, or throwing it out the window. If you’re going to run ads, at least take the time to test and find out what’s working and what’s not. If you don’t know what each of your customers are worth, how can you accurately decide how much to spend on advertising to them and still make a profit?
Jeff Greenfield combines technology and marketing to help businesses make smarter investments with their advertising dollars, while allowing them to better track their cost per customer for more effective ad spending.
Rich: Jeff Greenfield’s history of technology and marketing initiatives have served blue chip clients including GlaxoSmithKline, Kimberly-Clark, Sony BMG, Black and Decker, Forest Labs, Plum Creek and more. Prior to his cofounding and development of C3 Metrics, Greenfield was a recognized thought leader in the area of branded content as publisher of Branded Entertainment Monthly – a joint effort with VNU Media – detailing industry specifics, gaps and trends.
He’s been a featured speaker at the Next Big Idea, and he’s been a news source in the New York Times, Washington Post, Wall Street Journal, ABC, CBS, CNET and Investor’s Business Daily. He began his career building a 75-person, multimillion dollar practice featured in Chapter 5 of Buzzmarketing: Get People To Talk ABout Your Stuff.
He studied biochemistry at the University of Maryland and holds dual degrees from Southern California University of Health and Sciences. He is an instrument rated pilot and holds a Class E FCC Radio Operator’s license. Jeff, welcome to the show.
Jeff: Thank you, Rich. Thanks for having me.
Rich: Is there anything you can’t do?
Jeff: Well, you try new things as they come along and you force yourself to learn. That’s really what it comes down to, that’s really what this is all about is challenging yourself both in life and business and just keep pushing through.
Rich: Excellent, good answer. So you’ve done a lot of things, been a lot of places, what drew you to analytics in the first place?
Jeff: That’s a great question, because analytics isn’t really a sexy thing. It’s not anything you talk about and people say, “Oh wow, that sounds really cool and interesting.” It came about by trying to solve some problems that a client of ours had. Myself and Mark – who’s the cofounder of our company, C3 Metrics – we’ve been working together since 2001. We used to put together big programs for larger clients where we would do some branded entertainment, we’d do some TV, we’d roll out digital in our early days, and we had a lot of success with that. Then one of our clients asked us to help them out because they were really confused with the digital stuff and they didn’t think the numbers were adding up.
The CEO of this company, he was a former CFO, so he was really into the numbers and they just didn’t make sense to him. Really simple things like click through rates just seemed ridiculously high, and the impression counts seemed really low for those click through rates. So we looked at it and we realized he was right and things did not add up at all. And it was because there was really no measurement, nobody was kind of talking to each other. So we came in with a couple of suggestions that were going to force him to spend a lot of extra money, and he didn’t really want to do that. It was forcing them to get an ad server and all those sorts of things.
So I said I’d build it, we can put this together and I had done other technology projects and thinking that this would be a one-off thing, I really thought that this CEO was just asking too many questions. That’s honestly what I thought. This was almost 9 years ago, and I built this thing out, and I was surprised that the results in terms of what the insights were that we could pull from it. And what made me decide to go in this direction and with this whole analytic suite that we’ve done now, is I was talking to a friend of mine the last 6 months after we had done this, and we had built this product for this client and he was asking what we were doing and we explained it to him. Then he went to one of his other friends – who at the time was a CEO of a larger online site – and he explained to him that this is what Jeff is doing, and his friends said, “Bullshit. Nobody can do that, that’s like the holy grail.”
And when he called me back and told me that, I shifted the whole build around. I had originally built it just for one client and then we shifted it to make it a multi tenant, where you could add on as many clients as you want to all serve the same function. And that kind of led me down this path. It’s really cool because essentially what we’re doing is we are taking all of someone’s data that they have, make sense of it all, kind of creating for them their own little Watson that answers the big questions about advertising and helps put them on the right path.
