Chapter 5:

Defining the terms

If you already know your way around analytics systems, you might find this chapter a bit tedious, but glance through it. A common language is the best weapon we have against ignorance.

The basics #

One of the key things the military does is to give the troops a common language. This is not only important, it's mandatory for the fighting machine to keep on rolling smoothly. It allows faster and better communications and like soldiers, we use lingo and jargon in our work. We gathered the most important ones into an alphabetical list for your browsing pleasure.

Terms used in the industry tend to confuse people generally because there are a lot of acronyms. So while the list we have here is by no means exhaustive it does include a few of the more important ones and opens up why they are important.

We will use some of these terms in the following pages, so it's no if you know them, it's no necessary to go through them again. You can always return to this chapter to understand a term if you are uncertain.

Count #

The most basic unit of measure; a single number, not a ratio. Most people start using the measure by raising their fingers at a very young age. Often a whole number (e.g. Visits = 12,398), but not necessarily (e.g. Total Sales = €52,126.37). Example: One apple.

Ratio #

Typically, a count divided by another count, although a ratio can use either a count or a ratio in the numerator or denominator. (An example of a ratio fabricated from ratios is "Stickiness.") Usually, it is not a whole number. Because it's a ratio, "per" is typically in the name, such as "Page Views per Visit." A ratio's definition defines the ratio itself, as well as any underlying metrics. Example: Four apples per person (ie. 4:1 ratio).

KPI (Key Performance Indicator) #

While a KPI can be either a count or a ratio, it is frequently a ratio. While basic counts and ratios can be used by all Web site types, a KPI is infused with business strategy - hence the term, "Key" - and therefore the set of appropriate KPIs typically differs between site and process types. Example: Your monthly online sales revenue or number of clicks on the banner.

Why this is important Sure, these might seem obvious. However, these definitions are the basis for everything from this sentence forward. We suck at understanding how to create metrics that define our success and these three definitions are the building blocks of all metrics. KPIs are important because they directly tie back to your business. Cost metrics (like CPC and CPA explained below) are usually KPIs because when they get too high it affects your business in a bad way so you have to do something about it.

Site #

The website, the mobile website, the application or the place where you're attempting to persuade individuals (unique visitors) to go.

Why this is important Online is everywhere now. You use a mobile to look at sites, you use computers, TVs, PlayStations, iPads and all sorts of devices to access 'the cloud' we also call the Internet. The site you're persuading people to look at is an important thing to define because what works on a computer might not work on a phone.

The site is the part you can influence the most. You can't really control who or how many come to your city, but you can make sure that city is the best and most amazing experience they have ever witnessed. It's also best to check that your city isn't a gang-filled post-apocalyptic dystopia before you start trying to move traffic around it.

Traffic #

The amount of unique visitors you get totalled up over a given time frame. Not to be confused with the amount of cars on a road. The analogy however is valid because you can think of your visitors traveling down a road to see your site.

Why this is important It gives you a good idea of the number of people you're reaching and allows you to validate your potential. If you sell stuff for instance and only reach half a dozen people a day you might need to invest in your marketing. If you get a gazillion people a day but still aren't selling anything you might need to change your sales strategies or improve your site.

Marketing Channel #

Not to be confused with Site, the channel as we define it is how you get eyeballs to your offers. It's basically the channel you go to market with. Channels split into 3 categories.

  • Bought channels - Channels where you pay for traffic such as paid search marketing, banners from media websites or other forms of directly paid for advertising
  • Earned channels - Channels that you get traffic from without paying for it directly (though a cost still exists). Things like free search engine traffic, social media word of mouth or links from other websites to yours
  • Owned channels - Channels you have that allow you to reach out to existing customers or prospects. For instance Email or SMS channels to reach existing contacts in your database.

It is critical to understand the difference between these three as it requires a very different message in each channel. Remember, that you might have all three in one site's traffic, so don't assume what kind of traffic it is.

Why this is important Understanding the best way to reach your Unique visitors in different stages of your customers' lifecycle is key to spending less to persuade them to buy more.

Social media #

Is an earned marketing channel but deserves its own mention as it can be used for so much more. It can be thought of as a way to market but can also be used for research purposes or as a customer service media.

There are six different types of social media: collaborative projects (e.g. Wikipedia), blogs (e.g. Engadget) and microblogs (e.g. Twitter), content communities (e.g. Youtube), social networking sites (e.g. Facebook), virtual game worlds (e.g. World of Warcraft), and virtual social worlds (e.g. Second Life).

Why this is important Social media is not just a channel. The relevance and context are massively different from regular display advertising in paid channels. If paid channels are a sign to a place, social media is the friend telling you about how cool the place is. Surface vs. People.

Monetization #

The process of converting or establishing something (often something abstract like a download from your site) into legal tender ($, € or £).

Why this is important By monetizing all aspects of your online business you assign values to things that previously you may not have considered. For instance you may begin to understand that a certain download is worth a lot to your business.

Sometization #

The process of converting or establishing social media activities into legal tender ($, € or £). This is mostly here since we thought about this and bought the domain.

Why this is important Monetizing social media is very different compared to normal traffic. The easiest and usually the most logical solution is to try increase self service ratios and increase customer satisfaction, keeping the customers for longer. The trick is measuring it.

Lifecycle #

The customer lifecycle is the duration of your business relationship with the customer. Typically a customer is someone who has bought a product but not always, you could say a customer is someone who has given you permission to talk to them. We define the customer lifecycle in 5 stages;

Prospect > New > Repeating > Churning > Defected

  • Prospect - The prospect is someone who is in your target market but not yet bought into your product, service or offers.
  • New customer - Someone who has bought into your product service or offering for the first time.
  • Repeating customer - Someone who has bought in to your products, services or offers more than once.
  • Churning customer - A repeating or new customer who has stopped reacting to your offers and needs to be won back.
  • Defected customer - A repeating or new customer who has stopped reacting to your offers and has not reacted to anything over a predetermined time frame.

Why this is important The customer lifecycle is extremely important to define. First you need to determine what a customer is. Then you need to define when a customer stops being a customer. This is important so that you don't waste marketing money on people whom are no longer interested. You might have a different lifecycle for every product or service in your catalogue.

There are many customer relationship management (CRM) and Customer Experience Management (CEM) applications that make the job of figuring out the life cycles much easier. If you have a larger portfolio, researching analytical CRM (aCRM) solutions might be worth the while getting to know.

Call To Action (CTA) #

A call to action is something that asks your unique visitor to take an action. It is a persuasive element on your site or in your offer that moves your unique visitor forward toward the action that you want them to take.

For instance; "Click here to see more" as a hyperlink in an email is a call to action.

Why this is important You should measure all calls to action. What is even more important, is to have a planned action in every message. If you say this and that in your marketing message, what are you expecting the viewer to do? Where do we want to direct the viewer? Without this, there are no results.

If you liked this chapter, please recommend it to others.

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About the authors

We have a single goal together, to make our customers a billion euros in profit. This won't happen in one year, it might take five years, but we will not stop until we have generated a billion of provable profit for our customers.

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Markus Sandelin
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