Posts Tagged ‘analytics’

Applying the 80/20 Rule to Marketing: A First Look

December 31, 2014 Leave a comment

One of the many great lessons I’ve taken from Tim Ferriss is the active application of the 80/20 rule to projects and endeavors.

The 80/20 rule, known more formally as the Pareto Principle, states that 80% of your effects are usually generated by 20% of your inputs. For example, in B2B sales it’s often the case that 80% of the revenue comes from 20% of the customers. If you’re running a PPC campaign right now, it’s highly likely that 80% of your traffic comes from 20% of your bidded keywords. The ratios are not always exact, but the point of the principle is that in any given situation, the vast majority of our effort may not be achieving substantial returns.

This is why analytics have become so important to marketing over the last ten years, and why CMO’s have become obsessed with ROI tracking. The moment that companies could finally calculate the direct effect of advertising, most senior executives had a heart attack at the inefficiencies they saw (there’s a reason they call is “spray-and-pray”). The last decade of marketing has been about reallocating resources to where they demonstrate measurable results.

Pareto 101: Baby and the Bathwater

It’s easy to assume that just because you find an 80/20 dynamic somewhere, it’s always a problem that must be fixed. It’s not. The 80/20 dynamic will always tend to exist, even in optimized systems. It’s part of what happens when a system finds equilibrium. Sometimes expending effort on the lower 80% is absolutely necessary to maintain the top 20%.

Here’s an example: if you sell technology, you may decide that you only want to offer technical support to your top 20% of customers (let’s say “enterprise” customers). They are, after all, the ones who are supplying the majority of the revenue. You can do that, but your brand will be damaged by the refusal of support to the other 80%. So that may not be the world’s best idea.

Now, it’s tempting to apply the 80/20 rule only from a monetary perspective.  But because many marketing departments in the SMB world are staffed by only a handful of people, it may be more interesting to apply it from a time perspective instead. What tactics – hacks – can you apply to marketing that will have the highest gains compared to the amount of time it takes to implement and sustain them?

Where do we face this challenge at its most stark? Digital content marketing.

Content marketing – including blogging, social media, case studies, whitepapers, etc. – is a hugely important part of the digital marketing world. If you produce enough informative, interesting, trust-inspiring content, people will come to your website looking for more of your sage wisdom. They will trust you and your products, because of your authoritative works. They will share your content with their friends and colleagues, who will in turn link to your site and establish those all-important backlinks that are necessary for organic rankings…and then you’ll rule the world…

…in theory…

Content marketing is also incredibly labor intensive, even when content is actively repackaged and repurposed. Marketing Directors tend to fall in love with it because the only expense is salary – a sunk cost. But without an audience actively sharing your content, linking to it, or using it in a specific evaluation of whether or not to buy, it consumes more value in time than the results it generates.

Try This At Home

You want a fun activity? Select an SEO agency at random (these are the agencies who are supposedly the best at using tactics like content generation to foster backlinks and organic search results). Take a look at how much content they’re generating on their own behalf (it’s typically a lot). Then, go to the Moz website and enter their main URL into the search tool. Look at their Domain Authority score (this is how much authority the domain has achieved based on backlinks, social shares, age of domain, etc. – this is the necessary prerequisite to high search rankings). Anything under 50 is pathetic. An agency that knows anything about SEO should have an authority in the 80s or 90s. How did yours score?

Most companies, including the SEO agencies who should know better, produce a ton of original content that no one reads, no one shares, and has no effect on trust, authority or ranking. This is a ripe area for the 80/20 rule to be applied.

Looking to Apply the 80/20 Rule To Marketing

Andy Crestodina, the Strategic Director of Orbit Media, is one of the most successful appliers of Content Marketing for the purpose of search optimization. His book, Content Chemistry, discusses the concept of “atomizing” content. That is, creating one large unit of content that can be broken down and repurposed through many different media. For example, an eBook that also serves as a blog series, the basis for an infographic, the outline for multiple webinars, etc.

This is an example of applying the 80/20 rule to content marketing: creating content that can be atomized and repurposed with minimal extra labor. But this is just one example. Imagine how we could apply this principle to other channels like database marketing, telemarketing, and even traditional channels.

