Episode 011:
Numbers

Dom Goucher:    Hey, buddy.

Pete Williams:    Big fellow, how are you?

Dom:                   Good, good, good, as usual.

Pete:                   Very good to hear.

Dom:                   Or as they say here, ‘fenomenal.’

Pete:                   Fenomenal, very nice, very nice. Let me ask you a quick question on the top of the show. Are you new and I’m noteworthy, or am I new and you’re noteworthy? Because according to iTunes, we are New & Noteworthy.

Dom:                   Awesome, awesome.

Pete:                   See what I did there? Did you get that?

Dom:                   That was an awesome, awesome segue into that and a little bit of an announcement.

Pete:                   Worked on it all day.

Dom:                   All day.

Pete:                   That was my bit. Now, so yes, very exciting. We might as well let the cat out of the bag a little bit. One thing that we did do with these podcasts is we actually recorded the first eight episodes ourselves behind closed doors before we opened this up to anybody. So we didn’t even put the feed together or submit it to iTunes or anything like that until the eighth episode. Is that correct, Mr. Tech Guy?

Dom:                   That is correct, sir.

Pete:                   We’ll go back and tell the ‘why’ behind that in the moment. So we submitted it to iTunes last week and it’s been good. It’s been a week, being exposed, shall we say. It’s been very, very cool. A lot of great reviews. I think all the reviews so far have been 5-star or at least the ones I’ve seen, which have been fantastic. I don’t think we want to go in the path of this podcast having sponsors and stuff, so I think it’s all driven by our egos.

The more 5-star reviews and comments people give, the more chance we’ll continually do this. We’re not trying to monetize it or anything like that. So if you haven’t given a review yet, we would really, really appreciate you taking 13 seconds out of your day and just giving some little review. We’ll even settle for a 4-star review. But it’s been really cool. That’s obviously driven the podcast to be featured under the New & Noteworthy section.

Dom:                   Which is awesome.

Pete:                   Yeah, very cool. Very, very prominent placement inside the iTunes Store, particularly in the Business section, and the Management and Marketing sections as well. It’s a pretty good exposure. Hopefully, that translates into new listeners. If you’re new, welcome. Welcome aboard.

Dom:                   Yes, welcome one and all.

Pete:                   So one thing just on the whole iTunes stuff that interested me that I wasn’t aware of is that they keep each country’s podcast area completely separate. Now, I knew that I had a different chart. I understood they had Australian charts, US-based charts, UK charts and that sort of stuff. I’ve got an Australian and a US-based iTunes account, so I was aware of that. On that, we’re actually featured in the New & Noteworthy section in Australia and in the US. Are we in the UK at all? Did you know?

Dom:                   You know, I haven’t looked today. I haven’t looked.

Pete:                   We’ll actually come back to that again later on. I’ve got an idea of what I’ll talk about today and that will tie that in nicely, which is kind of unique. So a bit of an open loop for you. But one thing I found interesting is I never had different charts, but they actually have different ratings. So the ratings we’re getting in the Australian Store don’t get shown in the US Store, which I find very, very bizarre. It’s the same podcast. I understand that the charts are different, but a review is a review.

Dom:                   Nope. Social graph mate. Social graph.

Pete:                   Social what?

Dom:                   Ed, close your ears. Social graph, the effect of your social network on the information that you consume. It’s more relevant to you that people in your geographical location find that podcast interesting. Therefore, those ratings are localized.

Pete:                   See, I get that for basing the charts so I completely understand that the local ratings and the local listeners affect the chart status. What I do find weird though is when I actually go into iTunes and click on PreneurCast and go through the actual podcast page of iTunes, the only reviews I see are the ones from the country I’m logged in at. The algorithm and the social graph making the charts, that makes perfect sense to me. That’s logical. But not displaying the reviews across the globe, I find that unique.

Dom:                   Okay, I’m going to be really, really boring and mundane, and drag up a little bit of my history here.

Pete:                   Okay.

Dom:                   From a programming point of view and literally from a coding, writing code, writing programs, from that point of view, it’s a lot easier if the only people that are allowed to put reviews into an area are the people that you’re then going to use to work out the charts.

Pete:                   Fair.

Dom:                   So if they’re only taking the data from Australia, then logically, they’ll only capture data from Australia and only list data from Australia. That is a much easier coding problem to solve.

Pete:                   Fair enough.

Dom:                   Pretty mundane, sorry about that. But it’s like Amazon. Although Amazon now are spreading their reviews, I believe.

Pete:                   Yeah, okay. I’ll give you that. I’ll stand corrected. From a coding perspective, that’s fine.

