In this presentation given to the 10X Practical Data Science community in Berlin, I show the latest frameworks and mindsets around measuring customer journeys. In particular, measuring the single cross-business macroconversion rate leads to suboptimal allocation of marketing resources. I show that it's very important to exactly know what microconversions customers need to go through en route to the cross-business macroconversion. The theoretical framework for this presentation is the STDC framework created by Avinash Kaushnik.

1. The 10X: Practical Data Science
for Smart Entrepreneurs
Meetup # 1: Marketing industry | Allocating marketing
budgets better.

2. Plan of the meetup
ME
10X
ALLOCATING MARKETING BUDGETS BETTER

3. Me

4. My story [1/5]
My story in data science & analytics started back in high
school, when I discovered my interest in mathematics…
I got 7 (the highest grade) in HL Mathematics (International
Baccalaureate) and 41 points in total.
I was one of the 12 people to receive 7 nationwide in my exam
session.

5. My story [2/5]
Interviewed by Oxford Uni, got an offer to study at London
School of Economics, finally went on to study at Warsaw
School of Economics.
During my BSc, I became further interested in data analysis,
won some local competitions, joined the analytical mastermind
group of prof. Balcerowicz (FOR).

6. My story [3/5]
Currently I’m a senior at two MSc programmes: data analysis &
business informatics.
Graduating soon.
Theses about building a simulation engine for shipping
industry (Python) & NLP tool to detect important e-mails (JS?).
Will present both papers at conferences in 2017.

7. My story [4/5]
I’ve been helping companies with digital analytics and data
science for 1.5 years.
Sample projects I did:
- Mustache LLC - modelling data from e-mail newsletters; enhancing open rates
and CTRs.
- Appsilon LLC - optimizing digital marketing analytics; improving lead gen.
- Optimal energy LLC - marketing models, segmentation; improving lead gen.
- ...

8. My story [5/5 finally...]
Huge data-related unknown unknowns among entrepreneurs
and marketers.
Decided to change it.
That’s how 10X was born.

9. 10X

10. The place for
entrepreneurs and
marketers to improve
decision making and
solve business
problems with data.

11. Improving decisions making with
knowledge
- Workshop meetups once every 3-4 weeks (maybe more
often, depends on the workload).
- Online webinars & courses (http://10xed.org).
- Lectures by guests and experts and myself.
- Tools (e.g. Google Chrome extension for Gmail → July).

12. Improving business results with data
- Monthly industry-specific hackompetitions to connect
businesses & data scientists.
- Hackompetition#1 already announced → check out our
group at meetup.com.
- Small entry fee per company to participate, top 3 solvers
get cash prizes on the same day.
- Huge problem-solving conference once every 6 months.

13. ALLOCATING
MARKETING
BUDGETS
BETTER

14. “I know my (macro) conversion
rate, but I really feel that it’s just
the tip of the iceberg …
I don’t know what’s under the
surface and it drives me nuts.”
Here’s what I’ve heard several times from the
entrepreneurs I’ve worked with:

15. And it got me thinking: why is it
so…?
I decided to do some research and
think about this problem.
Here’s what I’ve found.

16. First, let’s define the macroconversion rate.
“Macro metric” which describes the % of visitors /
users who bought something.
In other words, I define macroconversion rate as this single metric that companies often try
to optimize for relentlessly.

17. Problem#1:
Conversion rate is
abused.
(when used in isolation).

18. Problem#2:
Conversion rate is an
example of pre-Internet
business thinking.
What I mean here is this: 20 years ago, conversion rate was all we had. For example, if you owned
a bike shop, you had no way of tracking non-commercial interactions between your brand and
customers. You did not have much more data than sales receipts, and hence conversions were the
only thing you could optimize for. But we are living in a totally different world now. You can
track customer-brand interactions to a fine detail. Of course, raw macroconversions are still
important, but there are additional metrics that matter.

19. I used this graph to tell the audience that there are two types of extreme values: local
extrema and global extrema.
The point is that optimizing solely for the macroconversion rate can get you only to the local
maximum.

20. If you’re obsessively focused on your
macroconversion rate, you’re optimizing for the
local maximum only.
And why?

21. Because ready-to-buy
customers are just one
segment of your
customers.
In mathematics, local maximum is defined as the maximum value within some small
neighborhood.
The analogy for marketing is: optimizing for a small cohort of customers is like trying to
find a maximum value within a small neighborhood.