Time to open up the floor. Where in your experience can marketers pick up the most true gains with the least amount of implementation time and effort?

These could be ideas at the tactical level, like headline-writing, simple web forms, or building your influencer network. But I’m really looking for the subtle, couterintuitive ideas that on one’s talking about. Did you ever try a marketing experiment that made no logical sense and have it pay dividends, the way some people increase the fat content of their diet in order to lose weight?

What’s your best marketing time-hack?


Statistics, Damn Statistics, and Lies: The Elusive Nature of Analytics

May 30, 2013 3 comments

The hottest buzzword of the decade is “analytics” – the ability to gain heretofore unattainable intelligence and insight by mining piles of data. As with the Internet in the 90’s, what was once the sole domain of geekdom is becoming mainstream. Whereas once we employed a lone statistician somewhere in a broom closet to “do the numbers” for us, now we have our own dashboards at our disposal to tell us our business status up to the second. You can see the seductiveness of this promise, can’t you? Imagine the control you could exert with perfect intelligence. There was a story in Charles Duhigg‘s The Power of Habit about a coupon customizing system that was so insightful, it inadvertently revealed to the family of a 17-year-old girl that she was pregnant before she had a chance to break the news herself. Imagine what you could do with that insight…

The increased quantification of our lives and our businesses is going to bring us many benefits. It brings us intelligence, insight, better forecasts, and proper understanding of the effects of randomness. Services will be more able to customize their offerings to suit our needs. But they have a dangerous mystery about them, and we are adopting them faster than we are learning to understand their implications.

Analytics and statistics, as well as being the bearers of social insight, are also the instruments of institutional dysfunction. They are the primary refuge of those looking to justify their own incumbency and promotions. How often have you heard one political party tout their effect on, say, levels of unemployment? And then how often to you hear the other party say, “Well, those figure don’t take into account those workers who have stopped looking for jobs.”? And then how often do you hear the first party say, “Well, these figures have been the basis of our economic appraisals for decades.”? Not only can people not agree on the interpretation of a certain statistic, but they can’t even agree on which statistics and assumptions are legitimate.

There is already much made of the ethical use of statistics. The HBO drama The Wire coined the outstanding phrase “juking the stats” – tweaking the underlying observations so that the statistics tell the story you want to tell. Statistics-playing strategies occupy a moral gray area: for example, teachers who teach test questions to their students so that their school won’t lose funding under the No Child Left Behind program. Any time you distribute resources using quantitative measures, people have infinite incentive to figure out how to work the system.

What I’m talking about, however, comes before any ethical questions are asked. Analytics have a deceptive certainty to them; a way of appealing to our own cognitive biases while at the same time seeming concrete. People tend to believe that statistics denote certainty. They generally have no idea how much subjectivity they introduce the moment they interpret a chart or graph. “Of course this is what this means…it’s obvious!” Increasing the amount of analytics does not provide more certainty; as the volume of analyzed data increases, so too will the opportunities for cognitive bias increase. This is especially true if statistical understanding does not increase at the same rate as one’s daily involvement with data analysis…we’ll increasingly be called upon to give interpretations that seem certain to us, but that we’re ultimately untrained to give.

Here are a few principles of human reasoning (in no particular order) which may cause a problem: Read more…

A Message to Data Analysts, Our Future Overlords

October 6, 2011 2 comments

[Editor’s Note] This entry is written as part of the Analytics Blogarama hosted by SmartData Collective. The subject prompt was: “The Emerging Role of the Analyst.”


As the post-apocalyptic civilization of 2017 (yes, it’s not too far off) sifts through banks of computer data searching for remnants of our contemporary culture, I hope they happen upon this post. I want them to note my foresight and prescience at having accurately predicted the new ruling class of the Next World Order.

As of this writing, very few of my colleagues join me in my supposition that data analysts – those seemingly quiet, thoughtful employees who “mostly kept to themselves” – are a mere six years away from all-out world takeover. My wife and I, no doubt, will not have survived the Great Quantitative Wars, but in return for paying homage to you “before it was cool,” I ask consideration for any household pets that may have survived us. If they survived, they’re probably hungry by now. There’s food in the bottom corner cabinet in the kitchen.