Dom:                   I’d rather be wrong, by the way. I’d rather be wrong.

Pete:                   But from a user perspective, I would have thought Apple have a few resources available. They’re not sort of restricted. Anyway, soapbox. Get off it, Pete.

Dom:                   I don’t know if you’ve noticed, but they’ve been a little bit busy lately, changing the world.

Pete:                   True.

Dom:                   With things like iPads and stuff.

Pete:                   Fair enough. Coming back to one of the early points about why we did the podcast the way we did. From my perspective, I wanted to make sure this is something that’s going to stick. I didn’t want us to say, “Yeah, cool. New podcast,” like so many people do. They record the first two or three episodes and then for numerous reasons, they drop the ball. And I think this is just a lesson in terms of creation in general such as when you’re trying to create a new blog.

How many blogs are started? Here’s an interesting fact. You know how there are these stats that say one in three businesses don’t last beyond three years or whatever crazy stats there are? It’s probably even higher than that now, really. I wonder how many blogs don’t last beyond three weeks, let alone businesses that last beyond three years. People start something, they write two posts. And then, the next shiny object comes along. We can easily go down that path in the conversation today.

But the reason we try to do this and actually create eight episodes, we did eight weeks of ritualistic podcasting. And if you go ahead and listen to the previous episodes, which I hope you do and I encourage you to do because there are definitely some episodes in there that I’m really, really proud of, that we actually spoke and act as if we already had an audience. So you’ll hear stuff where we sort of referenced things and say, “Make sure you go leave a comment.”

We try to do that to make sure we got in the habit of how we want to deliver the podcast from an actual recording perspective of how we want to sound, communicate and talk, and make sure that you and I work well and got the flow down pat. We also wanted to make sure we could be ritualistic, if you will, in terms of us showing up and making this happen. As we’ve spoken about in previous episodes, half of the challenge of creating anything is showing up regularly and doing that. I actually had a coaching session today over lunch with some people. They’re people I’ve known from a different world who want to get into what they referred to as the ‘internet marketing world.’

And I very lightly gave them that backslap and said, “There is no such thing as being an internet marketer. You are a marketer who happens to only have one path to market being the internet.” If you advertise in the Yellow Pages, you’re not calling yourself a Yellow Pages marketer. You’re a business owner. So I gave them that first backslap. And then secondly, I wanted to explain to them that to be successful in internet marketing or any business, it is really about discipline — showing up regularly, doing your CFTs and doing all that.

So we try to do that and make sure we had that process down pat that it’s something we enjoy doing, that we’re going to continue doing, that we’re proud of, that we can actually manage before we actually ship. Shipping is important, but you want to make sure you ship at the right time. So from my perspective, that’s the reason we went down that path and had such a backlog of episodes when we actually launched. We backdated them. So the podcast has been up for a week even though this is now the 10th or 11th episode. And thank you everyone so far who had given us fantastic reviews and helped us become New & Noteworthy.

Dom:                   Indeed, indeed. Just to talk through a couple of those points, Pete. First of all, absolutely, let’s look a little bit more about that, the habit-forming.

Pete:                   Sure.

Dom:                   You’re a busy guy, I’m a busy guy. We both have our own businesses. We both have our own little worlds completely separate from each other. We live literally opposite sides of globe 10-plus hours apart.

Pete:                  Absolutely.

Pete:                   I almost snuck in there and spoke about different hemispheres and weather. But I didn’t want to drop that whole weather thing because last episode we spoke about not talking about the weather anymore, so that’s why I didn’t mention that.

Dom:                   I’m just going to keep going.

Pete:                   Cool.

Dom:                   Just going to keep going. You’re trying to drag me into that, I know you are. But yeah, we’ve got all these issues about being in the same place and at the same time, and getting this thing done. So, as you said, shipping is crucial. But shipping and then fading would have been worst. Putting your name on a product that then just drops off really wouldn’t be a good thing to do. It’s like launching a membership site and then not delivering anymore content.

Pete:                   Exactly.

Dom:                   So we needed to do that. We needed to know that we could meet the commitment. And there were a couple of times when our schedules really didn’t work out. You’re little opportunity on the way to Bali for example gave us a few challenges.

Pete:                   Gave you a few challenges. Yeah, anyway, we have spoken about that.

Dom:                   Yeah, folks. If you haven’t heard the Bali edition, pop back and have a listen to that one and the one after it about failure. We wanted to know that we could do this. Because once we’d shipped, we wanted to know that we could keep going. We kind of had a dry run but it wasn’t because we were acting as if it was going to go live all the time.