Rich: Very cool. So you and I first met at the Digital Marketing Symposium at the University of New Hampshire where we were both presenting. Your topic was “5 Obstacles To Effective Digital Measurement”. Now I’ve got this model at work called the “BARE Essentials Of Digital Marketing”. B.A.R.E. – build, attract, retain, and evaluate. So evaluation obviously requires analytics, it requires data, so what is the problem with analytics today than?
Jeff: Well the biggest problem with analytics is that most people don’t understand where the holes are. You’re never going to have a perfect answer – especially when it comes to marketing and advertising – the reality is that until we have a machine that can hook up to someone’s brain and discern exactly which touchpoints and which brand images actually have them make a decision to buy from us or engage further with us, that’s perfection and we don’t have that. So anything else we should step back and understand that anything else we have is just wrong. The questions is how wrong is it and how far away is Google Analytics, or how far away is any analytics from the actual truth.
And the first step in understanding that is understanding where the holes are. We should never accept these things as being an absolute truth because there are a lot of holes. More and more people are starting to be aware of these things, one of the ones that just stands right out is that consumers today – especially in North America – have multiple devices that they utilize. I got a laptop at work, maybe a desktop, an iPad at home, and my phone. And most people have 3-4 different devices that they access at all different times, and the problem that we have as marketers is that I send out all these messages, someone becomes aware – maybe on their phone or their iPad – and then they end up buying or engaging with the laptop later on. So unless you can string those touch points together across those different devices, then you’re analytics are going to be really messed up.
Luckily Google Analytics does a pretty good job, but they’re somewhat limited in the sense that if you’re outside the Google universe, they’re not going to be able to do it. So if everything you do is within that Google universe, Google Analytics will connect those people together. But outside of that. They’re not going to be able to do that.
Rich: So what do you think the future is? Let’s take it down a notch. We’re small business marketers – me and a lot of people listening to this show – so is Google Analytics good enough, or you talk about these holes, are there ways that we can plug these holes?
Jeff: Yeah, we can definitely plug these holes. I think it really starts with when you’re talking about your acronym that you have – that concept of evaluate – and I think the first step in evaluating for any business owner or any marketer, is to know your numbers. I can’t tell you how many times we have clients of ours for larger corporations and we ask them what the number is that they have to hit. And they don’t know.
Rich: Oh, so big corporations are just like small businesses in that way?
Jeff: That’s exactly right, Many times we have to pull the public information on the company and look at what the CFO’s say, and we say, “Hey, your return on ads number, your CPA number is this.” And they’re like, well how did you know that. Well, your CFO just told Wall Street this last week. So the same problems that small marketers have, you can just take that and grow it exponentially, that’s exactly what large marketers have. The biggest problem in large marketers is that they’re just far too many people. Sometimes – in fact we know this for a fact – a small team can get so much more done.
I think the entire Google Adwords product was built with 3 people. Excel was built with a team of less than 5. So you should never feel like you’re hampered as a small business owner. But the number one thing you need to know is you need to know what your numbers are. You need to know if you’re doing things on a CPA basis, you need to know what your CPA is. Not your CPA for brand search, not your CPA for different channels, but what is the number at the end of the day that you have to hit in order to make money. Or if you’re doing return on ads spend, what does that number have to be. And you should write that number down and stick it at your desk, because that number is going to drive everything else that you do.
I’ll tell you that the truth is, a lot of people think they know their numbers, but when you really dig into it, they really don’t. And sometimes that means that they’ve got to sit down and look at their P&L, they’ve got to look at everything and be honest with themselves about what the number actually is.
Rich: Ok, this is good, and maybe this is more basic than you thought we were going to talk about. But I think that this is important. And just to clarify, I think CPA is the “cost per acquisition”, am I correct?
Jeff: That’s correct. Anything cost per acquisition, so cost per lead and anything based upon that, or return on ads spend.
Rich: Ok, so we need to know how much money we need to make at the end of the year, how many clients or customers that’s going to take to get us there based on how much each one is worth, and how many people we need to get to click through to our website for us to call somebody a customer. Working backwards, is that how we can get to a cost per acquisition?