I understand why you felt you had to finally assert dominance over the world, and I sympathize. The madness simply had to be stopped.

It’s hard to believe that people wouldn’t see the signs leading up to this eventuality. After amassing many years of university education and several hundred thousand dollars worth of student loans, we rewarded you by putting you to work for managers that didn’t have the faintest idea what the hell you were talking about.

  • “What do you mean, there’s no significant relationship? Make one!!”
  • “Random, schmandom…who gives a damn?”
  • “What the hell is a mean? I just asked you for the average!”

And God help you if you worked for an MBA. The beneficiaries of one intro stats course fifteen years before, they would proceed to tell you exactly how you must have miscalculated your c-value…and it’s not like you could tell them that there is no such thing as a c-value. You were very patient as you explained that, no, we can’t just throw in more bar and pie charts to pretty it up. But alas, there was that one accidental moment when you corrected your boss’s interpretation that the data showed his decisions were 95% certain to be accurate, and they kicked you over to the IT department and called you a “Business Analyst,” and you were never heard from again.


By the time the financial sector melted down in 2008, you clearly all had enough. You watched in horror as the market minted AAA-rated junk CDOs, and insisted that it had quantitative models that proved absolutely no risk. How could there be no risk?! A first-year quant student from University of Phoenix could have told you that there was risk! Yet off we went, because our banks had to make more money than all the other banks. The risk analysts were moved into closet offices.

We figured out too late that those people who we assumed to be quantitatively-driven traders were actually hormone-addled narcissists. Oops.

So, now you’re ruling the world, and I can’t really say that’s unjust. We kind of had it coming. Our mistake was that we didn’t respect analysis enough to learn about it. We had a statistics class once, and then said, “That’s hard. I’m just going to hire someone to do this.”

That’s a pretty arrogant stance. We assumed that we could be leaders while still maintaining our own ignorance. You can’t be a leader while turning whole subject matter areas unquestioningly over to others because we simply can’t be bothered to make an effort at understanding. While campaigning for the presidency in 2000, George W. Bush was asked several times about his lack of military experience, and he replied that he would “listen to his generals and take their advice.” Having witnessed how that plan turned out, we collectively made the same mistakes in the area of data analysis.

What we should have done was embrace the emerging role of analysts in business by educating ourselves to a level of basic competence, and placing some trust in the relatively objective perspectives they afforded us. The last ten years have put more useful data at business’s disposal than the preceding hundred years, and its to our benefit that you, our new leaders, became more prominent in business as a result. Your work gives us a picture of our enterprise that circumvents our internal biases and predilections. Respect for analysis and objectivity would have spared us both The Great Depression and The Great Recession, and God knows how many unnecessary bankruptcies and bad decisions. But, it also would have denied us the opportunity to remain ignorant and make uninformed gut decisions. So we said, screw it.

So, as you’re reading this, oh Great Overlords, you have consolidated your power as the new ruling class of earth. Praise be to you. The good news is that social programs will now be fully funded, the military fully provisioned, the national debt fully paid down, and lawyers abolished. The bad news, of course, is that salons, barber shops, and upscale style boutiques will have fallen into dilapidation from lack of use, and college parties will now be very measured, thoughtful affairs. I’m truly sorry we didn’t respect your value until it was too late for us, and I wish you well. And seriously, please, look in on the pets. The short, stumpy little fuzzy one likes cheese.


If you’re new to this blog, it has lots of information on what motivates our behavior and interactions. It may therefore provide some insight into the downfall of our civilization and the rise of the Analyst Ruling Class. Here are some articles that might be of interest:

Social Validation and the Drive for Success

The Six Weapons of Influence: Reciprocity

The Six Weapons of Influence: Commitment and Consistency

The Six Weapons of Influence: Social Proof

The Six Weapons of Influence: Liking

The Six Weapons of Influence: Authority

The Six Weapons of Influence: Scarcity

The Halo Effect

Why We Want What We Can’t Have, and Can’t Have What We Want

Motivation in the Workplace: Surprising New Science

How Pressure and Stress Are Affecting Your Performance