While we were ironing the kinks out, the technology in the background, getting all the processes and things sorted out, we were recording real content, which is great. From a slightly geeky, more technical point of view, if you’re going to do a podcast, folks, top tip, when you submit it to iTunes, it really does help if there’s something in your feed.

Pete:                   Yes.

Dom:                   They won’t take a feed that’s empty. So you may as well record at least one show, and get it in there. The more the better because they will look after you if you are shown to be a regular content producer, as we clearly are. And we benefit from that because they considered us for New & Noteworthy.

Pete:                   Yes. And something interesting actually about this whole conversation we’ve had so far, it’s not going to be the main focus tonight, but we can definitely continue down this path. One of the things I found interesting in the last 36 hours, 48 hours, I’ve listened to two people that I really admire for two different reasons. One, Merlin Mann and his Back to Work podcast which I really do enjoy. It’s very, very ADD-filled but there’s an actual goal in there if you see through all the fun rocks and pebbles.

And also, John Mayer, who every year or every last couple of years anyway, he’s gone back to Berklee in America, the college over there, and given a presentation about being a songwriter as well as songwriting. Those are the two things I’ve listened to recently, and were going to have an episode solely on John Mayer in a couple of weeks which is going to be very, very cool. But In both of those things I’ve listened to recently, they both gave advice similar to what we’re talking about right now or what we did.

They were saying that, in Merlin Mann’s case, he was saying write blog posts that don’t actually get published to your blog. And John Mayer was saying, write songs before you even tell anybody. It’s about locking yourself away and getting in that habit and getting in that flow of knowing how to create consistently. And it’s very, very true that a lot of people don’t do. They think they’ve got to ship straightaway. Because if you’ve been in the world that you and I have been, in the conversation and in the community for the last two years, the conversation in the community in the marketing world has been all about shipping.

Merlin spoke about it the two years prior. And I think the pendulum is starting to shift a little bit again to make sure you ship – don’t not ship, but make sure you actually have a platform, a foundation, a history, a momentum going with you as you actually start to ship. That way, that momentum can keep you going in a forward direction.

Dom:                   Absolutely.

Pete:                   Is that an analogy on analogy that’s confusing?

Dom:                   It’s pretty clear. It’s pretty stacked with analogies, but it’s pretty clear. Pretty clear.

Pete:                   Very, very cool.

Dom:                   I’m going to join all these things together and bring in a completely random reference, and just see how many people we can lose with this one. Are you aware of the author Terry Pratchett?

Pete:                   No.

Dom:                   No? Fictional author, very famous English guy.

Pete:                   I haven’t read a fiction book since I was in the equivalent of what would have been Year 8 or 9. Not eight or nine years old, but like junior high year.

Dom:                   Wow.

Pete:                   When I was in senior high school, I just bought the audio books of the books we’ve got to read for studying. I kid you not. I remember lying in the bath at home just with the tape cassette player – this is prior to CDs, books on tape, and listened to the books. Didn’t have double-speed or two-speed back then unfortunately, but just listened to them in one speed as opposed to reading.

Dom:                   Okay. Excuse me a minute. [Sneezing] Geek, geek – sorry. Anyway, Terry Pratchett, very famous fictional author in the UK, writes science fiction, fantasy, humorous, incredibly humorous, really well-observed…

Pete:                   Oh, Terry. What’s his birthday? April 28th. Yeah, I know Terry.

Dom:                   He had this character in there called Mrs. Cake. And Mrs. Cake has a problem which is that she’s psychic. She knows what you’re going to say. But if you don’t say it, it gives her a headache.

Pete:                   What crap do you… Okay, yeah.

Dom:                   Right.

Pete:                   Okay. So she knows what you’re saying. But if you don’t…

Dom:                   You really need to tell us what your main thread was going to be before you give me a headache.

Pete:                   That’s an analogy on an analogy.

Dom:                   Yeah.

Pete:                   So yeah, Terry. Great guy. Sold 65 million books worldwide in 37 languages. Yeah, Terry.

Dom:                   And I didn’t hear you type that into Google at all.

Pete:                   So yes, main thread. What I was thinking that we could talk about is numbers. We could use words verbally on a podcast to talk about numbers. And the reason I’m thinking, or wanting to have a chat about this is a couple of reasons. Just numbers are important. Numbers can be scary but numbers are very, very important. Knowing your numbers is a thing that a lot of people talk about in the world of marketing. You have to know your traffic numbers, you have to know your conversion numbers, you have to know what your sales team converts at, you have to know what your profit is.

