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BUSINESS METRICS
& WEB MARKETING
ALPER AKBAŞ
alperakbas@aviationportal.org
Warnings!
1. This is gonna be a little long presentation (especially if you
ask questions)
2. This presentation is not designed for the old fashion
“P<adv.>nic” device located in the ceiling. Better viewed
in technologic devices. (I will share it, if you want it.)
3. There is too much information in. Don’t worry, the purpose
is to know that such concepts exist in the business life.
4. The information encompasses all industries. But I will also
touch aviation on the surface.
5. I ask questions!
6. I talk too much!
What is the highest and best
you can create for the business?
VALUE
?
What is the highest and best
you can create for the business?
VALUE
?
To find out the right question
to ask.
To find out the right question
to ask.
• Then, find the best answer you possibly can in the time,
and with the resources available. 
• Ensuring that your answer has practical impact by
translating it into a specific call to action.
• A specific recommended action, communicated to the
relevant decision makers.
• Using visual metaphors and non technical language.
What is always the right
question? 
What change, in our business processes can
and should we make RIGHT NOW?
To increase revenues, maximize profitability, or
reduce our risk.
What is always the right
question? 
What change, in our business processes can
and should we make RIGHT NOW?
To increase revenues, maximize profitability, or
reduce our risk.
RIGHT NOW?
Our company has engineered
real time, computerized
systems. That optimize for
certain dynamic metrics. By
adjusting our response to
customer and market
input. With a delay for
processing or latency, of no
more than a fraction of a
second. 
A computerized response is
not possible. So we respond to
individual customers with a
human being. Where that
human being has access to
the full historical record, of
that customers interactions
with the company. Whether
through buying
things, customer support calls,
actions on our website, etc.
The change that we are
recommending, can't happen
overnight. But it can happen
as soon as it has been
empirically tested and shown
to work. We do testing by
making one small change at a
time to our website by creating
two different versions!
BEST2ND BEST STILL GOOD
A|B TESTING
What do we mean by, right now? 
Metrics are special numbers that help us to
ask and answer the right business question. 
What is a business metric?
What decision should we make? 
What process should we change right now? 
special numbers
BUSINESS METRICS
Click-Through Rates are a metric.
Where we have a 4.75% sales tax, the sales
tax is not a metric. There's nothing that we
can do to change it.
Metrics are numbers that we can impact when we change our
business processes. 
The percentage of people who viewed our ad on a particular website. Then used it
as a link to click through to our homepage can change every time the ad contents
and appearance change. 
Distinguishing Revenue,
Profitability, and Risk
Metrics
Revenue
metrics
Profitability
metrics
Risk
metrics
All business metrics can be classified into
three broad categories. 
•Revenue metrics are outward facing.
•How well or badly the company is marketing
and selling its products?
•The company sales force wants to know:
➡How many units of each product were sold over a given
time interval and  how this compares to the same time
interval last year and the year before.
➡Sales by region, by product and by new versus repeat
customers. 
➡The sales funnel, the potential future customers
➡How effective any marketing campaigns may be.
➡How many people have seen a particular advertisement
or email marketing piece or mail offer? 
Revenue Metrics
%Who & What Percentage
Responded to our ad campaign?
SELLING
is a revenue metric. 
Everything that relates
directly or indirectly to
Profitability Metrics
have to do with the efficiency of the processes by which the company
creates and delivers its products and services to customers. 
OPERATIONAL METRICS
•Concerns those people in the company responsible for
production. 
•Anything relates to:
➡How much cash is tied up in the form of unsold inventory
➡How much production is unsaleable?
➡How often the company loses sales because of insufficient
production or inventory?
➡How much is spent on variable costs, raw materials and labor,
per unit product?
Inventory & unsold / unsaleable goods
Profitability Metrics
Some Profitability Metrics in Aviation Language
ASK Available Seat Km. (It is also used to calculate Employee Productivity)
CASK Cost per ASK
L/F % Load Factor (this is also profitability and revenue)
No Shows It is no show
FOC Flight operating costs (Crew, Fuel, Maint. etc.) 

