Reprioritize Your Marketing Spend and Transform Your Results: Learn a radical new framework

let's begin right away it's good to see Dave with us Andrew Layton Christie a lot and others that are joining us as we queue up and charge I'm gonna take this watch off so we don't have any noise go ahead and get that out of studio we had a technical problem our power went down and then when we rebooted Microsoft decided to update so that's what we're up against at the last second here in any event I'm still ready to go and I'm gonna skip through a group of slides and take you to something's intriguing take a look at results this is results only now if you're just tuning in the paragraph underneath that table should capture your attention and you should be thinking deeply after reading what you need to understand this is the result of an experiment there's a control and there's a treatment there's a three-part path reaching out into the channel and going forward to the presentation on the website and all the way to the call-to-action notice a two hundred and seventy two percent increase in conversion that's wonderful but that's not the point look afterwards a two hundred and sixty eight percent revenue increase combined with a corresponding sixty-six percent reduction in CPA and more a margin difference a three hundred and two percent that is four times the monthly profit everything I want to talk to you today is about the science beneath those gains and a completely new way to think about spending your money and marketing some of you work in a 12 months budget cycle and it formal it's very disciplined if you're like most organizations it's completely broken more than that you're scrambling to get money and it's a zero-sum game as you battle with someone else dan Burstein yesterday our head editor called it a knife fight between departments some of you are a small entrepreneurial group you don't even think 12 months ahead you're working in the next three months but all of us are likely spending money in order to grow our organizations and I don't care with your budgets 12 months a 12-man committee and involves 12 billion dollars or if it's a tiny company just getting started I've seen this firsthand in some of the largest companies in the world I've been in a fortune ten contriver saw the budget process during a research piece they employed 17 agencies hundreds of vendors and their ads spin now listen to me there ad spin was 4.5 billion dollars and the dysfunction was shocking at the same time I've seen small entrepreneurs trying to copy large organizations and everyone getting it wrong here's the one thing I'm sure of most of us are wasting a lot of our money we just don't know which percentage we don't know what to do about it and it's not in the classic sense that oh you bought the wrong media we're buying media with money that we should be spending in a different way we have inverted the rationale and thus Confused ourselves we don't know the difference between investment and expense and we can't separate it in the way we design our budgets we're fooling ourselves and I'd like to go deeply today into something that helped you number one capitalize on the holiday season number two make the next 12 months cycle perhaps you're on a fiscal budget whatever it is could be January through the end of next year the most productive spin you've ever had more importantly if you're connecting with me right now and you don't have all the money you want I've got good news you don't need it you don't need it in fact you probably could take the money you've already spent spend it differently and get a dramatic increase if you can think in a completely new way with me now you here may teach often about very specific pieces of psychology but the psychology of the budget process is just as profound not only in selling it through to superiors but in competing keeping yourself from being confused by all the confusion that exists in the typical process so I'm going to start drawing on the board and I want to share with you an approach that produced four times the monthly profit on a fun and I want to share with you how we got there using a heuristic I've never taught on in public classes before only privately through my own team into my own team members with that in mind I'll go to the board and draw two lines last week I opened up with two lines just like this but I'm doing something altogether different this is geo philosophy this is a sort of a combination between geography and philosophy and I want to explain it to you like this here's a line that represents the standard approach and here is another line we're gonna let these two lines illustrate problems that are critical for you to overcome so if you're connecting with me right now zero in on this line and I'm gonna put a letter here I'm gonna put a B here and an M here I want you to imagine for just a moment that performance is mathematically equivalent to the length of these two lines combined so there's a lots of ways to illustrate how to cover that extinct instill a more of this and then have a shorter line this way and frankly this point right here is the point that I'm attacking in our thinking if you're not sure what you're looking at M stands for the more mindset and if you get to the philosophy and even the physics of our approach to many things in life we are often confused between more and better so some people in the constant lust for scale are constantly attracted to bigger to more and in doing so they don't understand the tension almost a paradoxical tension between better and more you're sitting here right now with a need to drive more business I imagine everyone here would like to drive more business and so you've got a choice you can make right now and I want to talk about what that choice is you can do what most people do which is drive more or you can focus on becoming better and in most of our budgets we're always scrambling for more in fact the fastest way to grow our business is to dump more money in the ad spin I want to show you why the entire process will inhibit you achieving maximum efficiency and thus profitability and even in growth you might say well I'm not about profit I'm a start-up and I just want to grow like Amazon did four years let me tell you if they had focused on better more would've mattered so we are talking conceptually now but please for just a moment connect that back to the slide we looked at just a moment ago somebody did something different there in fact the cost per acquisition dropped 66% let's translate that into your world what if you cut your budget by 66 percent but you made four times the