You have to know your numbers, and that can be very, very scary. But I think what I would love to chat about is what numbers are the right numbers and how to do some division to divide your numbers into the right areas. One thing that we have started to do a little bit over in my Infiniti world, the telco world, my real-world business world, is over the last five or six years, we’ve put up a very, very good marketing team. We’ve got quite a number of people in our marketing team, from copy writers to SEO and SEMs, to designers and developers and coders, and all that sort of stuff. We’ve got a very, very solid team.

And we decided, for numerous reasons which I won’t bore you all with today, to take on a couple of select clients and do some website development work for them. All our sites are fundamentally one of the biggest drivers of new inquiries to our businesses, the multimillion-dollar business that we have. So we know exactly what to do when it comes to building websites that convert and get traffic from AdWords and SEO and all that stuff. So we thought we’ve got this amazing skill set here. We know what works online. Let’s actually help some clients.

We don’t want to create a huge web development business or anything like that, just a few select clients that we can work with that will stimulate us, allow us to test new things and see how we can grow their businesses. Some of the stuff we’ve been looking at, we’re doing some JV stuff as well. But that’s a whole another conversation. And if anyone’s interested in having that conversation, feel free to shoot an email over to support [at] preneurgroup [dot] com. Happy to have a chat about that at some point. But we’ve been having a conversation recently back and forth with, for want of a better term, a prospect, someone who’s potentially looking at taking on our web development services and doing something together.

It’s been interesting. They’re smart business owners but they just aren’t looking at the right numbers the right way. So I thought we could basically discuss and dissect a recent email that I sent across to them, basically trying to get them to open their eyes up and point them in the right direction and make sure they’re looking at the right numbers so they can make smart decisions, educated decisions with the correct data. Is that fair? Does that sound too scary? Is that good?

Dom:                   Well, it’s a big old topic but I think it’s a fantastic one. You highlighted a very simple example of people needing to know their stats and needing to know the conversions and things like that, which is common in the internet marketing world specifically. But yeah, very few people really know what numbers to look at and how to look at them. So I think it’s fantastic. Go ahead.

Pete:                   Oh, absolutely. And very few people really know and take pride and really want to know where they rank in iTunes as well, particularly in their local country.

Dom:                   Don’t you dig at me just because my ego is nowhere near as big as yours. I just haven’t looked this morning.

Pete:                   I’m closing that loop from before. You said you hadn’t checked where we are in the UK. So I just, you know… Anyway, so back on topic.

Dom:                   Quickly.

Pete:                   I’ll try and read the email. No one’s going to have an idea who this business is, which is great. So we had a conversation. They’ve done AdWords before. They’ve built a very successful business up and they did some recent testing with AdWords. They came back and said in one conversation that they didn’t think AdWords is going to work for them. I had nothing to do with their AdWords campaign. Someone I know was involved, helping them out a little bit and giving some advice on that regard. I trust him. He’s a brilliant, brilliant guy when it comes to AdWords. So I knew he looked after them correctly.

And what they came back to me, what they were saying in one conversation is their website currently converts at six percent. So let’s say their website converts at six percent. Now, there’s a whole another conversation around a conversion rate of a website at six percent and we’ll touch on that if we get the time in Part 2 of this conversation. So that was one part of the conversation we had. They don’t feel they need to do certain things because their site’s converting at six percent.

So let’s just take that for granted and again, touch on that later. Another part of the conversation they said is that they had an additional 800 visitors to their site with this AdWords test. But they didn’t think it would work to continue going on. Putting those few numbers together, I basically wrote, this is Part 1 of the email. “I’m surprised the numbers are not working for you. Based on a six percent conversion rate, the additional 800 visitors due to AdWords should have given you an extra 48 new sales.” Eight hundred visitors at six percent conversion rate, 48 new sales. I hope my math is right.

I also then went on to say, “I’m also guesstimating here obviously, but given most of your businesses or business is repeat customers as you have mentioned before…” Because in previous conversations, they said a big chunk of their business is from repeat clientele. So based on a business which has historically been built to a very significant number based on repeat customers, you can easily assume their lifetime client value should be at minimum $100 profit for every new customer they got. For a lot of businesses, that could be a little bit higher or lower, and that’s where you start looking at lifetime value of a client, which is something we won’t get into.

But if you’ve studied marketing and you’ve been in this marketing community for a while, you’ll know that lifetime value is important. It’s not about the first sale necessarily that the client makes, it’s how much they spent with you over a lifetime. So let’s just say this was able to give them $100 profit over the life of a client. That increase of 800 new visitors should have given them around $4,800 worth of new business over the lifetime of those new clients. You may get 800 new visitors to your website today; and all the 800 over the lifetime of them interacting with you, you’re going to get about $5,000.