- Costs per block-hour of operations
- Block-hour daily utilisation / Aircraft Utilization
- Departures per Day
ASK / D Aircraft Productivity (ASKs per day)
RPK Revenue Pass. Km’s
Profitability Metrics
Some Profitability Metrics in Aviation Language
ASK Available Seat Km. (It is also used to calculate Employee Productivity)
CASK Cost per ASK
L/F % Load Factor (this is also profitability and revenue)
No Shows It is no show
FOC Flight operating costs (Crew, Fuel, Maint. etc.) 

- Costs per block-hour of operations
- Block-hour daily utilisation / Aircraft Utilization
- Departures per Day
ASK / D Aircraft Productivity (ASKs per day)
RPK Revenue Pass. Km’s Mainly Revenue Metric (Weighted Revenue)
C/RPK which means “Yield” is a Profitability Metric.
Can often achieve significant increases
in profitability by focusing on improving
operational efficiencies. 
LARGE ESTABLISHED COMPANIES
WITH RELATIVELY LITTLE ROOM
TO INCREASE REVENUES
?
Profitability Metrics
What does it mean in aviation language?
Can often achieve significant increases
in profitability by focusing on improving
operational efficiencies. 
LARGE ESTABLISHED COMPANIES
WITH RELATIVELY LITTLE ROOM
TO INCREASE REVENUES
? LOW COST CARRIERS
& HYBRID CARRIERS
Profitability Metrics
What does it mean in aviation language?
major financial institution32.8%
individuals & others
7.4%
mortgage pools or trusts
22.1% federal & related agencies37.7%
have to do with tracking and where possible reducing the many potential dangers a
company faces. 
Risk Metrics !
major financial institution32.8%
individuals & others
7.4%
mortgage pools or trusts
22.1% federal & related agencies37.7%
have to do with tracking and where possible reducing the many potential dangers a
company faces. 
Risk Metrics !
•If a company is spending a large portion of its net cash flow every month on interest on its
debts, then even a small drop in revenues caused by some external shock, like a recession,
could cause the company to become insolvent and collapse (How did you acquire the
aircrafts?, Are there any plane sleeping in the park?). 
•Secured creditors have the right to seize a company's assets if they're not paid on time and
that would close down the business.
SECURED
CREDITORS
!
major financial institution32.8%
individuals & others
7.4%
mortgage pools or trusts
22.1% federal & related agencies37.7%
have to do with tracking and where possible reducing the many potential dangers a
company faces. 
Risk Metrics !
•If a company is spending a large portion of its net cash flow every month on interest on its
debts, then even a small drop in revenues caused by some external shock, like a recession,
could cause the company to become insolvent and collapse (How did you acquire the
aircrafts?, Are there any plane sleeping in the park?). 
•Secured creditors have the right to seize a company's assets if they're not paid on time and
that would close down the business.
GOVERNMENTSECURED
CREDITORS
!
In our case GOVERNMENTS, Regulations…..
ALSO SEE PASSENGER RIGHTS | What happens if you cancel a flight?
major financial institution
32.8%
individuals & others
7.4%
mortgage pools or trusts
22.1% federal & related agencies37.7%
NET CASH OUT is always the most important metric to track. How many
months can the company survive at the present burn rate? 
Risk Metrics !
Adjusted Net Debt | Cost of Capital
If it relates to leverage, it also relates to Risk MetricsALSO
Churn Rate as a Risk Metric !
:)
>:(
????
The rate at which new subscribers /
customers drop off within a year,
runs  the risk that over time, there are
fewer targets who have never been
customers and it becomes impossible to
maintain revenue growth or even hold
steady. 