Jeff: That’s exactly right, and then what we need to do is we need to say how much is a customer worth to me, and what is the lifetime value of that customer. So let’s say I have a service that people buy from me and there’s some sort of recurring revenue model. And you have to do an honest look and look across your business for the last 6 months or year, of al the new customers that have come in, how long have people stayed with me for. This concept of “churn”, you’re always going to have customers that leave you. And by looking at that number, I can then determine that when someone becomes a customer, I can have a pretty good estimate of what their lifetime value is.
So once I know how much a customer is actually worth to me, then I can go back and figure out if a customer is worth $1,000 to me, and of that $1,000 – because of my cost to goods sold, and everything like that – that I make $500, well then I know that I can’t spend anymore than $500 to obtain a customer. If my cost to obtain a customer is $550, I lost money on that customer. So we have to come to a happy medium and figure out what are the margins that I want to make. Maybe I want to make 50% margin, so maybe then the maximum cost per action to acquire should be $250. But we really have to look at not just that first purchase, but if there’s ongoing purchases to figure out what is a customer actually worth to us.
Rich: You know it’s funny, because on some level this is so basic. And yet on some level, people don’t want to pay attention to this because it’s not sexy, like, “Hey, I just got 100 likes on that Facebook post I just did.”
Jeff: You’re totally right on with that. People want to go out and look ad Adwords and how many video views they got and all that stuff, but the reality is that’s just crap, it doesn’t mean anything. Before you spend another dollar, everyone should sit down and do this exercise to look at your customers and really do an analysis.
The best way to look at it is imagine you hired an outside auditing firm, a CPA firm to come in and really look at your numbers. That’s the type of honest look that you have to do with your numbers. We do it at our company every single month and it’s a great exercise to get into because the truth is, whatever your lifetime value is of your customer last month, it may have changed this month. It may have gone down or it may have gone up. And guess what, if it went down or up, that’s something you need to know. Maybe you did something in your business that had an impact, whether it’s positive or negative. But if you’re not watching this stuff and you’re not on top of it, then all the marketing and advertising you do doesn’t matter. It’s like you’re just driving down the highway and throwing dollars out the window.
Rich: Absolutely. And I know that a lot of people who are listening – because I hate numbers, I’ll be the first to admit it – but the most freeing thing you can do as a business owner or if you’re in charge of the marketing department, is to know your numbers. Because once you know that framework, it’s amazing how much freedom you actually have because you know how much sandbox you actually have to play in.
Jeff: You’re absolutely right. Everyone knows about the concept where you can set up very basic simple marketing automation where someone signs up and they download something from your website – this is kind of in that pre purchase funnel – and then they get an automated email that comes out and you go through like a series of steps where people get a series of emails. If you’re not looking at the open rates on those emails, if you’re not looking at the click through rates on the emails, or if you’re not testing messaging, then you’re not watching your numbers. And that’s really what it comes down to is you have to always be on top of all of the numbers of your business and always be looking.
And every month we always tell our large customers who have sometimes 5-6 different agencies, the one thing that they need to insist upon from their agencies is every month they should be getting a report of what they did each month, here’s what worked, and here’s what didn’t work. And for any small business owners that are listening, you should have every single month, stuff that you tried to get new business that did not work.
Rich: Oh, I love that.
Jeff: Because if everything worked, then there’s a problem. That means you’re not testing enough. I don’t care if you’re only even spending $500 a month, set aside $50 – 10% – to test something as an experiment. Because you have no idea.
Just to give you an example, for larger advertisers that are running display banners and these ads that you see on any newspaper site or any website that you go to, you may see a background on that banner that’s blue, but there’s like 8,000 different shades of blue. Do you think that the designer that designed that just picked the right shade of blue and said it’s got to be the best performing one? No. You have no idea unless you’re testing. You should be testing everything from messaging, to colors, to everything. There always should be stuff and never waste, it’s never money wasted, because when you learn what not to do, it points you better towards the direction of what’s actually going to work.