That would equate to basically $6 of revenue for every visitor that your site gets, if you’re getting $4,800 worth of revenue or profit actually, $4,800 worth of profit to your business based on 800 original visitors. Eight hundred visitors come in, six percent of them convert, that number of conversion spent $100, $4,800, backwards math, it’s $6 per visitor. Does that make sense so far?

Dom:                   Uh-huh.

Pete:                   Which I think is excellent. If every visitor that comes to your website gives you $6, that is very, very cool particularly if your AdWords costs are less than $6. If you hypothetically can have an AdWords cost where your average cost per click is $5 and your revenue per visitor is $6, you’re making $1 profit of every visit to your site. Right? So why would you not do it? Is that fair?

Dom:                   To me, yes.

Pete:                   So that was the first part just to get them to think about, hang on, sit down for a moment and do your numbers. Because you’re making decisions of, “Hey, this could be quite an expensive AdWords campaign,” or not really knowing the full, breaking it down and doing those numbers. If that six percent conversion rate is true, it’s going to be a very, very silly decision to not do what they were going to do. It’s basically why knowing numbers is so important, so you can make decisions like that. That’s a very rudimentary entry-level conversation.

If you’ve been around business, you kind of know that that’s important and you know of the concept. And you go, “Yeah, I know that. I know that.” But the first question is, have you actually sat down and done your numbers properly? Have you really sat down? And it can be scary. Because you might not want to know the numbers, which is why people avoid doing it. But it’s really, really important. Part 1 over. Any comments, Dom? Any feedback?

Dom:                   That’s a really good breakpoint for Part 1. And I think we’re going to come back to this one based upon all the people’s feedback. But mine, absolutely. I’ve seen even the most basic people focused absolutely on the internet marketing stalwarts of what’s your AdWords click-through, what’s your conversion rate on the side, etc. etc, fail when asked that basic question. Anyone who’s been to one of Ed Dale’s Challenge conferences and seen Robert Somerville, the…

Pete:                   Simon Cowell.

Dom:                   …Simon Cowell. Yes, Robert Somerville, the Simon Cowell of internet marketing. When he puts that steely glare on anyone who puts their hand up, and says, “What are your numbers?” They go…

Pete:                   Yes.

Dom:                   And that’s the most basic.

Pete:                   Because Rob drives a Phantom.

Dom:                   I think he possibly drives a Prius.

Pete:                   True.

Dom:                   True. Quietly. But those are the most basics. But I think you’ve really raised an important thing, which is people get focused on… There’s an old joke, it’s a mother-in-law joke, which is about the mother-in-law who read in The Highway Code, ‘Always check your rearview mirror before pulling out.’ Unfortunately, The Highway Code doesn’t say what you do if there’s something coming. A lot of people follow blindly or look for a blueprint, look for, ‘if you have this conversion on your AdWords, it will be great’ and all that.

But they don’t really understand what goes into those numbers, where those numbers came from. And I think what you’ve raised here is really, really good because it’s saying, look at it in context and also add that lifetime value of the client into there. Really look at what you’re talking about. Don’t just look at one number, but look at the impact for your business. Conversion at six percent, some people would say great, some people would say not so great.

Pete:                   Well, this is…

Dom:                   Additional 800 visitors to the site, a lot of people would say thank you very much.

Pete:                   Yes.

Dom:                   So yeah, it’s a really good thing to look into some more because I know that this is one of the things that you do look into. The face value of whatever is out there is something that you pretty much just go, “Yeah, okay,” and then you start looking properly.

Pete:                   Absolutely. And this here’s the Part 2. I’m going to go into it now. I know you’re probably sort of saying, “We should stop this, we should stop this,” which is fair because we only have half an hour. But I think people who have iPods, iPhones and stuff, they have a pause button so let’s give them some power because I’ll keep going. I went on to start challenging some of their beliefs and their assumptions. So basically, I went on to say, “Now, I’ve got two other questions that I really want to chat about. Firstly, the six percent conversion rate that you mentioned, is that on all traffic to the site or just first-time visitors?”

Because the first-time visitor percentage that we should be really focusing on when someone’s come to the site and chosen to spend money with you, of course repeat customers are going to convert at a much higher rate as they know the product, the service and the website experience. If they have gone to the trouble of using this website which has… Let me verbalize the process of purchasing on this e-commerce site. You click a couple of buttons and you find yourself on the product page. You click ‘Add to Cart,’ a popup warning, not like a website-based popup, a browser popup, the okay, cancel-type windows that pop up popup and say, ‘Your item has been added to your cart.’