DYNAMIC METRICS
TRADITIONAL METRICS
DYNAMIC METRICS TRADITIONAL METRICS
•Three attributes make a business metric
Traditional:
➡ The metric DOES NOT change significantly
over intervals of a month or less.
➡ Specific actions CAN NOT visibly

or significantly impact the metric in the
short term
➡ Impacted by dozen of different factors (like
quarterly revenues) and Many of these
factors are completely outside the control
•Standard financial and managerial accounting
•Quarterly statements of net cash flow, profits and
losses
•Three attributes make a business metric
Dynamic:
➡ Will the metric change significantly over
intervals of a month or less
➡ Are their specific actions the company can
take that can visibly or significantly impact
the metric in the short term
➡ Small changes in process, can lead to big
impact
NEW ADVERTISEMENTThe Great
we launched last week
This PR / Ad Action
affect your sales?
May
Answer is:
You don’t know
but have to track to know
which is a bit COSTLY!
A PR / Advertisement Campaign
!
You have to track & know:
How it affected your sales in
different demographic zones
by means of segmentation!
CEO & CFO
will ask about it! Repeatedly
Online sales are extremely sensitive to
average page load times. 
Edge Caching
Studies have shown that pages that load in three
or more seconds are much less likely to lead
to sales than pages that load in less than
three seconds. 
40% of web users will abandon completely,  a
web page that does not load in three
seconds.  This is why there's an entire industry
devoted to what's called edge caching.
A perfectly dynamic
revenue metric
Online sales are extremely sensitive to
average page load times. 
If your company does not already do load time performance testing for mobile
devices in all global markets where it is active, It should start immediately. 
Edge Caching
!
Studies have shown that pages that load in three
or more seconds are much less likely to lead
to sales than pages that load in less than
three seconds. 
40% of web users will abandon completely,  a
web page that does not load in three
seconds.  This is why there's an entire industry
devoted to what's called edge caching.
A perfectly dynamic
revenue metric
Ifyouwanttocreatedifference
in your business,
focus on the
Dynamic Metrics“
WEB
MARKETING!DON’T LIMIT YOUR REVENUES
Marketing
Deliberate, measurable process of first creating and then continually increasing positive awareness and interest
for a specific brand, product or service offering within a target demographic. 
Enterprise & Traditional Retail sales
Personal Traditional metrics predominate
Computer sales sales
Impersonal Traditional metrics predominate
Marketing
Deliberate, measurable process of first creating and then continually increasing positive awareness and interest
for a specific brand, product or service offering within a target demographic. 
>>>What’s
next?
Analytics related to them lead directly to
increasing sales. 
Web Marketing Metrics
[Revenue Metrics]
Even small changes you make, can lead to
rapid and significant changes in these
metrics. 
For example, in your website's homepage text
or in the AdWords that you purchase for
sponsored links on search results.
DYNAMIC
A Target Demographic?
Deliberate,  measurable process of first creating and  then continually
increasing positive awareness and interest for a specific brand, product or
service offering within a target demographic. 
MARKETING
A group of people with common
characteristics, such as all being between 18 and
35 years of age, being from the same country or
geographic region, etc.
Target demographic
A Target Demographic?
Deliberate,  measurable process of first creating and  then continually
increasing positive awareness and interest for a specific brand, product or
service offering within a target demographic. 
Marketing is COSTLY
Bymeansof Money & Time
Because marketing requires effective use of limited
resources, marketers  seek to focus their efforts on
groups whose members are much more likely than the
average person to be willing to learn about the product
or service offering, to buy it, and ultimately, to become
high value, recurring revenue customers.
MARKETING
Flying Pizzas
Cong! You opened a pizza house in a town!
You have a perfect sign on the window.
There are 770 residents in the town.
+You are the only pizza restaurant in the town.
NOW
It is time to
GROW YOUR BUSINESS
Flying Pizzas
Welcome to the new city!
With 6 Billion population & 70,000 pizza houses
A new threat for the revenues.