profit and wait a second and not at the expense of top-line growth but instead you achieved two hundred and sixty eight percent more in revenue how many would like to experience some version of those ratios in your marketing now I'm going to oversimplify today and if you're a mathematician I'm going to you you may not like what I do next but as I start to unfold this I'm gonna show you the math I'm going to show you the philosophy and then you can apply the philosophy and you can apply the math / science to the psychology of your process indeed I have a simple problem and I'd like to illustrate that problem well let's think about that I have a lot of problems and they're not so simple but what I want to teach today is a simple problem that is if I can't have more because how many of you want more but you have limitations either you don't have an unlimited budget or perhaps perhaps perhaps you control your company and the abutted is as much money as you can get but you still don't have all the money you want or how many of you are in a department where you have to fight for the budget either way it seems like we never get enough so let's assume for a moment that most of you can't have more in the sense as an infinite supply and that you'd like to understand how focusing on better could achieve more than if you were to spend more with all that in mind I have a simple way we're gonna attack this I've got three thought movements and in those movements I'm going to explain and illustrate a new concept for you a powerful new heuristic and with that heuristic I'm going to start to work backwards into a more profound rationale that should drive how you spend your money does that make sense to everybody Robert good to see you and to Dave Fogle's on the line we all know that Dave has an infinite budget if you don't have enough money you can probably get some from Dave he'll lend it to you interest-free out of his vast wealth right Dave and if you need - I'll give you Dave's a home phone number and you could just call him directly and ask in the meantime oh here comes the smart comments infinitely small Dave says that's an interesting oxymoron that's not an oxymoron that some man he sounds like Kierkegaard in Reverse all right and I see Shaun we're doing some research with Shaun right now it's good to see you on here Shaun all right with this in mind are you ready to learn these three pieces is everybody ready because we're gonna we're gonna attack and we're gonna get the most value out of the short time that we have together this will be unlike anything I've ever taught here before in fact some of you have to pay very close attention or the math is going to frustrate you but I'm gonna make the math imminently simple at least in practice I'm gonna have to refer to my notes because I keep working on simplifying it over and over again and on the surface I'm not going to say anything that you're not aware of but as you start to see it's ratios and its impacts then you'll see where the profundity is hiding before we get to that I want to ring you to my first point watch on the screen you may want to take notes on this it's understand the marketing prioritization heuristic all right so that's called the EM p-h the marketing priority heuristic and with that I'm gonna see if I can just I think show you that first of all with a slide I want to write this on the board I wrote it in fact if you were to look at what happens before we teach my whiteboards are covered I was here all night for the last two nights in the lab just thinking and we ran under whiteboards we made more and as I teach to you right now I'm looking at something what I'm looking is an actual photograph of one of my whiteboards that Austin he's over here on my right Austin suspense not McCraw Austin McCraw is at Cambridge right now doing his doctorate those of you that are Freeman at Austin he came here right at a schoolers been working with us for many years and now in my senior leadership team and he's a genius when it comes to value prop and he's doing something connected to that in his research at Cambridge and over here is Austin Spence who just out of prison and in the work release program I'm kidding and he's laughing for those of you that think I'm picking on I mean he's sitting next to benaiah Wilson and they've all helped me but I'm gonna be looking at this because I am i wrote this many times until I thought the simplest way to explain it to you and you need to see it but I can't go there yet I'm gonna take you to slide here it is let's go all the way back to this slide right here this is the mph this is the marketing performance heuristic and I want to help you think about it in two ways first of all you'll see there are three symbols PR D F n N and a DV just stay fullscreen for a little while cliff you're doing good at going back and forth but I want to dwell on this and let them see it now ad V stands for advertising FM - n stands for funnel PR D stands for your product notice there is a greater than sign between each of these and it's trying to tell you something very simple that we have to illustrate mathematically before you can see its power but it's really saying you're going to get a greater gain by focusing first on product and look above it especially its value proposition and there are four types of value propositions secondly if you focus on your funnel many of you are talking about Web Design projects don't use the word Web Design don't think web redesign don't even think web it's not a page it's a series of zeros and ones I like to think of them as as signals these are signals that form a signal set and the signal set is what your page should be and if you hire an agency to build you a pretty page you're gonna miss the whole point what you should be doing is arranging the signal sets on that page to stimulate something in the mind and you don't even do that with a page until you do it with a funnel I'll be talking about why we spend our money wrong on almost every web design project I've ever seen so the funnel and then your advertising we spend it worse here and I'm going to talk about prioritizing your spend in a completely different way inverting it and moving in the opposite direction that most people move as they invest their money or as they waste it and to do that I want to point above that that the first thing we're talking about is the value proposition PR D then we're talking about the micro yeses and the micro yeses form the funnel then we're talking about relationships establishing new relationships it's not advertising it's not really a funnel and and and the end people aren't buying a product