You click ‘Okay.’ You’re still on the same page. You then have to click the cart button in the top of the navigation to get to the cart to go to the check-out process. You then click the ‘Check Out’ button on the final check-out page, another popup pops up. ‘Thank you for confirming your check out.’ You now proceed to the credit card statement part. And then you’re going to put your credit card details in, and then you go through the rest of the purchasing. It’s just not a user-friendly slippery slope-type check-out process.

Dom:                   Wow.

Pete:                   That’s the reason I initially was like, “This can’t convert at six percent. There is no way.” So if people in this scenario, if they have gone through that process historically and have done all that, and the product’s amazing and the customer service is amazing. So if someone has got to that point and historically gone through the product, done the service, done the website experience, they’re definitely going to convert at a higher rate, and they always will. Repeat customers will always convert at a higher rate because they know the experience.

Dom:                   Absolutely.

Pete:                   So basing your business decisions on an overall site conversion rate is very, very silly. Because you want to eliminate that from a decision-making process about, what form of lead-generation should I use on business and is this lead-generation viable, whether it’s AdWords to your website, whether it’s radio or TV to your retail store, whether it’s direct mail, for you to call up and inquire about your business. You have to isolate those as their own unique data because you don’t want repeat business to scuff those numbers.

One of the things their decision-making process was based on is that, “Well, our site’s converting at six percent. We can wait a little bit before we change the website.” And I’m actually saying to them, I would bet houses that your website, the new visitors, first-time traffic does not convert at six percent. I’m actually surprised their repeat visitors convert at six percent.

Dom:                   Yeah.

Pete:                   And they just couldn’t get that. They just didn’t have that, they didn’t divide their numbers up, they didn’t do their math and actually delve into it properly. So that was one of the… Sorry, go ahead.

Dom:                   That was a fantastic point, that was a fantastic point. And yeah, that’s a really, really good example because their site is, in the website-design world with the highfalutin terminology I’m going to lay down on you, we’d call that a brick-wall site.

Pete:                   Yes.

Dom:                   Because they get to it and it’s like hitting a brick wall.

Pete:                   And it still works with them and they’re doing very, very well. So that was the first main point I wanted to make. The first one was just a bit of hopefully a polite backhand to them saying, “Hey guys, just realize, do your numbers properly.” Because if six percent was true, you’re making a silly decision by not doing AdWords because of those numbers I did earlier. Then my next point where I really wanted to sort of question them was, “Do you really think it is actually a six percent-converting site based on what I just spoke about? And then I went on to give them the second push inquiry thought-provoking idea, for want of a better term.

I went on to write, “So when it comes to a new site, the two elements you really need to look at whether it’s with us or someone else,” because I don’t really care if this person does website with us or not. I think we could do a great job and I think it would be very, very profitable for all parties involved. But they came from a referral from a good friend of mine, and I know they’ve worked with other people I know, so I just want to see this person actually succeed because of people I know who have helped them before. And they mentioned they’ve got some other quotes a lot cheaper. I said, “Look, I don’t think they’re quite going to give you what you want.

But if you’re going to do that, by all means here’s some free advice.” And the advice was this, twofold. If you’re going to build a new site, the two elements they really need to look at: What are they doing to increase the average sales value of existing clients’ repeat orders? So obviously they’re saying a lot of their business is coming from repeat clients. So in this new shopping experience, this new website that they’re going to build, what are they going to do to increase the average value of existing clients and their repeat orders?

So things like what upsells are they going to have in the check-out process. So rather having a popup saying, “Hey, thanks. Your item has been added to the cart,” if you’re going to do a popup, the popup should say, “Hey, did you know that if you buy this, you’re going to get this as a bonus for half price? Do you want to actually change your order to include this additional item at only 20% more? Save a total of 60%,” or whatever it might be. What sort of cross-sells can they do? So again, throughout the check-out process or on the actual product page, can they have, “This is the product you’re looking at, but underneath it, popular solutions are this and this.”?

Think of Amazon. Everyone has experienced Amazon. You’re on the book’s page, directly underneath the book and directly underneath the ‘Add to Cart’ button, they’ve got, “This book is commonly bought with this book. Buy these two books together, you’ll get a discount.” Cross-sells, bulk orders in that check-out process to actually increase the sales value for existing repeat orders. Yes, that does work for new orders as well but specifically, if we’re going to divide up the client base into two parts, two little buckets, and the bucket is repeat customers. Because in this scenario, that was the majority of their business.