Global Distribution Super Markets
Now, You suffer from
“Burn & Churn Rates”
GDS - Super Markets
Cheap Frozen Pizzas
GDS
GDS
Flying Pizzas
Welcome to the new city!
With 6 Billion population & 70,000 pizza houses
A new threat for the revenues.
Global Distribution Super Markets
Now, You suffer from
“Burn & Churn Rates”
GDS - Super Markets
Cheap Frozen Pizzas
GDS
GDS
Welcome to
Web Marketing
Welcome to
Web MarketingYou should try to identify a much smaller group within that 6
Billion, your target demographic that are likely to want pizza,
and more importantly, are likely to want your pizza. 
Find out much more likely than average to respond favorably
to your unique message!
NOW
with your potential customers
how you are different than the other 70,000 pizza
places out there. 
You have to communicate
Welcome to
Web MarketingYou should try to identify a much smaller group within that 6
Billion, your target demographic that are likely to want pizza,
and more importantly, are likely to want your pizza. 
Find out much more likely than average to respond favorably
to your unique message!
NOW
market differentiation.
message of difference is
YourThe idea is to match your market differentiation to a target demographic.
How to match a target demographic? 
Target
Demographic?
100 hours of videos
are uploaded to Youtube
every minute
Target
Demographic?
Over 500 million
Daily Tweets
100 hours of videos
are uploaded to Youtube
every minute
Target
Demographic?
3,600 images are posted
to Instagram every second
Over 500 million
Daily Tweets
100 hours of videos
are uploaded to Youtube
every minute
Target
Demographic?
Over 1 Billion Facebook Users
41,000 post / second
3,600 images are posted
to Instagram every second
Over 500 million
Daily Tweets
100 hours of videos
are uploaded to Youtube
every minute
Target
Demographic?
40,000 Google search /second
3.5 Billion a day
Over 1 Billion Facebook Users
41,000 post / second
3,600 images are posted
to Instagram every second
Over 500 million
Daily Tweets
100 hours of videos
are uploaded to Youtube
every minute
One of the most focused ways to reach
who have an interest in your offering
is by purchasing Adwords. 
Adwords are offered by Google on an
auction basis
There are also a number of other similar
alternative venues and pricing schemes.
ADWORDS
What are we talking about?
This is Ad Words
Can be improved by SEO
This is Organic Search Results
This is Ad Words
Can be improved by SEO
This is Organic Search Results
This is Ad Words
This is Google
Mainly Python
Java, JavaScript
Paid Links
GOOGLE
identifies the ad words
Ad Words
Terms advertisers bid on
Match Topic
“Emergency Pet Care”
Key Words
“Veterinary hospital “
First, when a user enters search terms into
Google
Google identifies ad words, 
terms that advertisers have placed bids on
that match the searchers topic. 
How does it proceed?
GOOGLE
identifies the ad words
Ad Words
Terms advertisers bid on
Match Topic
“Emergency Pet Care”
Key Words
“Veterinary hospital “
First, when a user enters search terms into
Google
Google identifies ad words, 
terms that advertisers have placed bids on
that match the searchers topic. 
How does it proceed?
Here you accept
to pay!
Here you pay!
Advertisers bid on their keywords by setting a maximum
cost per click-through, or Max CPC for each keyword they
are interested in.
CPC bidding is also sometimes called pay per click, or PPC.
Typically, winning adword bids are sold for less than the
maximum CPC. 
The actual CPC is typically 1 to $2. 
CPC & ACPC
Cost per Click (Pay per Click) & Actual Cost Per Click
Advertisers bid on their keywords by setting a maximum
cost per click-through, or Max CPC for each keyword they
are interested in.
CPC bidding is also sometimes called pay per click, or PPC.
Typically, winning adword bids are sold for less than the
maximum CPC. 
The actual CPC is typically 1 to $2. 