they're buying the resulting experience so you've got to understand this in a different way in order to think about how to spend your money now beneath that there's another point it there are two things you want to focus on under each of these and you should probably understand these better, in fact in the infographic, we'll build you one, I want the articulation to be first and some beneath it they are not one term to get the value prop right you have to get the exchange some right I'll explain that later and then even when you get to exchange some right you've got to get the articulation of that right the essence of marketing is the message the articulation is the message if you don't get the message right nothing else matters the same thing goes for the micro yes is your funnel has a sequence that matches the sequence of thought that is most likely going to produce four conclusions in the mind that will get people to buy and if you don't arrange your funnel to match the sequence then it's a poor funnel and it will get mitigated results if you get the sequence right you have to get the message right on that sequence on each step that's the articulation in your advertising it's about selection so thanks some sequence and selection to get the selection right you have to pick the right medium and and select the right things to emphasize etc and then you've got to get the message in the in the channel to match the messaging throughout the balance of the funnel in your web presentation and forward as they begin to understand the articulation or the message of your value proposition now all of this ties together many concepts that I've been teaching for 20-plus years and if you're new to this teaching I want to assure you that the goal isn't to help you pass a test the goal isn't to give you some abstract set of concepts the goal is to help you see the financial results that I just outlined in the previous case study in fact stay with me and I'm going to show you how we did that with real web pages how we broke it down transform the thinking and how it all worked together this is about changing things in the world if you're a marketer and this is new to you or you're one of those who have been part of our community for some time may I stress to you that in the end I want to do something meaningful with my life and I assume you do also and for that very reason what we're learning now is going to help you spend your money to produce meaningful results my next meeting right after I step another studio is with a mad scientist that's the best way I can describe him my friends around the world have called him the Thomas Edison of the of the 21st century and I can't say anymore except to say there's a way to use marketing to cure significant number of the diseases that are selling the world again I have to be very careful what I say beyond that all I want you to know is marketer if you learn these things you can use this like up like a martial art you can use it for good you can also use it to hurt people but it used right it's incredible let's get to this logic let's move from my first point which was simply to understand the prioritization heuristic roughly you understand the three components value puppet micro yes is in relationship as as exhibited or embodied by your product your funnel and your advertising that one is about someone is about sequence and one is about selection and all of them are about the articulation or the message that being said I want to take you to this because here's what I want to show you to do today instead of spending like most of us do tons of money this way somebody checked me out a new marker in case that's a problem I got one coming that check this one out that was fast these guys are armed and dangerous alright so watch again instead of spending this way and this way I'm gonna advocate that you spend like this less on the under more and more on the better okay this is the key to an amazing budget this is the key to doing more with less this is the key to transforming your results in 2020 or any year you're watching this video without in mind you're gonna have to learn how to apply that PR dfn in and by the way this will not be one session it'll probably take two or three to unpack this but if you're literally trying to plan a way to scale your growth next year this is the series that's designed to help you take advantage of our twenty thousand-plus experiments and learn from what we're learning as we interact in the field with thousands of different variations and so I want to take you to the second point which is — optimize your spend for mathematical impact. So this is very critical because this has to do with the sequencing of your spend and the emphasis of your spin sequence it in just the opposite order just change when you buy for instance if the money you were going to spend in April is spent in February that alone could create an order of magnitude in difference with regards to your ROI you say it's the same amount of money at a different time of year yes but the key is it's at a different time which means it's in a different order which means your results are going to be different so let's get that order of the spin correct as well as the essence or focus of the spin to do that I've got to start with some mass and I'm going to show you some things that most of you know but we've got a big challenge here the world is full of this today unlike any era in the history of mankind and that's a big statement there is no known point in history where we have had so much information at our fingertips that phone anybody had phone in the studio we take them out so that they don't see but I'm gonna hold up one here's an iPhone do the work on this I've done it I've read this I didn't do the study but some years ago during my lifetime because I was born into an era where there was no PC I watched the advent of the very first I formed a lab to study the Internet when it was still in UNIX more than 30 years ago this device would have cost 20 million dollars a few years back and it would have occupied his space many times larger than our studio just just just to embody the computing power and yet you're carrying around it is funny today because we live the day of Google experts ask somebody a question and even if they don't know anything they can give you a plausible answer why they're quickly googling it I see it all the time I'll talk to Google experts and it makes me smile because you know they got that information right out of Wikipedia two minutes ago but they make it sound as if they're an expert and and that's the power of having this device in your