- Andrew Anderson
One of the most difficult principles to understand for many people in our industry is that rate and value is not the same thing. One of the fastest ways for a program to go astray is to confuse one for the other. It is easy for people to understand the need for agreeing on what you are trying to accomplish, or why they need to have leadership. It is even easy to talk about the need for efficiency and that it is ok to be wrong, but yet even when people get past that point, they still consistently miss this critical difference. We so desperately want to explain our value to the company, that we confuse the value of our actions in an attempt justify our actions. This fundamental loss of understand leads to a wide range of poor decisions and bad understand that dramatically limits the positive impact a testing or analytics program can have.
A rate is simply a ratio or a description of actual outcome; it is the same thing as me telling you that I have a $4.23 RPV for a population or that I got 5000 conversions. This is a description of past behavior, and is simply an outcome, not a description of why or how that outcome came to be. Where people lose focus is that the value, or ability to positively or negatively influence that outcome, is not tied to those gross numbers. A description of rate tells you nothing about an individual action, since you are not comparing that outcome, only describing it. Increasing your conversions does not inherently create more revenue, nor does the revenue by itself reflect positive value generated by an action. We measure things by saying we ran a campaign and then we got $3.56, this is not the same as telling you anything about the value of that campaign. Value would be the difference in running that particular campaign versus not doing anything, or running a different campaign. The rate is the end outcome, the value of that action is how much it improved or decreased performance.
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Read the full post at the Digital Marketing Blog.
