Original subtitles

So how do you influence your KPIs

if you can't control them?In this video,

I'm going to show you how the

makeup of your key metrics is

made and how you actually go about

influencing them. So first of all,

most people will be looking at cost per

acquisition. What is the makeup

of cost per acquisition?There are only

two components that are used in the

calculation of cost per acquisition

really at the kind of influence influence

level. It's the cost you're paying per

click and the conversion rate.

So just think about that. There's just

two metrics which actually come in play

when it comes to calculating your cost

per acquisition. So the calculation here

as you can see on the example on the

right is your cost per click.

Divided by the absolute number for your

conversion rate. So in this case if our

click cost per click is 2 lbs and three

pence then I would do the

calculation 2.03

divided by the 6% as absolute so

0.06 gives me my CPA and in this

example the CPA is 34 lbs

and. When you kind of understand the

core of these two metrics and how

they come to play in your CPA, you can

better understand how you can improve

your cost per acquisition. And this is

what it's all about, knowing how to

actually go deeper and influence your

cost per acquisition. So within this kind

of equilibrium. We can drop, we can try

and drop our cost per click. We can try

and increase our conversion rate and

ideally we want to do both of these at

the same time. So what is the makeup

of your cost per click?It's relevance

score. It's the competition in

the auction and competitors. It's

your bidding strategy. It's the

optimised pixel that you're using in your

website conversion. Objective, for

example, it's the audience size and

whether you're reaching the

bulk of people or or if there's still

lots of people to be reached, the

frequency of your ads and how satisfied

people are with your ads and how much

they're interacting, the objective that

you're actually playing with. So the cost

per click for a page post engagement ad

will generally always be cheaper than a

website conversion ad, and also

the campaign funnel and how you've

actually built that out. Going back to

the funnel section of the training and

thinking about have I actually bought

people through the journey or not as

well. So that that's just a kind of

insight in influencing cost per click.

And then you have conversion rate on the

other side. So what influences that?One

of the major influences is actually

traffic quality. Now the

game isn't just about getting the lowest

cost per click, it's getting the best

value click. that you can get. Best

value means that you want the best

customer at the best price. Sometimes you

might get a higher cost per click but the

quality is better and therefore they

convert better as well. So traffic

quality plays a big part in your site

conversion rate. Then it's things like

the offer and the hook. What's in your ad

that's going to entice them to go ahead

and convert on your site. So if you're

pushing a general product and it's

more of a kind of yeah I'm going to have

a look at this this productOf interest.

People click into your site, your product

page is quite passive, it's not really

trying to sell them or not doing a hard

enough job to sell them. Then you're

gonna struggle to convert as well. So

the offer and hook starts in the ad and

then it's carried through on your landing

page as well. So a lot of people who run

Shopify or a Magento site.

Send traffic into a category page or a

product page. And these systems are

really limited in the way that they can

present back a product and a proposition.

Some of the best converting funnels take

an ad to a landing page and actually

expand out on the product or

proposition and convert that prospect

far better than a standard product page.

And so when I'm doing e-comm testing, if

have a product that's performing really

well and maybe we're testing it with a

standard product. Page. Once we know that

the product is getting traction in

our ads, then I will want to build out a

dedicated landing page for that product

or that range of products and work a lot

harder on a sales page to get people to

convert on that product. Just absolutely

focus in on that product and get them to

transact as well. So that's really where

the landing page comes in. And then your

product conversion rate. So tracking how

many people are converting from your

product page and actually adding to cart

is another big part of conversion rate

optimization. In my

10-15 years in marketing, I've spent a

lot of time on analyzing conversion rate

optimization. And one of the big

mistakes people make here is to try and

influence this big number. So if your

site's converting at 6%, how do you get

that to 7, 8, 9%?You look at the

micro conversions through your funnel. So

how do I get more people from my landing

page to my product page, my product page

to my cart page, my cart page to go

ahead and purchasing and then within that

you go to your. Kind of really micro

level conversions within the page itself.

So how do I get someone

who's visiting the page to Scroll down,

look at the key info, add the item to

their basket and then you start thinking

about small tests that you can apply to

influence that conversion rate. So. You

know, when you look at cost per

acquisition and you want to influence

that number, do understand that there's

different strategies and tactics that

come in play. So as a Facebook ads

marketer, you absolutely need to know

about conversion rate optimization and

you need to know how to get your cost per

click down or at least get the high

quality customer.