22. Here are the groups of customers you’re
blind to if you focus solely on your
macroconversion rate:
- People who came to learn about your products
- People who came to learn about you
- People who came out of the serendipity of life…
- In short: people who aren’t there to buy from you yet (majority of your customers!).
Here is a good visualization of
various needs the macroconversion rate
makes you blind to. Took it from here.

23. And it gets worse...
- Macroconversion rate narrows your thinking to 20% of people who consider
buying at a given moment, but what about the remaining 80%?
- Macroconversion rate makes you optimize for 2.5 out of 100 people on
average.
- Macroconversion rate makes you focused on the short-term, but what about
the LTV or NPS?

24. Takeaway#1:
Segmentation,
Segmentation,
Segmentation!
If you see your traffic as this homogenous flow of clicks, as the macroconversion rate
thinking often demands, you risk getting suboptimal solutions.

25. If optimizing for the
macroconversion rate is not
optimal, what is then?
Optimize for the holistic customer
journey & both the macro AND
microconversions along it!

26. If you account for all of your traffic, i.e. not only for the transaction-ready segment, and
then optimize the entire customer journey, you’re maximizing chances of hitting your KPI’
s global maximum.

27. Oopss…
How do I do it?!

28. AIDA...
(Attention
Interest
Desire
Action)
One good way to create customer journeys is to help yourself with various business
frameworks. One such framework is AIDA. Rings a bell?

29. ...is a bit selfish...
Because it’s focused on you!
How about us, the customers?
The problem with AIDA, however, is that it doesn’t say much about the real
journey of your customers. AIDA is focused on your business needs, not the needs
of your customers. So what’s the better way here?

30. We live in a different
framework
We have real needs

31. STDC...
(See
Think
Do
Care)The author of this framework is Avinash
Kaushnik.
WE:
“Where did you buy this watch?”
“Oh, I saw Ronaldo wore it.”
“I’m thinking about going for a trip,
where do I find cool deals hmm?”
“Bro, I’m booking those concert
tickets for the next Saturday.”
“I love Apple products.”

32. Further links on STDC framework:
● See, Think, Do, Care Winning Combo: Content + Marketing + Measurement.
● See-Think-Do: A content, marketing, measurement business framework.
● Digital Marketing & Analytics: Five Deadly Myths De-mythified.

33. Additional note..
The distinction between AIDA & STDC framework is not just about naming.
The point is to look with empathy at the real needs of your customers as they
progress along the path of interaction with your company.
It is about understanding how people feel and what contexts and situations
they find themselves in along the customer journeys.

34. Remember
segmentation?

35. See: segment#1
Think: segment#2
Do: segment#3
Care: segment#4
These high level segments should be chopped further into smaller segments based
on various demographic and behavioral characteristics.

36. SEETHINK DO CARE
NO commercial intent.
E.g. exclusively the people who use cars.
See stage often happens subconsciously. If you want to move people from see to
think, you should research both their conscious and subconscious motivations.

37. SEETHINK DO CARE
Subset of See with even the weakest intent load.
E.g. people who think they need a new car.
Always conscious.

38. SEETHINK DO CARE
Ready to buy.
Lion’s share of marketing today (although it’s
changing…).
E.g. people who actively look for cars online.

39. SEETHINK DO CARE
A history of transactions.
LTV.
E.g. People who love Mercedes.
Or: people who love Mercedes and tell their friends about it.

40. See, Think, Do on a real
website.
Source: Occam Razor’s
materials.
See-Think-Do framework in
action.
See content:
- Blog
- Social media
Think content:
- Wishlists
- Stylists
- Call
Do content:
- Add to bag

41. STDC brings focus.
Oh, and only 1-2% of companies really use it.
Thinking in such a granular systematic way about sales and marketing is not
common and can be a huge competitive advantage.

42. But let me now say
something
controversial...

43. Content strategy
Marketing strategy
Measurement strategy
These three strategies that have to be
applied together or they won’t work.

44. Disregard the previous insight and you’ll:
Produce “do” content for the people in the “think” stage. Waste.
Try to engage “care” people with “see” tactics. Waste.
And so it goes….
This is very important. In the realm of decreasing attention spans of today’s
customers and increasing competition, interaction points between the company
and your customers are getting more valuable. Use them incorrectly and you’ll lose
both the monetization potential as well as potential fans.