hand now why is that critical because when it comes to budgets we're all about information but we're really short on wisdom and so we gather data data data I'm so sick of hearing about data you say wait a second I thought you're a scientist in a laboratory for some I don't think I'm a scientist I think I'm a philosopher who uses science a little bit they call it experimental philosophy and secondly no I'm not all about data I'm all about what I can do with data when it's properly harnessed which is to gather wisdom data is more important you think of it as behavioral traces when you're looking for patterns but I hear all these companies talking about their warehouses full of big data and I think to myself most of you don't even have your little data working so it doesn't do you one bit of good to store all of that because you don't know how to find or extract wisdom from it well everybody building a budget gets lots of information about cost in the marketplace and what competitors are spending and market share and all the other nonsense to build a business case not that some of that isn't necessary but ultimately we still produce a budget that's short on wisdom and long and information and I will now take that and break it down in this way let's imagine that you spend a hundred dollars on your media I'm going to run out of space if I'm not careful here cliff and I don't know if I need to pull this board my way or not but we'll see I'm also going to change markers because this this one I don't like either someone may want to get another dark one I'll go to blue right now and see if I can make these to work they have a lot of markers they do pretest them but these pins are designed to go dry another of businesses attempts to get more revenue out of our pocket all right so here we go $100 spin ready now you can obviously realize this is a symbolic number and you can put any number in your own spin in the place with that hundred dollar spin you buy 100 visits it could be 100 leads okay I'm going to use the word V but if you're in the lead business let's assume as 100 leads now you've spent a hundred and you've got a hundred now let's suppose that with those hundred visits you convert one person at $50 so now you've converted one person and the cost is $50 and what does that mean what does that look like what are we trying to say well it's means this for that you got $50 and you spent a hundred and now we have a little division problem can you help me see the division problem somebody tell me what the sum of that is if I were to solve for 50 over 100 what is that it is 0.5 1/2 now everybody I have a problem trying to teach us right now some of you know this instantly think you might even know where I'm going others of you know it vaguely or it might even be intimidating so I've got to keep it simple but I've got appeal to everyone if your old math whiz just hang with me if you are struggling to understand I'll try really hard and use your Q&A to talk about it ok and Eli that's a great quote by the way you can see that you can see a lots quote obviously in the chat feature so we spent $100 we got a hundred people to click on an ad somewhere and come to our site and one of them bought our $50 item and so that means for the hundred dollars we made 50 and our sort of overall sort of return is 0.5 on our money now most of you know you can't sustain that that means for every 100 hours you spend you're gonna gross 50 it's not a good model but many people scale that way now we're gonna step it up slightly okay and this is where it starts to get confusing but let's make a couple of quick points first what's my conversion rate somebody just look at this who does see the math and I have two dials here I have two conversion rates what is my conversion rate on this spend to get traffic I spent $100 and I got a hundred visits let's just ask it differently what what what did it cost me to get one visit somebody tell me okay it cost me $1 to get one visit everybody understand that you got that part right all right what's my conversion rate right here so I had a hundred visits I got one purchase what's my conversion rate you can do the math in your head that's right Dave its 1% one out of a hundred most of you know that really well but for the few that don't I'm going to put this down 1% now let's take the next piece and I'll show you what happens you say I need more cells so you decide to make a big change I'm only gonna make my change in Orange everything else stays the same so now you spend $500 okay ok mathematicians and marketers and interested philosophers stay with me the hardest thing I have to do is get the color of my markers right all right so so here I go now somebody tell me if you keep that rate how many visits are you buying when you spend $500 how many visits are you buying let me go to let me see in the chat cliff how many visits are you buying that's right thank you 500 so now you've got 500 all right so you got 500 visits but your conversion rates gonna stay the same so how many conversions are we going to get five five customers remember how much would they spend $50 and so now what is my number going to look like to the right of this yeah cliff that big screen helps I'll put a dollar sign right here I'd like to do this neater but I'm doing the best that I can to get this clear all right good all right it is the same but this time I put what what's the top here how many how much money did I make I made five times fifty which is two hundred and fifty dollars and I spent five hundred and let's call this let's not call this our an ROI or anything we don't even know what the cost of the product is let's just say that our quality ratio our efficiency of our spin is still the same now of course you can go back and brag to your investors we week we increase customers by fivefold you also lost a lot more money and this is the formula many companies put up with for a long time before they crack the code so I'm gonna take it a step deeper now and hopefully you're gonna start to see a pattern emerge are you all following me okay yeah Doug says what's a few decimals depends on who you are right all right now let's go to the Thrillist raishin at this point we're gonna focus on a different thing I want to point out to everybody watching that this was called a more play let's spin more man if I had more budget I can get more customers some of you aren't losing that much but maybe you're losing an acceptable piece you're trying to buy your way in buy a more play but I want to move towards a quality play to illustrate why it's so important to use the heuristic that I've outlined all right so