Rich: I completely agree. I think that it’s ok to fail, as long as you learn something from that failure. And I think that’s what some people forget is you still need to learn something, so you need to run these things like they’re experiments.
Jeff: That’s exactly right. Business is an iterative process. I remember the story about Dave – the founder of Wendy’s – who I think he had to go to several hundred banks to get his loan to open up his chain. But he never stopped and he never saw every time he got denied as a failure, because what he did is it helped him hone and refine his pitch, until finally the last bank accepted him. But he never stopped, imagine if he had stopped.
So every time he had a failure, the key is to say as a business owner, what did I learn from that. It’s only a failure if you say, “That was a waste.” It’s never ever a waste, there’s always a lesson to be learned.
Rich: Yes. And not to do the same mistake twice, for sure. And that Wendy’s story reminds me of a famous story – perhaps hypocriful – of some viewer talking to Thomas Edison about what was it like to have 10,000 failures before you invented the lightbulb. And he said, “I never failed at all, I discovered 10,000 ways not to invent the lightbulb.” So it kind of helps you hone down on what ultimately is going to help grow your business.
So getting back to some of the analytic stuff and some of the problems, you mentioned briefly multiple displays, so are there tools out there for marketers to kind of track people across multiple displays? I know that Facebook – as long as you’re logged in – can track you from a phone to a desktop to a tablet. Are there other tools out there we should be aware of?
Jeff: Well that’s one of the advantages of Facebook. As marketers, one of the things we have to look at is there’s these walls that have kind of gone up that Facebook knows is a walled garden, and Google is a walled garden, Verizon is one, Amazon is another, and the last big one is ebay. So each of these companies – they’re massive – and when you think about all of these, they all have a presence on both the desktop and the app world or the phone world. So like on Amazon people buy on the web, or they buy on their phone. And so Amazon is able to attract people to cross because they’re authenticated, they’re logged in.
The same is true of Facebook. Most people, very rarely will someone logout of Facebook on their desktop or their laptop. And what that means is, that if you go to a site – any site that has a “like” button on it – then they know who you are because you’re authenticated to the Facebook world. But Amazon and Facebook, they’re not talking to each other, they’re not sharing any data. And the same with Google.
So the key is to understand as a marketer is that you run ads on Facebook and you run ads on Google, that Google can tell you someone is utilizing different devices and connect them. But they don’t know necessarily that someone’s over at Facebook and vice versa. So that’s kind of one of the important things to keep in mind. As long as you stay within that world, it works out pretty good.
And Facebook has actually come out lately with a new product and we’ve had a lot of our larger marketers test it – and I’ll mention it because some of your listeners may not be aware of it – but it’s worked out really well. And that’s this Facebook lead program, where within Facebook instead of running an ad, you can kind of run an ad that allows someone to click a button. And when they do it automatically sends you their contact information. So when you think historically if you’re trying to gain customers and you have something where they come to your website and they fill out a form, Facebook has figured out a way to do this where people don’t even have to leave Facebook.
If you’re having a business that can utilize that as a tactic, I would highly recommend giving it a try and the cost on those are really low. We’re seeing numbers that are just through the roof for our customers. Everything from really large scale marketers, to manufacturer, it works out really well.
Rich: So if somebody’s on Facebook and they see my page, or possibly an ad that I’m running a sponsored story, and there’s some sort of Facebook lead button there and they can click it – I probably need to incentivize them for some reason – and then that’s going to send me that information, or possibly populate my CRM?
Jeff: That’s exactly right, yeah. So then what you can do is, normally what you would do is you would run ads where someone would click and come to your website. And then when they come to your website, then they would fill out a form and you would get information. But we all know as a rule from marketers in the digital realm, that the fewer clicks that someone has to do, the better it is. Because anytime they click it’s like, “should I go there, should I not go there?” And so utilizing Facebook there’s a great tool out there which is awesome for small businesses. We use it ourselves, it’s phenomenal, it’s called Zapier. And Zapier allows you to – without having the need for doing any programming – within 5 minutes you can take this Facebook lead information and Zapier can connect that, and then on the other side Zapier can connect to your CRM. And it will pipe right through as though they were at your website filling out your form. And within 5 minutes you can be live, it’s absolutely incredible.