CPC & ACPC
Cost per Click (Pay per Click) & Actual Cost Per Click
The most expensive
adwords
Per-click through
prices
Attorney $54
Mortgage $47
Insurance $47
How the ranking works?
Note that Google gets paid only when someone clicks through  a
sponsored link to the advertiser's landing page. Google ranks the links
that it shows. Therefore to maximise the revenues it uses the below
calculation:
Ad Rank = (CPC bid)(expected click-through rate)
How the ranking works?
Note that Google gets paid only when someone clicks through  a
sponsored link to the advertiser's landing page. Google ranks the links
that it shows. Therefore to maximise the revenues it uses the below
calculation:
Ad Rank = (CPC bid)(expected click-through rate)
Quality Score =
Weighted Average of
expected click-through rate
ad relevance and landing page experience
Ad Rank = (CPC bid)(Quality Score)
How the ranking works?
Note that Google gets paid only when someone clicks through  a
sponsored link to the advertiser's landing page. Google ranks the links
that it shows. Therefore to maximise the revenues it uses the below
calculation:
Ad Rank = (CPC bid)(expected click-through rate)
Quality Score =
Weighted Average of
expected click-through rate
ad relevance and landing page experience
Ad Rank = (CPC bid)(Quality Score)
In Google's words what this means is the quality of your ad text and landing page
in the context of what a user is searching for. 
Why Quality Score?
To prevent exploitative misdirection that would hurt the
Google brand. For example, imagine if a liquor store
decided to buy adwords related to emergency pet care on
the theory that people with a sick pet could probably use a
drink. 
How this ranking works?
Ad Rank = (CPC bid)(Quality Score)
Why Quality Score?
To prevent exploitative misdirection that would hurt the
Google brand. For example, imagine if a liquor store
decided to buy adwords related to emergency pet care on
the theory that people with a sick pet could probably use a
drink.  =
How this ranking works?
Ad Rank = (CPC bid)(Quality Score)
Why Quality Score?
To prevent exploitative misdirection that would hurt the
Google brand. For example, imagine if a liquor store
decided to buy adwords related to emergency pet care on
the theory that people with a sick pet could probably use a
drink.  =Google automatically parses the text of the sponsored link, and of the web page the sponsored link
points to, the so-called landing page. If either text does not contained primarily language directly
related to the medical care of animals, the liquor store would get a very low quality score for that
bid. 
Google aims to offer sponsored links to landing pages that are as similar as possible in subject
matter, quality, and click-through rates to the webpages that Google ranks highest in its unsponsored
or organic search results. 
SEO = Search Engine Optimization
Some Definitions to save the day!
This is Google
This is you!
Some Definitions to save the day!
This is Google3.5 Billion
Search a day
1,000peopleclickedyourlinkonGoogle
andlandinyourpage!
This is you!
Butyoureceived2,000visitors
fromallthirdpartywebsites.
Inthiscase,yourCTRfromGoogle
is50%
CLICK-THROUGH RATE
50%
Some Definitions to save the day!
This is Google3.5 Billion
Search a day
1,000peopleclickedyourlinkonGoogle
andlandinyourpage!
This is you!
400 of these 1,000
stayed in your site
Butyoureceived2,000visitors
fromallthirdpartywebsites.
Inthiscase,yourCTRfromGoogle
is50%
600 of these 1,000
stayed in your site for a few seconds
and immediately left!
BOUNCE RATE60%
CLICK-THROUGH RATE
50%
Some Definitions to save the day!
This is Google3.5 Billion
Search a day
1,000peopleclickedyourlinkonGoogle
andlandinyourpage!
This is you!
400 of these 1,000
stayed in your site
However only
20 of 1,000
made a purchase
Butyoureceived2,000visitors
fromallthirdpartywebsites.
Inthiscase,yourCTRfromGoogle
is50%
600 of these 1,000
stayed in your site for a few seconds
and immediately left!