somebody says Netflix is still operating on this model there's truth to some of this all right now stay with me to the next piece here we go let me see yeah so let's suppose that let's suppose that we go back to our hundred dollars we don't spend any more let's suppose that if we don't spend any more we're gonna get the same result let's just assume everything else stays the same okay but let's suppose that we improve our conversion rate so that we get a different outcome you improve it and now you get four sales times fifty dollars now this means you went to your funnel or you leveraged the value proposition and you produced more yeses but you did that while holding your spin on everything else the same we all know for just a moment we all know what that number is going to be right we now have made four times 50 right and I'm running out of room to do this and I think it's starting to show that I am in a pair of shorts cliff do the best you can but I got to get down here to do this under I'm just wearing shorts with my suit because I'm in Florida and worse I have on I have on zeros sandals that are made for long distance runs but take a look here we go 450 we have we have made $200 and we spent how much how much should we spend everybody somebody tell me we spent 100 what is that ratio do the math tell me what that ratio is that's not it keep going what's the ratio what's 100 into 200 it's just a piece of division let me ask you that way what's 100 into 200 there what's 100 of the 200 all right so think of it like this 100 goes into 200 and we are at - but it's not a point this was point 5 this was point 5 this was a half of 1% now we're at 2 what's just gone on here well we have something magical is happening and it's gonna get more powerful when you see it next so what we've done in this in this piece oh I've done nothing I've done it wrong I've looked at my notes instead of just thought with you let me improve it let me go back slightly all right stay with me 100 100 yeah that's right for 50 you know everything everything's right all right I got to just keep going so you see this would anybody agree that 2 is way better than point 5 to everybody see that so we focused on better I'm gonna put a little be here and that was powerful we improve a step in our funnel now I have two more very fast illustrations and then it's all gonna make sense so here we go 100 it's really easy to think it through but to lay it all out real clear for you and to give you the right kind of illustration it's a little bit different I want to improve my ad so I proved my ad I get a bigger response spend $100 and what did I get from that hundred dollars everybody I got 400 congratulations we probably hired somebody like Dave or some of you on here to make our Facebook campaign work better and we spent a hundred and we got 400 everything else the same conversion rate stays the same as the original so with that kind of money we got four cells right we got four cells times 50 and we all know what that yields is what somebody tell me so this is this goes with above I'm gonna take this and just erase these to keep it easier I'm just going to keep the ratios for the rest of these all right and that way you can compare those and I won't run out of room so we had point five point five and we had two now it's four times 50 is 200 right and the spin was what 100 what is 200 divided by 100 everybody should go okay it's - its - again 100 goes into 200 two times now I've done two different moves here think about it in the first move I went for better let's call that on the offer page in the second move I went for better in the ad now it's obvious that when you get a conversion increase here the money spend is more efficient but sometimes we don't understand how all the pieces work together and again I'm making a simple illustration if I were to show you how we do this in a complicated spreadsheet with complex spending like I've done it with banks with mortgage applications and they hold some of the mortgages and they sell some of the mortgages and they calculate all of their cost and when we got done doing this it had profound impacts they went for better instead of more and they made at least 117 million dollars on a little program by just thinking about better instead of more so I just want to point to you that if you're an enterprise level person with sophisticated math and teams this still is important and I'm trying to make a point for everybody in my audience and it all gets clear in my final example this is where it I get excited this is where I have seen magic happen I was sitting with one of our new what our new employees who's in a leadership and training program early this morning and I was just walking him through it and I said when you get this right it feels like you're a wizard it really does it's like magic what happens so let's just go back to the fifth and final example and I'll get away from math and in two examples I'll show you case studies and I'll I'll get more practical with you in just a moment okay all right so here we go this time let's assume I approve both so I'm gonna spend only $100 now contrast that up here I five sales but I had to spend five hundred to get them and I only made $250 so basically it took me 2 to 1 I'm losing a lot of money now I've been working on the better piece and so I instead of spending more I focused on better and I saw big increase but what happens if you're really smart you work backwards and you do both of these here's what you see I spent a hundred but this time I got what we said before let me switch colors I got 400 because I moved my conversion rate on my ad then let's assume that I went from that and improved my conversion rate in the same ratio that we did earlier and so now the number is gonna change it's gonna change suddenly and I want you to understand that I have 400 because of that improvement in conversion but I have another improvement in conversion that will stack and when it stacks something magical happens so this time it stacks and I get that same conversion rate member up here instead of this is a four percent conversion rate and and all this is one percent this is one percent this one produced for sales on $100 that's easy math four out of a hundred what is that four percent so let's go to four percent again but it's four percent on four hundred so I get four sales for every 100 bucks I spend so what are they how many cells did I get somebody tell me how many sales did I get right here there's a number I've got a right on this page and I want you to see if you're following with me I got four percent on my hundred dollar spend so I got