Rich: Interesting. And is that Zapier with a “Z”?
Jeff: Yes, with a “Z”.
Rich: I only asked because oftentimes people will spell things and say it’s with an “X” because “Z” was taken. So I just want to make sure.
Jeff: Yes, zapier.com. Phenomenal. And what they’ve done is they’ve taken all of these very complicated APIs, these toolsets that people have to be able to connect them from one to another where you would normally have to hire a programmer. And they have created this middle ground where normally I could hook into there and then I can hook into all the other tools. So you can take things like Mailchimp – all of the tools that a small business owner would utilize – are already part of it. And it’s just this great connector. So instead of having to hire a programmer, it’s 1, 2, 3 and you’re good to go.
Rich: Fantastic. Now let’s say that I hire you to help me with my small business marketing, what steps can you take to get me more accurate results than I might be getting today?
Jeff: More accurate results, or better conversions and numbers?
Rich: Maybe better numbers so that I can make better decisions. How about that?
Jeff: What we have created is a very sophisticated piece of machinery that captures all of the big data, so anytime somebody clicks on an ad – whether their on Facebook or Google – anytime someone is exposed to an ad like on Google or a news website, we’re there. And we’re capturing all of this data, and then we’re connecting all this data through all of the way to the CRM system. So we’re connecting so we can get information on returning customers versus new customers, and different personas and things like that. And then going through and kind of cleaning up this data. Because one of the problems with all of this data is there’s a lot of garbage in there, and it’s a lot of unstructured data.
We clean it up and then we run it through an algorithm that is very similar to what’s being run in the self driving cars. It’s a machine learning algorithm that gets smarter and actually grows up as more data is put into it. And it’s constantly updating, constantly churning and learning. And what that does is it kind of provides the advertiser with kind of their own mini Watson that’s there to tell them where to spend more and where to spend less.
A good example of that is, when it comes to buying ads on Google, everyone knows there’s ads that are very expensive. So if I’m selling flowers and the name of my flower shop is “Jeff’s Florist”, that term is going to be a lot less expensive than the term “flowers”. “Flowers” is going to be a very expensive term, in fact, once I get the numbers I’ll realize that the word “flowers” – every time somebody clicks on it – it’s probably $80 and my average bouquet is $75, there’s no way I can make money at that. Absolutely no way.
But the reality is maybe it turns out that once someone becomes a brand new customer of mine, that maybe over the course of 2 years – because my service is so great they actually spend $1,000 with me – so I’ know that the average lifetime value is $1,000 for this customer. Well if that’s the case, I would spend $80 everyday to obtain a customer like that. That’s part of what our platform does is it learns about your business and learns down to a very granular level where you can spend more money and where you can have overspent. A lot of times people will overspend and over invest. It’s like pouring a cup of water and it’s constantly spilling over, you don’t even know you’re wasting the money. Because of the way that people measure today, it’s almost impossible to tell. So our platform brings clarity to that and lets the marketer know you can stop doing that.
For some of our clients we’re able to go in and save them $300,00 – $400,00 just in the first month or two. It was money that was completely wasted. They can take that money and put it in their pocket,or take that money and reinvest it in places they can actually spend it and get a return.
Rich: Very cool stuff. I’m sure people will want to learn more, dig a little deeper. Where can we find you online?
Jeff: You can go to c3metrics.com, you can also find us on Twitter @c3metrics, as well.
Rich: Great. Alright Jeff, thank you so much for your time today.
Jeff: My pleasure Rich, thank you so much.
- Find out more about Jeff at his website, and be sure to follow him on Twitter.
- Rich Brooks is the President of flyte new media and founder of the Agents Of Change Digital Marketing Conference. If you like the information and guests on this podcast, start thinking about attending the 2017 conference now!