As you may have guessed, there is a story behind this. Every day at 8 am we meet up and talk about what is going on. We share challenges, discoveries, and talk about what’s next. In one meeting, we discussed the need to place a “Your baby is ugly” call. This is when we have to tell a client that the website they are heavily and personally invested is data ugly.
Your Baby is Ugly
Jackie, our Marketing Strategist, was discussing a new account that had just finished its first marketing cycle and the results were ugly. Google Ads was receiving the targeted traffic level and the search query results were clean, but the results were ugly. The conversion rate was a terrible (0.16%) with a goal of 2%. We were concerned when we first saw the site but the client told us it worked for them and we always trust what client’s say until data proves otherwise. We held our input and waited for data. Our first impressions have been wrong before and we always trust our clients. We have seen lots of sites that we thought were ugly that produced good results for clients and these can often make us smarter. With data in hand we needed to have the dreaded “Your Baby (aka Website) Is Ugly” client call. While there was nothing funny about an ugly website we did have a good laugh with the “Your Baby is Ugly” twist. As a Content Scientist, I set out to find a website ugliness formula and this article is about that journey.
The Ugly Formula
Our Designer Krislyn from an artist’s perspective said:
“You cannot calculate beauty because it is in the eye of the beholder”.
As a Content Scientist, my response was different. While the emotion of art is difficult to put a number to, the performance of a website is not. As a business, your beauty standard should be profitability. Not only can you put a number but it is a best practice to do so. Beauty comes in two forms:
- CPA (Cost Per Action) – expressed in dollars
- VOA (Volume Of Actions) – expressed in units
- Beauty is positive – the bigger the profit the prettier the site
- Ugly is negative – the bigger the loss the uglier the site
Here is the math:
ugly$ = (value – cost – cpa)
uglyUnits = VOA(actual – target)
It really is this simple!
Value is created by the action of the visitor. This can take many forms but ultimately it has to be expressed as a dollar value in the formula. For Executives that have never been through this before, the conversation of getting to this value can be difficult. The difficulty comes from them trying to get to a specific exact value. This is marketing data so you have to become comfortable with averages and estimates. To help lead clients through this, we ask them for an average order size and average cost of goods. Use the P&L to get the total sales number from last year and divide it by the number of orders last year. That will give you a number that is accurate enough. Sometimes there are exceptional non-repeating orders that have to be removed from the data but that is pretty rare. If the business is new then they have to guess.
Cost is all direct costs associated with the value. This can be done as either gross or net cost. Gross is the direct cost of the product and net considers the contribution to overhead but this can get wildly complicated. For marketing purposes, it is accurate enough to take the total expense last year and divide it by the number of orders. Then add the direct product costs and you have the net-cost.
CPA is the Cost Per Acquisition and it is what the business sets as the value of the action taken. Common actions for the CPAs include:
- Orders
- Leads
- Subscriptions
- Engaged Visitors
- Returning Visitors
- Time On Site
Each CPA type needs to have a value, and historical conversion rates from one CPA type to another can be used for this conversion. If an average order is $100 and your salespeople close one in four leads then the value of a lead is $25. Once you have your number:
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Actual CPA above the CPA Target is Ugly
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Actual CPA below the CPA Target is Beautiful
The line between Ugly and Beautiful is your CPA Target.
Set a Reasonable CPA
We have client conversations all the time to help them set CPA Targets. We ask the question “How much would you pay for a lead?” and often the first answer we get is “As little as possible”. Certainly a reasonable answer in their mind, but not in their market. Every business wants expenses to be as low as possible and initially everyone thinks of CPA as an expense. CPA is an investment, not an expense. The lower the CPA, the lower your volume will be. Cost and Volume are strongly connected to each other with a string-relationship. It is impossible to pull on one end of a string without moving the other end. If you take the CPA Target and multiply that by the Volume Target that is your Budget.
Budget = CPA Target * Volume Target
Call to Action
Acting on this data often requires forgiveness and separation from the past. Many clients are hugely vested in Ugly websites because they were once beautiful and dominated their markets. They are very proud of their ugly baby and defend it fiercely. There are a few sites that age like a fine wine and need to be replaced. Make sure you know which one you have and let the data tell its story. Over their lifetime, websites just need maintenance and tune-ups. However, at some point, it will need to be scrapped so the next generation can come of age.