four hundred new visits but I got the same conversion rate and so now I get four percent of the 400 and I get sixteen visits whoa whoa all right sixteen times fifty mathematicians 16 times 50 is what eight hundred all right so let's let's look at our math just a second $800 on a spend of what 100 dollars what is my quality score now the quality of my spend somebody tell me what is it now pretty easy 100 goes in 800 how many times here's old school take these two off which means I take these two off divide one into eight and I have not a considerable increase not a really good increase not even an amazing increase a life-changing transformative dramatic increase hard to overstate it you say yeah but does that work in real life I know all the disclaimers I know that more traffic might produce less conversions unless you get the same quality I know all of those things cuz we've been doing this 30 years but I see versions of this happening over and over again and the reason it's happening is because we're thinking differently the conversion is not an opportunity conversion is the sharp point of the marketing spear the idea that conversion marketing is a separate discipline is a bunch of nonsense marketing that doesn't focus on conversion is less than useless you say wait what about big institutional branding you're still converting people you're converting they're thinking you're wanting to think differently about your brand or about the company what I want you to understand right now is something so vital because in a moment I'm going to switch back to that heuristic I went from point 5 to 8 what that looks like I think I'm gonna have to get on my knees to do this cliff that'll work is I only spent a hundred dollars there's the more line up I got to get lower up you can't even see it down there alright so I'll have to I'll do it to the right I only spent a hundred dollars this line is eight times this line I have focused on the better over the more this is better where's my green and this is better and the outcome is mathematically a piece of beauty there is an elegance a symmetry and a beauty to marketing that's approached in the way we are not scientists we are artists who use science you say no no no no no I'm a data guy let me tell you something if you're gonna try to predict human behavior you better use some art because human beings have been defying our best abilities to predict their behavior for centuries if it weren't that problem you wouldn't have any great recessions and other things that happen all around us and what I want to share to you or with you today is a new way to think by going back to this product funnel and ad so switch there keep this on the board and switch over now what most of us do when we plan our budgets and it stuns me I mean this graciously I'm not trying to be harsh but I also believe in what I'm doing I'm passionate and I went marketing to matter and I'll tell you right now I talked regularly people who are spending five hundred thousand dollars a month or five million a month or 50 million a month I talked to one recently they were spending us I think 800,000 a month and they wanted to improve their website and they thought 40,000 was too much aren't you insane you don't understand that you're spending your money in the wrong way we end up on the far right see if you're looking at the slide we end up on the far right go back to the slide cliff the advertising piece and we spend minimal dollars on getting that website to be a piece of psychological force an art form and unless even on getting our value proposition articulate it's so clearly nothing going to drive more revenue than your value proposition and not just one I'll talk about that a second but understanding how to get all your value propositions right understanding how to stop thinking about web redesign if you got bad plumbing in a house painting it doesn't make the plumbing better what you need to do is build a series of signal sets beginning with not later not as an afterthought not after agency submits their RFP and gives you lots of sexy designs right away pre testing the new website with a funnel until you've got it math dirt and then you build your website around there in fact I'll show you and I can tell you over and over again I went to the Boston Globe one time if you don't know this they render my servers for many many years we affected a turnaround in the Boston Globe's financial picture we did it by saying your value proposition is wrong going into the digital age they had two sites Boston clumb and the Boston Globe comm one was paid one was free they didn't they couldn't figure out why people weren't buying the paid version I realized it was a value proposition problem and that they were about to make the same mistake that your bosses might make or that you might make as a marketer never solve a product problem with marketing never solve a product problem with marketing I must say the third time never solve a product problem with marketing screaming louder is not going to help your case very much make sure you have something to say before you say anything at all so my point is this I said we can use optimization pretest the funnel while we work on the value problem we'll make a few million dollars that's all but that'll pay for everything you want to do on the website and the value proper testing and that's probably what we did if you're paying for your websites out of your regular budget you're making a mistake you can pay for that out of found money do you hear me you can pay for a new website completely out of found money but it's not gonna happen if you do an RFP call an agencies and have an internal debate about which design is most appealing what's gonna happen if you do it right is you're gonna let the market tell you how to construct the funnel which through a smart testing and hypothesis system that will not only pay for the website but will pay for years in the dividend that comes from an increased conversion rate so I want to say to you that's the main thing I'm trying to teach in this point is there is a triple impact when you get this right when you spin the opposite direction of everyone else don't put all your money into advertising you take your money and you get it into the value prop that's the most important thing and into the most carefully engineered funnel with those two pieces you can spend way more on your advertising because the more you spend there there's an efficiency spend now but today right now here's what I do when I'm helping a startup I don't know that eight is the number okay but let's suppose they start at point five and I can get them