And especially if you're running an ecom

store, if you're doing it yourself, it's

actually a big burden to be able to do

both. And there are tools out there,

especially on the conversion rate

optimization site. For example, Visual

Website Optimizer, a pretty quick tool to

go and plug and play. It will allow you

to do AB testing on your site. Or even

with landing pages, there's tools like

Unbounce, Leadpages, Instapage,

Clickfunnels that allow you to just

create really quick landing pages and

start testing those as well. Combining

that with something like Visual Website

Optimizer, you could take a single ad and

then split that into two landing pages

and see which one performs best. Or you

can take two identical ads in your ad

set and give them their own. Landing

pages to test it that way as well. If you

are going to take that route, then the

best thing to do is to split your ad set

in half. So you'd make a duplicate of

your ad set and run one ad in one and run

one ad in the other. Or you use the

Facebook split test tool

which allows you to take an audience and

split it in half completely, which is the

more scientific way of testing. So you

can take an audience, cut it in 50,

cut it in 50% each. And Facebook will

ensure that 1/2 of the audience will

only ever see one creative that you're

running in one ad set and the other half

will only only ever see the ad in the

other ad set. It's a cleaner way of AB

testing when you want to test with the

audiences. But that's something to bear

in mind when you are doing your testing

is thinking about how you want to do your

split testing as well. One big, big

caveat to bear in mind when you're doing

conversion rate testing on your website

is that the Facebook algorithm is super,

super sensitive to change in performance.

So let's say you've got a really, really

good performing ad set and you have a

separate team doing conversion rate

optimization or a separate person on the

site and that person takes your really,

really good landing page and starts A/B

testing that with or without your

knowledge. Now, if you end up

splitting the traffic 50/50 from your

really, really good ad set, what

can happen isThat

50% of your traffic goes to a bad

performing ad set. The data that goes

back to Facebook is therefore not as good

as it was before. Facebook sees a drop in

conversion rate and the algorithm starts

to change its targeting. This is a

disaster because when you're

doing a B testing on the site, you're

obviously controlling it. So you know

that for example, if conversion is bad on

a variant, you're going to pause it.

You're not going to continue working with

that, but Facebook doesn't know it as far

as Facebook is. concerned, all of a

sudden, you know you're spending 2 pound

per click or whatever it is, and your

site conversion has dropped from 6% to 4%

or even 3% in that day, Facebook

thinks that it's the problem. It will

then try and find better quality

customers having no knowledge whatsoever

that you've actually been testing on the

website. And it could be that it was

targeting a great subset of your

audience. And all of a sudden the website

changes has made it go ahead and change

its targeting. So that's a real big

gotcha to keep an eye on that when you

are doing a B testing, keep in mind that

any changes in your conversion rate here

will impact the algorithm as well. So

that's a big chunk about CPA

optimization. Then for anyone

doing e-commerce, we were all we will

also be looking at return on ad set.

Ad spend and again in a similar way,

ROAS is made-up of two key metrics,

the cost per acquisition, which we've

already discussed. And the average order

value and again just like with conversion

rate, AOV is completely site dependent.

So one of the challenges here is as

you're developing your ecom proposition,

you're going to be playing around with

offers, bundles, promotions.

And and trying to get people in at

various levels, you know you might be

taking the kind of free free plus

shipping route or using the loss leader

route or you might be trying to get

people in on one category and then

upselling to another or cross selling to

different areas. They all play a big part

in your AOV. So your AOV is made-up

of your price. Now I've done ecomm

testing in the past and I've gotten some

great traction from my ads, brought them

to the site and actually one of the key

key reasons why they haven't converted is

price. For anyone that's running an

e-commerce store, price is all about

testing and finding out what people are

prepared to pay. But it's also about the

presentation of your site, how

trustworthy is it, the social proof,

etcetera. And so they will play a big

part in whether people are actually going

to buy your higher end items or not as

well. And then your promotions, your

upsells, cross sells, your one time

offers through your cart for example.

Now this is something I do want to

highlight if you go back 2-3,

maybe even four years the.

Facebook ecosystem was nowhere near

competitive and as an e-com

advertiser you were able to drive big

profits from Facebook. So going back to

2014 for example,

I I would see 34500%

return on ad spends on

cold audiences and going fairly broad and

niche and it was it was a great time to

be on Facebook nowadays with the rise

in cost per thousand impressions, your

CPM, the rise in the number of

competitors. And also the rise

in lots of kind of e-commerce and

drop ship and things like that and the

kind of challenge with Amazon and eBay,

etc. It's made it even harder to get

the high ROAS return from Facebook cards.

And this is where I absolutely encourage

people to look at. Post purchase

transactions to reduce your cost per

acquisition and increase your return on

ad spend. So there's a few different ways

of doing this. For example, if you bring

people in on a lower priced product

into your purchase funnel, so they go

ahead and purchase let's say a $10

item or a $15 item.