45. On our
journey to the
global
maximum let’s
talk about
measurements
...

46. Stage 1st place metric 2nd place metric 3rd place metric
See % new visits # interactions # “talking
about this”
Think Click-Thru
rate (CTR)
Page depth /
time on site
Bounce rate
Do Profit Macroconversio
n rate
Checkout
abandonment
rate
Care Customer
lifetime value
Net promoter
score
Repeat
purchases
Talking about your
measurement strategy...
Source: my own work + Occam’s Razor materials.
See metrics measure raw “eyeballs”.
Are you being noticed?
Think metrics tell you whether
people see your product as valuable
at all.
Do metrics tell you how valuable is
your product to your customers.
Care metrics measure the strength
of relationship between the
company and customers

47. Before we go any further, let’s do a quick review of the key metrics mentioned on the previous slide.
Metric Description
% new visits Proportion of first-time visits in all visits in a period of time
# interactions Platform-dependent. Likes/shares/+1’s/Instagram hearts/Follows ...
# “talking about this” Facebook metric; index showing likes, comments, shares for a Fanpage
Click-Thru rate (CTR) Number of times a piece of content (most often an ad) was clicked divided by the
number times it was shown/viewed
Page depth / time on site /
interactions per visit
Number of pages viewed during the user session / Average time spent by a visitor on a
particular page / Average number of interactions per visit
Bounce rate Rate at which new visitors arrive at your website and leave without any further
interactions. Negatively correlates with page depth, time on site and interactions
Profit Revenue - COGS
Macroconversion rate Macroconversion rate for the entire business (usually < 2.5%)
Checkout abandonment rate The number of abandoned shopping carts divided by the number of initiated shopping
carts (from my experience ~ 60-70%)
Customer lifetime value Cumulative profit until churn
Net promoter score % company promoters - % company detractors (highly correlated with profitability)
Return visits / Repeat
purchases
Purchases or visits by the same user over a period of time

48. So let’s move from measuring what the
needs of the customers are to...
Managing marketing budgets better.

49. You can optimize marketing budgets by
measuring both little macroconversions
along your customers’ STDC journey and
that final macroconversion of theirs.

50. The flow:
Research customer persona → Segment their needs,
behaviors and contexts with STDC framework → Map
out microconversions & the macroconversion along the
STDC journey → Report & create funnel content →
Optimize the marketing spend using Google Analytics
Start with the customer personas.
Decode what their characteristics, goals, needs and motivations are.
In the second step, apply STDC framework. The goal here is to answer two questions: 1) what information
do my personas need along their STDC path, 2) where do they look for those information. Then, try to map
out microconversions that push them through the funnel, all the way up to the macroconversion.
Finally, spend your marketing budgets on content that supports the chances of microconversions along
the way. Then testing kicks in. A lot of it. If a given piece of content does not support a microconversion,
iterate, improve. The best way to know whether microconversions work is to use Google Analytics, as
shown on the next slide:

51. Google Analytics panel with microconversions.
Source: Occam’s Razor materials.
Source: Kissmetrics blog

52. So why it’s important to focus both on
micro and macroconversions?
- You can capture all four segments of the STDC framework, not just Do, as in
measuring the macroconversion exclusively.
- You can essentially capture what happens during all visits, not just 20-30%.
- You can really see what contents contribute to ROI.
- You’ll have an understanding of why your customers use your product in the
first place.
- You’ll be able to create a good customer journey system and optimize your
spend.

53. Closing words - how to create an
optimized customer journey (finally).
- Segment your customers and their behaviours using the STDC framework.
- List all the microconversions en route to the macroconversion.
- Create content to push people from one microconversion to another, again
based on STDC framework and your strategy.
- Methodically optimize microconversions completion rates over time via A/B
testing your content and call to actions, data science & modelling, etc.
- If there’s a high bounce rate between any two microconversions, dive deeper
into STDC metrics I’ve listed earlier and come up with new content ideas
based on the needs of your customers.

54. 3 INTERESTING
BIG DATA
INSIGHTS

55. #1: 75% of enterprise leaders cite growth
as the key source of value from
analytics.
#2: 60% of enterprise leaders have some
predictive analytics capabilities.
#3: 80% of enterprise leaders measure
the impact of analytics investments.

56. See you on the next meetup.
If you want help setting up this STDC framework & Google Analytics for you
business - write me a private message on meetup.com and let’s jump on a call.