to break-even that may be important let's suppose we get them to just two but the minute I get to that means you're making $2.00 gross for every $1 you spend if that math works you only have two questions how long does it take me to make that - is it instantly do I make a sale on the spot or is there a long conversion cycle in the sell process if it takes three months to convert them you need three months of ad money in the bank for but by the third month you've doubled the money you spend and so then you come over here and you change this 100 into 10,000 you increase it over and over again but not before you got think don't forget - ROI we all get lost in ROI and mostly listen profit is an opinion cash is a fact get to cash right you know why Jeff Bezos scaled Amazon if you get under the hood if you go deeply deeply under the hood you'll find out that he built a cash generation machine long before he was profitable that's why he didn't run out of money yes he raised money lots of it but there was an ingenious way he found the cash he needed to keep stealing the business we are doing it wrong and I'm trying to get through to marketers everywhere I sit in the rooms of these board meetings and I want to stick a gun a nail gun and shoot myself in the head what's wrong with us it's just easier to spend more and we're not related into a culture whose philosophy is bigger better more but better is bigger better isn't higher quality better is bigger that's oops I'm about ready to turn on the sensors with what I was going to say let's just say that's wrong thinking really wrong so what you need to do is get this number up to two and then spin all you want right here unlimited you should not have a marketing budget do you hear me you don't need a media budget you need a media investment first you should have a testing piece and every media budget should spend five percent at least of the media budget on testing that's very conservative profess not enough spend 20 because you're going to waste more than 25 take five percent if you're spending $100,000 a month spend five at least on testing frankly I'd spend more when on a budget small you need 10 to 20 thousand dollars get it right get that efficiency - to make sure it stays it - and then spin spin spin spin spin you should not spend money on media you should invest money against a ratio that guarantees you sufficient quality to give you an unlimited budget more important than that when it comes time to build a website pretest the most important paths and I'll teach how to do this make certain you got a conversion lift before you launch the site because you know that when you launch a site you're gonna launch it with the results of your tests and a funnel that's guaranteed to improve conversion and if you do it right you'll have all the money in your hand before you build I've called up my friends or CEOs I say I want to I want to build a new website and I've said well how you gonna approach it and I start lap cuz we're buddies and I'll start laughing at him and we'll laugh together and then I'll just say look do this do this and you don't need this in your budget doesn't have to be in your budget you'll make all this money in the first quarter then build any website you want build one twice as good as you were going to take the difference and reinvest it somewhere else but don't do it the way you're about to do it because you're just gonna lose money you won't even know when you launch the site if your conversions gonna go up you'll just be guessing and hoping well what's wrong with this picture does anybody just Boeing design an airplane this way do we say hey let's get some focus groups and see if they think this thing will fly let's talk about it let's have a discussion all right are you following with me if you are I'm gonna show you a real example because many of you you know I had to do this to get to the point which is spend look at that look at the shift to the side cliff spend from left to right not from right to left focus on getting left to right correct then scale up advertising this is doable in an Information Age where we can measure enough not everything but enough to get to a quality that makes sense now there's way more to budgeting than this and I want to teach more about this going forward I'm just giving you the first idea in the first of these series and I'm going to illustrate that now by taking you to the case study that we looked at in the beginning test protocol 12:14 these guys needed leads how many of you need leads could be leads we've done it with subscriptions we certainly done it with ecommerce but they needed leads they had a paid search ad we were simultaneously in all of these instead of saying let's spend more money on paid search by the way the agency business and sort of my students ranges these agencies are not against you but I am against the spending model that says the more you spend the more we make that's stupid why would I pay you an X percent of my spin and then asked you how much to spend that's like asking the Fox how many chickens are in the coop and he tells you three because he's eating two he's got one plan it's ridiculous don't follow the kind of classic structure in your relationship of an agency don't give a percentage of spend there's nothing about quality nothing about efficiency and nothing to your own credit there come back to me now so our goal was just to drop something different here in this ad and you're gonna think what you want to see a conversion lift no I want to see more people all I want is more people to come to a page that I'm gonna get more yeses from so we did these are all treatments all tested what do we see if you don't that class methodology you can explain why this worked because that is a piece of science that I've taught over and over again see the quantifiable statements there's so much in there we're helping you drop conclusions as opposed to making claims and but all these we design so here we go boom now that produces an income and listen you're gonna think wow big deal yep yeah me too just 21% seems just and a paid search ad that's great but still 21% why does that matter oh because the triple cuz the triple hits about to come now we're not just doing that at the same time so that's the advertising but we actually worked beforehand to improve a landing page and the final call to action that generated a very very qualified lead you can see by all the form fields it required a high motivation even completed so where's the conversion list for those if you don't know them I know them by heart so I can give them to you we increase conversion on that offer