Crime and Punishment electricity ROI of business marketing performance of (a) in all e-commerce related KPI, and no one is more thrilling than the ROI. Text / world network operators invited OF SONG star spring of 2012, I was invited to do in Beijing and Xiamen on the 'traditional brands of electricity supplier' of related topics speech, after the end, there are some friends surrounded me and asked me : ROI by increasing the conversion rate does not seem to be able to improve? 'Of course not,' I replied, '...... but ROI is really important?' The questioner hesitated slightly, but it is a definite answer me:. 'The boss asked, and I have no idea,' Oh, another one The poor guy behind bars. An accepted view is: the price of the flow itself, the quality, flow and matching the degree of site content (user will consume the content) are the three important aspects of the impact ROI, in which the latter greatly affected the conversion rate.
According to this logic, no doubt, Baidu's 'brand area' has the best ROI. People in the Baidu search your site name, and then link to your site, most likely with a clear and strong motivation, quality and degree of matching the flow itself, no doubt, and brand area prices - morally it should be free But now charges, however, the price per unit flow rate relative to other media channels still be cheap. It seems to be common sense. I remember Baidu brand area ROI even exceed 50:1 (return:investment). (Note: Unless otherwise specified in this article return merchandise sales amount to count, rather than in accordance with the profit plan; investment costs refers only to the flow of purchase.) But sometimes common sense is terrible, I always wanted to open almost paranoid sense The black box. Like the mad pursuit of ROI KPI harm than what can best measure our marketing effectiveness? This leads to the inevitable question often asked me: 'Do you think the biggest problem on your current marketing is?' The normal operation of an organization, and functioning of the human body is very similar, it is difficult to use one single indicator to explain physical health, as the case of an organization, can not use one single indicator to measure. ROI is important, but not the only important. Another common sense tells us that when a Web site traffic increased a certain critical value, the flow rate and the overall degree of matching site content will be lower, after which, ROI will also increase traffic and will inevitably decline. It is not difficult to understand. For example, I have a travel product sales site, in extreme cases, when I travel to all traffic on all interested snare continued introduction of traffic, then spend to purchase flow (investment) will continue to increase, but the return (return) We will not continue to increase (new to my site traffic is not interested), so ROI will certainly be reduced. Generally, we tend to buy traffic operation later more accurate (and our website that best matches the target audience) traffic, and then gradually extended to those times accurate flow rate, in the process, ROI must be gradually reduced a. Which is a lot "digimon cosplay costumes " of e-commerce is often the way to go - put the money invested in performance marketing (performance marketing) on, and secondly, if sufficient funds, will consider making more money-losing brand marketing (branding). So, if we need to maintain a higher ROI, traffic must be extremely careful selection itself, and the flow quantity is necessarily limited. If we are fanatical pursuit of ROI, we are not impossible, for those who belong to you the most traffic - Baidu brand area and brand word, and you have a relationship or rebate site for those loyal customers send newsletter. But, the result is that you do have to bear the traffic growth slow or even reverse, while reducing the risk of revenue. Only focus on ROI results, it does not help you become bigger and stronger, but instead make you feel bound to lose the opportunity.
This is not a normal commercial logic. ROI is not the most important KPI to measure marketing performance if ROI is not the most important KPI to measure marketing performance, then how are we to measure marketing performance? One of my colleagues had a foreign trade B2C e-commerce company, she talked about the method of this company in the assessment employed marketing director: 'Our marketing director is the assessment point is simple - he needs to put this month's budget all spent out, and to reach a minimum 'sales. She stressed: 'It is the first important money out - because the ROI is more difficult to significantly improve, it is possible to properly put money out, sales will certainly be able to achieve.' The idea for this company so unique to As I had to seriously consider along this road - the money out to buy traffic and sales reached the lowest, which is actually still is a variant of ROI goals. But the difference is that they are not so deliberately stressed ROI, but stressed that the sales, but with sales less budget spending, actually got a marketing margin - they putting the focus on margins. E-commerce competitive environment plagued all the domestic electricity business practitioners, almost all competitors have a head margin is not concerned, but foreign trade electricity provider is different, they need to ensure that the act itself is to sell merchandise sales profits. Today's domestic electricity supplier can disregard profits spearhead it? Perhaps also, but it has been toward the end. ROI quest for quick profit reflects, and focus on profitable business primitive regression. KPI What is more important?
Depending on the situation and mentality in which the boss. If the VC or PE (investors) to give financial support to crazy, maybe Maori no sense, ROI may only be valuable for the micro channel optimization, sales in this case is justified in order to oppress a competitor, but such opportunities lopsided ; if business start-ups, with limited funds, you want a steady and steady development, then under the control of performance marketing ROI is significant; Furthermore, like the foreign trade electricity supplier, like the e-commerce and retail viewed as no different from the nature of the line by sellers make money, then most of your energy should be the pursuit of profit. Of course, things are no absolutes, three cases may penetrate each other, but need to measure the subject does not change. These three cases, how should we look at ROI? How to treat borderline cases ROI perhaps we need to analyze this issue with a little knowledge of microeconomics. We have the following assumptions (these assumptions are in fact the real situation of the abstract). Suppose that a: With the increase of traffic flow and gradually increase spending, and when the flow exceeds a critical value, with the increase of traffic flow, the higher unit cost (marginal cost increase). Assume two: With the increase of traffic, revenues gradually increase, and when the flow exceeds a critical value, with increasing traffic, revenue generated by the unit will be increasingly low flow (marginal income decreases).
