Maths trickery in eCommerce

I’ve long been an advocate that Finance is the New Marketing, as yet I don’t think I have persuaded many marketeers but I think I’m getting my message across that this new data driven marketing can be aided by finance.

The key challenge is interpreting the data and understanding it and there is more than one occasion where the Maths appears to play tricks.

Take a look at the following tables

Table A

Table B

Between Table A and Table B I have increased conversion across all channels, but due to a change in the number of visitors and the channel they are attributed to, my overall conversion rate has dropped.

Cue desperate calls from your CEO about why conversion rate has dropped and the usual conversion specialists pitching their shiny wares.

Just maths trickery but it might catch some people out, especially with the emphasis on conversion rates that there has been in the last year.

What has happened is that my profit has gone up. Increased conversion does not necessarily mean increased revenue. I could have kept the same number of visitors and just assigned them to a different channel to show the same affect.

Why diversification increases upside risk

Lets look at the same table but with some year on year %age changes.

If I increase my 3 key profit drivers (visits, conversion, profit per order) in my email channel by 1% each, I get a greater increase in profit than the decrease in the same profit drivers in the affiliate channel. Seems weird, but it’s just the maths.

It is also of greater benefit to either gain or lose 1% in each of the 3 areas than lose 3% in one area.

Is the maths suggesting you spread your marketing investment out? It appears so but how well does that translate to the real world and is it relevant?

Comments below……

Thanks to @manross for opposing aggregated conversion as a KPI and pointing this one out.