Upsells, cross-sells, bulk order, check-out things is really, really important because the easiest and most effective way to increase the revenues from existing clients is through this. The core focus shouldn’t be on increasing conversion rates of existing clients, but increasing the revenue per sale. So if their six percent conversion rate is highly weighted towards repeat clients, that’s still a pretty good conversion rate. They shouldn’t be trying to focus on increasing the conversion rate necessarily for repeat clients. It’s definitely a secondary focus. But in my opinion, in this scenario based on these numbers that I have available, I’ll be focusing on increasing the revenue for these existing clients, the revenue per sale for their repeat purchases to increase that lifetime value.

So that was the first thing I wanted to put in front of them to consider. And then the second part of it was based on what I have previously spoken about. There was room for increased conversions based solely on first-time visitor data. And this is where I went to a bit more technical stuff. They need to actually filter out and create filters inside Analytics. Because an e-commerce-based site, and for those who aren’t familiar with Analytics and don’t have it on their websites, really just go to Google. It’s a free service and it gives you a lot of data. And what you can do is you can create filters. This is something a lot of people don’t realize.

You can create an overall filter. So when you’re actually looking at your Analytics account, normally when you look at your data in terms of traffic sources and keywords and time on page bounce rates, it’s based on old traffic. What you can actually do is you can create filters and you can put a filter around all the data. So you can say, I want to filter out all of my reports based on first-time clients, first-time visitors. So you exclude anybody who’s been to your site before. So that way, when you’re making decisions based on first-time users, you’re only looking at data based on first-time users. That way, the bounce rates, the sales conversions, the traffic data is all based on this first-time visitor stuff.

Because it’s this data that is going to show you how and where your business can grow from new clients and increase conversions. And I went on to say, “I don’t want to be blunt, but I’ll be very surprised if the conversion rate for your first-time visitors is at six percent.” And then I went on to taper a little bit, “You really need to look at these two things in isolation and not confuse the stats. It’s very easy to mix and match the conversion rates of repeat buyers and first-time visitors.” And this is the lesson I hope people take away from this numbers thing. Looking at numbers is important and you’ve got to look at it regularly.

If you speak to any successful businessperson, they know their numbers, whether it’s traffic data, conversion data, how many sales their cold-calling salesroom makes every day, what the conversion rates are. They know their numbers. But it’s also important to know your numbers in the right isolation, through the right filter, the right Analytics filter, or the right high-level filter to be able to say, “Okay. I’m looking at the business through this filter right now. How can I increase revenues from existing clients? How can I increase conversions from first-time visitors into my business?” Whether it’s sales pitch and trying to sell stuff differently, whatever it might be. You have to have the right filters when looking at the numbers and divide that properly. There you go. Case closed, Your Honor.

Dom:                   Awesome, awesome. End of today’s lecture. Oh, man, I’ll tell you what. There’s going to be some serious forehead-slapping going on around the listeners on this thing.

Pete:                   I hope so.

Dom:                   I would hope that people know a lot of what you just said. But if they don’t, I think what you just put across is probably one of the most valuable things people are going to hear certainly this week. So many people will just wander in and take their overall conversion and go, my site converts at whatever. But it’s absolutely vital that they know what they’re looking at and that, as you say, they put it through the right filters. And if nothing else that one client would benefit from the second point you made which is segment out who are your new users, visitors and who are existing or repeat customers because that would give them a real number to base their decisions on.

Pete:                   Exactly right. That’s all it’s about, making educated decisions with the right numbers. Maybe we’re not the right people for these guys because we’re not cheap. We are definitely going to be at the higher end of the price point because we know our stuff. How many web design companies can actually sit there and say, “We make websites for ourselves that make millions of dollars a year-worth of revenue and generate millions of dollars-worth of leads.” Not many website companies can do that. So we take that premise when we talking to new clients.

So you’ve got to pay for us. We’re definitely not going to do a $2,000 website. But yeah, I don’t know what the context of that statement was. I’m sure I had a point when I started making it. But it was basically saying that we want to be right for these guys because we’re going to be expensive. So even if they choose someone else, make sure that they’re making their decisions around this and you’re doing the new website for the right reasons with the right data.

Dom:                   To go where I think you are going with this, anybody who has the money, this is a no-brainer. Let us look at any two web design companies. There’s a web design company with some really good pencil-carrying jockeys that make really shiny good things and then there’s this guy over here that has million-dollar websites who will let you use his team. That’s a no-brainer if you’ve got the money.