page the middle piece by 54% we increased conversion on that form to see the form by 97% way to think about that that means almost twice as many people take how many more people fill out that form and completed it then we work backwards so think about what going on here if the best way I can do it is uh show you like this I want you to see this real quick so that I can help you get the whole picture now this case study is in our how to model your customer mind you can learn that it's free it's not even out you know it's just there for you to help you it's thousands of experiments drawn pull together to put a few of the most important ones to show you how the methodology works and I don't even know that it's part of this download somebody tell them where to find it I'm just sharing that with you to say there's tons of examples I'm just picking one but I'm gonna do it like this in my last few minutes stay with me here's the paid search ad well let this this box represent it here's the landing page will let this longer and then here's the form that needs to be filled out we'll let this represent the form now ultimately a 21 percent lift here gets more people to look at this page but at the same time we're getting 54% more to go to the next page but that's not enough at the same time we're getting 97 percent more of the people who get to this page to complete the form now when you start going backwards it's really hard to do the math and figure it all out but we did it worked with him for a year on this not on this but another thing so we got to track it and see it actually happened what really went down was these numbers start to add up in the ways that makes financial math magic and that's how you saw a two hundred and seventy two percent increase in conversion 268 percent more revenue and sixty-six percent in cost reduction more importantly a 4x increase in margin 302 percent now I am sharing that with you because I want you to understand that it's not enough for you to get on here and listen to me talk about how to get a headline right oh that's cool this is how to model your customers mind I'm sharing it with you because there's 60 pages of these examples get it it's free and and and it'll show you how to work on all aspects take me to the New York Times one they were showing it to me before this and I've just picked out the New York Times so they're gonna scroll down to it last thing I'm going to show you before I'm done in the meantime I hope today is is helping you in a different kind of way and I want to talk about that and we're almost done are you down in New York Times yeah multi-step subscription funnel see the control to see the treatment it's more that seems crazy and this is an extraction but go down to the bottom line let's go down to the next piece oh wait it's at the same one go all the way up where's the conversion increase there it is 1,600 cells that he reads captured and what's the overall increase each of these are adding up keep going just keep going slide down other way here's another one PR Newswire and look at that 202 percent all of this only matters in the context of this broader picture that's associated with this heuristics that we're trying to teach you if you do this right and get your quality up you can scale the other end let's stop right there take me backtrack and see the chat features pull up the heuristic on my final side and I will tell you I have another point which we're gonna get into next week and that is cliff you could show them the point use these first two points that I've made to prioritize your marketing activities and I'm going to talk to you precisely how to prioritize it in each category like what you should be doing with your value problem I'll give you a hint of that right now take a look at this slide these are the four types of value props if you don't harmonize them you're losing money and we can talk more about that you can see more of that in the future but you've got to know how to harmonize the four types we'll talk about all of that go back to heuristic cliff if you would and what I want you to see is that in the next couple of weeks we're going to tell you how to design a web project so it doesn't cost you anything now to get value out of it how how to how to get your value proposition proper and thus use it as they hear me a force multiplier on everything else you do there's nothing you should be doing more important than getting your value prop just right nothing nothing if you're very prep is strong enough you'll never need to market at all just tell people what you've got they'll come get it I can give you thousands of examples thigh props most important thing you have on your plate is the more strategic thing you can do it's the compass of your business and our work in that area 10,000 plus experiments just on that probably the most powerful thing we've ever discovered now I'm out of time I would ask my audience I need feedback team because I went through all this math is this helping you is this making sense let me see the chat so I can see people coming in I need to get your you're thinking about today because I think it'll help me adjust to what I do next week now next week I won't go over all this again I better I won't be able to justify why I'm doing what I'm doing I'll get right into what do you do about these three components in the heuristic and I I want you to keep thinking with me help us get better ask us the right questions make certain that the entire community who are learning to think in this new way and create meaning with their work are benefiting from the way we're working together it is at some point you might come away so that's simple we all know this but nobody's spending their money in a priority that matches what we say we know hence the problem I guess it's possible to know some truths in different levels we need to get this one deeper into our thinking and rethink budgets you can't separate expenses from investments until you know what does it cost you can't recover and what does it cost you should recover for instance I may not I may not recover the cost of my testing until I get the right result from that test but every dollar I spend on advertising afterwards should be an investment knowing how to separate the expenses from the from the from the investments and how much testing will it take in order to pay for it so all of those are the factors that weigh in and when you determine how you determine the way you spend money I am out of time I hope you're getting a help I hope that we can all teach each other I appreciate your joining us today and I'll be back next week with more you