Under this assumption, we can get a 'Cost - income' curve. (See Figure 1) If our goal is to maximize profits, then obviously, our traffic volume should be in a position shown in dotted lines on. Following this position, increased traffic will exceed the increase in the cost of merchandise sales, profits started to become negative. Under these two assumptions, as long as the ROI \u0026 gt; 0, it should continue to invest in marketing costs. Of course, this is nonsense, this is not considered ideal conditions other costs. In fact, the purchase (or production) of the product itself and the operating costs are required, so we need to put this matter into account. Assume three: the cost of procurement of goods and sales proportional operating costs and goods. - This is not a totally realistic assumptions, but in order to simplify the problem, we are not here to dwell on. Under the new assumptions, the curve a little change will occur. If the product and operating costs are tiny compared with the sales of goods, then (such as sales of goods accounted for only 10%), then the above curve will become like Figure 2. In this case, the measure of media expenditure and income ROI is how much? As shown in Table 1 and the graph in Figure 2 corresponds to the red data line of FIG. This case, ROI can make money as low as 1.2. However, for those 'heavy' business, the situation is perhaps different, if a business's products and operations costs account for 50% of product sales amount, then the curve will change. (See Figure 3) In this case, ROI can be reached 2:1 business support normal operation, as shown in Table 1 blue data line. However, nearly 50% of gross profit for China's electricity business is really asking too much, because most of the electricity supplier of goods is too homogeneous, gross margin is really low. If a business product and operating costs accounted for 90% of product sales amount, then the curve and look like it? (See Figure 4) seems no matter how can not make money, goods sold every one, it will increase a loss. In this case, the only way is to get outside investment - since in the bloodshed, someone would have to be willing to continue to blood transfusions.
This is the beginning of the second half of 2010 to the present, most domestic electricity supplier true portrayal. However, this actually gives us a good inspiration: with or without external investment, we can consider the profit curve to determine the scope of our reasonable ROI. If no matter how impossible by sellers make money, then the external investment to be regarded as a reasonable amount of profit it, so green profit curve can have the opportunity to become positive, and we are also able to find the final 0:00 and that intersects point, and calculate ROI. Originally absolutely should not have to spend any company flow, with the help of external investment, the ROI can support any more than 2.3:1 traffic running. (See Figure 5) three ways to success Figure 5 gives us a lot of inspiration. Our marketing is essentially "darker than black costume " the process of changing the curve above. We can have a variety of efforts, reflected in the following three ways. First, we can reduce the cost of traffic desperately, blue curve shifts to the right. However, the cost can significantly reduce the flow of Supreme rare, this is not most people can influence the head of marketing options, but it is the boss forced us to do the most options.
At first hao123 in order to compete for a 'broken' position has been 'badly beaten', and China is a good flow of resources on such a high degree, I want to flow prices, just let someone give you money directly as unspeakable. (See Figure 6) Second, we have increased traffic, as long as our profit is still positive, we should continue to invest traffic until cosplay costumes for sale the margin is zero so far. This is all of our marketing people most commonly used method, this method so. We commonly used method is to start buying in a high ROI of traffic sources, when these flows play to do, and go buy those ROI second highest, and so on. However, this method actually exist limitations and risks, refrain here, we in the next period will be devoted to this issue. (See Figure 7) Third, we have a method, this method is of great significance. If we can think of ways to select a given traffic situation, so that income can be improved, our profits will naturally increase, and ROI will benefit as well. This is nothing like a move, replaced vernacular Internet marketing analysis on us, is to 'cultivate internal strength' - to enhance the conversion rate of your website, increase old customer retention rates and other methods to make us able to Under the existing traffic, higher revenue. (See Figure 8) Of course, I can not say what the top three ways to better and more effective, in fact, the first and third approach equally effective way, while the second approach for small electricity suppliers have not yet formed traffic bottlenecks It is also operational.
However, an organization for three methods of emphasis is, however, inconsistent with the degree of difficulty of the three methods. I always think that, for most e-commerce sites, optimized for the flow itself (first approach), in fact, far more difficult to optimize the website and users, after all, we can choose the flow channel is limited. But electricity supplier commander who, perversely, often for the first approach we put forward a very high demand, far more than the actual pressure applied, but contempt and even ignored a third way, even some designed to easily upgrade a third path methods are completely non-use, it is a great pity. The next phase will focus on the third leading serial herein successful approach involved analysis method by which traffic can increase revenue in a given situation.