But I think where you were going with this is you’ve given two pieces of knowledge here right now and that knowledge taken anywhere including on your own, going back to your Analytics setting or no Analytics if you’ve got no Analytics, you install Analytics, you go to the Analytics panel and you press the segment, that doesn’t cost any money. That’s not a multi-tens of thousands of dollars implementation of a website. That’s just business intelligence and that’s free.

Pete:                   You know what does cost though? Guts.

Dom:                   Oh.

Pete:                   And what I mean by that, this is going to go on forever. I hope people don’t press pause and kind of listen through. But if you need to press pause, press pause. I won’t go far too much more. When I say guts, and I have been guilty of this so many times. But one of the reasons that I’ve had the level of success, for want of a better word, that I’ve had is that I keep pulling myself up and I keep trying and pushing to continue to do this as best as I can, and I think we do it pretty well. But it takes guts to look at raw numbers.

Because when you’re looking at raw numbers in your business, there’s nothing to hide behind. There’s not a shiny brochure and say, “Look, this is what we created this week. We did this nice little brochure. There’s not a nice little sale. There’s not a nice new product that you’ve built. There’s not a nice new process for implementing customer service to hide around and sort of pat yourself on the back with.

The raw numbers can be scary and I think a lot of people don’t actually want to look at it because of what might be there. So there is a price to pay to actually do this. It doesn’t cost money to do this because you can do all of this yourself, as you said. But I think it takes guts and it’s a pretty big payment a lot of people aren’t willing to make and it’s a whole another episode.

Dom:                   Definitely. That reminds me very much of the older problem that takes guts which is revenue versus profit. So many people are happy to tell you, “I sold this many units. I’ve made this much. My company turned over this much.” It’s like, yeah, okay, but how much profit did you make?

Pete:                   Yup.

Dom:                   And this is one of those. I’ve been re-reading The 4-Hour Workweek this week.

Pete:                   Tim’s coming to Australia, which is exciting. Tim’s finally getting on a plane and coming down here to hang with all of us and I think he’s doing a presentation in Melbourne in October. So, the Australian business…

Dom:                   Awesome.

Pete:                   We’ll put a link in the show notes to where you can go and grab a ticket and stuff. It’s going to be pretty cool.

Dom:                   It’s pretty much the same conversation, revenue versus profit, overall conversion versus new conversions. It takes guts to look at that, excuse the pun, analytically and admit it. Hopefully, what we’ve done here is, I say sometimes is I think we may have pulled the pin out and thrown one over the wall. So hopefully, in the next few weeks, maybe you can tell people some things they can do when they find out that their new visitor conversion isn’t quite so high.

Pete:                   We’ll get on to productivity. We’ll actually start giving some productivity tips and some actionable stuff as well. So we’ll definitely go into that. Because across the analogies you just gave, there’s also really looking at yourself and saying, am I being busy or am I being productive? And again, it’s a very big distinction people don’t really make. “Oh, I’ve got lots to do. I’m busy, busy, busy.” But are you being productive? So let’s leave it that. In the next couple of episodes, let’s actually delve into the productivity side of stuff and actually getting things done.

Dom:                   Awesome, awesome. We are, again, way over our original time, although I’m seriously considering changing the allocated time. Because these ones that go over, they just always seem to go over because the content that you’ve put across, the information is just brilliant.

Pete:                   Do we have an allocated time? Is there like a…

Dom:                   We try to keep it to half an hour mainly because I get bored after half an hour listening to other people’s stuff.

Pete:                   Oh, okay.

Dom:                   But so far, as you say, we’re getting 5-star reviews and people are saying the content’s fantastic. So maybe in the comments, folks, maybe in the comments. Give us some feedback. Let us know if you want us to go on longer or if it’s okay as it is, and definitely some feedback about this topic on numbers.

Pete:                   Absolutely.

Dom:                   Because it’s a big, big thing.

Pete:                   And again, if you don’t want to, for whatever weird reason, write a comment, give us a tweet, give us a Facebook share. Let people know about it. Because obviously, the more that know about it, the more feedback we have, it’s obvious I think. People listening to this are marketers and business owners, and they know how important feedback is and ratings are, and all that sort of stuff. I really do hope that people are getting value from this and in exchange for our 45 minutes of ranting and raving, they will give us 10 or 15 seconds back in the comments.

Dom:                   And just to close the final loop on this one, Pete, I think really you’re noteworthy because I’m pretty new.

Pete:                   So it took me all day to figure out my little intro and that took you 45 minutes. That’s awesome. See you next week.

Dom:                   See you next week, mate.