You can then immediately offer them a

kind of one time special exclusive on

your higher end product. Maybe it's a

506070 dollar item, reduce it

down to 25, maybe 30% off and say

look. Today only we have this special

offer. If you're interested, you can buy

it now and save X percent. If you can

get the product and pitch and kind of

relevance to that product right, it's a

great opportunity to get a second sailing

quickly and bulk up your average order

value in that particular transaction and

make your Facebook acquisition activity

work a lot harder as well. So if for

example, let's say our standard

AOV is 40 lbs and the cost

per acquisition is 20 lbs. Great. The

return on ad spend is 200%. So

if you think about average e-commerce

margins and 50%, if our

40 LB cart

cost 20 lbs for us to actually purchase

the cost of goods sold. It would mean

that this isn't a profitable campaign for

us. So that 20 lbs to acquire that one

customer is literally just broke even. So

that's the cost of your goods and the

kind of advertising cost has gone into

the rest of it. And you know, in this

kind of example, what you might want to

do is have a look at

how you can. Bulk up that

value and get more out of that customer.

So if after they've made this 40 LB

purchase, there's another sale that you

can make, even if it's less. So let's say

it's a 20 LB on top. What you're then

doing is having two purchases on that one

acquisition and your basket value has all

of a sudden gone up to 60 lbs on the same

CPA. So now the profit is now

increased. There's other ways to do

upsells. There's been some studies

on when the best times are to actually

hit people up with the additional sell.

So first of all, there's a peak in

excitement that occurs when people

purchase an item. So there's that kind

of. Excitement of great, you know, I've

now bought this item. Then there's the

anticipation waiting for that item to

arrive when the item arrives and they've

got it physically in their hand. That's

another key excitement point. And if you

can time your promotions right, that's a

great point to capture them again. And

also the kind of first two to four weeks

after having that product as well and

then it dies out and the product becomes

normal for them. So thinking about

hitting them up, whether through Facebook

ads or through e-mail or even Messenger

bot, a great example. For example here is

once someone has transacted with you on

the website to connect up your

shipment information with your bot to

get them opted into your bot and that

gives you another sales channel to hit

them up with marketing as well and to try

and get them to make a subsequent

purchase down the line. So then you have

e-mail, you have messenger bot,

SMS is another option as well. So if you

wanted to again offer them an SMS route

for shipping notification. You can then

use another channel to hit them up. SMS

is not as responsive as messenger

bots are right now and especially when

you're using messenger bots plus e-mail

to serve up your kind of marketing

and upsell messages post purchase. And

then you can also follow them up with

Facebook ads and really work on improving

your ROAS based on acquiring 1

customer but multiple purchases and

really for e-com to be successful. There

are two ingredients. Of scaling to,

you know, millions. Number one is

lifetime value. You know, the game within

Facebook and e-commerce is not just about

getting as much profit from that first

sale as possible. It's getting as much

profit from that one customer as

possible. So if you get one purchase and

you're breaking even because you know if

that average order value is 40 lbs, your

profit is 20 lbs and you're spending 20

lbs, then. You're gonna

suffer with the ecom game, but if you're

thinking about lifetime value and let's

say for example this customer purchases

three times even just three times in a

year and they spend 120 lbs

over a 12 month period. Your cost per

acquisition was 20 lbs and you know

therefore your profit continues to rise.

And this is where you then start bringing

in e-mail and Facebook ads post purchase

to bulk up your lifetime value. The

second part of a successful

e-commerce and sustainable business

through e-commerce is through branding.

And branding actually is something which

really starts right from the front to

back. So from your ads, your landing

page, your whole experience, your

customer service, don't discount how

important customer. Service is to bulking

up your lifetime value and getting people

to buy back again. There's a reason

Amazon placed so much emphasis on

customer service, because that's the

thing that people remember when things

are either going well or not, is how well

you're making them feel. And you know,

the attachment with a brand and product

comes down to that feeling, how did they,

do they look after me, do they make me

feel important, etcetera. And I know for

example, when you're scaling up with

e-commerce, it can be quite easy to be

overwhelmed with so many support

questions and messages coming in. But put

the investment in. It really is worth the

time of treating your customers as

friends and making them feel like you

actually care about them and you you have

their interests best in mind as well. So

kind of. A quick recap, the focus here

is your ultimate goal is to

profit, but in order to profit you need a

good cost per acquisition in OV. In order

to get a good cost per acquisition, you

need a good cost per click and conversion

rate. And being clear that there are

multiple strategies on improving all

of those as well, it's it's important to

be able to break down the key metrics

into the smaller segments and being able

to create an action plan for those as

well.