BOUNCE RATE60%
CONVERSION RATE2%
CLICK-THROUGH RATE
50%
Some Definitions to save the day!
This is Google3.5 Billion
Search a day
1,000peopleclickedyourlinkonGoogle
andlandinyourpage!
This is you!
400 of these 1,000
stayed in your site
However only
20 of 1,000
made a purchase
Butyoureceived2,000visitors
fromallthirdpartywebsites.
Inthiscase,yourCTRfromGoogle
is50%
600 of these 1,000
stayed in your site for a few seconds
and immediately left!
BOUNCE RATE60%
CONVERSION RATE2%
CLICK-THROUGH RATE
50%
This is so bad! You throw away this money!
Some Definitions to save the day!
This is Google3.5 Billion
Search a day
1,000peopleclickedyourlinkonGoogle
andlandinyourpage!
This is you!
400 of these 1,000
stayed in your site
However only
20 of 1,000
made a purchase
Butyoureceived2,000visitors
fromallthirdpartywebsites.
Inthiscase,yourCTRfromGoogle
is50%
600 of these 1,000
stayed in your site for a few seconds
and immediately left!
BOUNCE RATE60%
CONVERSION RATE2%
CLICK-THROUGH RATE
50%
This is so bad! You throw away this money!
Question:
What is the right question
to be asked here?
Ad Words is just the beginning
The question is how much a converted customer costs you?
Ad Words is just the beginning
Once we develop some experience with bidding on ad words, we will have data on the
typical actual cost per click through, actual CPC we are paying. 
We can track just the users who come to our website through a sponsored link
and determine what percentage of them ultimately buy our product at least once.
This percentage is our conversion rate for sponsored links.
The question is how much a converted customer costs you?
Acquisition cost
Acquisition cost Total CPC
Conversion Rate
=
Acquisition cost
Acquisition cost Total CPC
Conversion Rate
=
What we pay to
Google for CPC $2
From google ad words
1,000 people visited the page
but only 20 people made purchased
2%
Acquisition cost
Acquisition cost Total CPC
Conversion Rate
=
What we pay to
Google for CPC $2
From google ad words
1,000 people visited the page
but only 20 people made purchased
2%
In this case, we are paying
100 USD (2 USD / 2 %)
to acquire one customer from google
Acquisition cost
Acquisition cost Total CPC
Conversion Rate
=
What we pay to
Google for CPC $2
From google ad words
1,000 people visited the page
but only 20 people made purchased
2%
In this case, we are paying
100 USD (2 USD / 2 %)
to acquire one customer from google
Question:
What is the right question
to be asked here?
Acquisition cost = 100 USD
What does that mean?
Your goal should be a cost of
customer acquisition less than the
first year's  average revenues per
customer. 
Unless your company is super ultra very cash flow positive!
Acquisition cost = 100 USD
What does that mean?
Your goal should be a cost of
customer acquisition less than the
first year's  average revenues per
customer. 
Unless your company is super ultra very cash flow positive!
If avg. rev. per customer is 85 USD
and acquisition cost is 100 USD
YOU ARE RUNNING
OUT OF CASH
Acquisition cost = 100 USD
What does that mean?
Your goal should be a cost of
customer acquisition less than the
first year's  average revenues per
customer. 
Unless your company is super ultra very cash flow positive!
If avg. rev. per customer is 85 USD
and acquisition cost is 100 USD
YOU ARE RUNNING
OUT OF CASH
Acquisition cost
Total CPC
Conversion Rate=85 USD
100 USD
Acquisition cost = 100 USD
What does that mean?
Your goal should be a cost of
customer acquisition less than the
first year's  average revenues per
customer. 
Unless your company is super ultra very cash flow positive!
If avg. rev. per customer is 85 USD
and acquisition cost is 100 USD
YOU ARE RUNNING
OUT OF CASH
Acquisition cost
Total CPC
Conversion Rate=85 USD
Either you need to
decrease CPC from 2 USD
to 1.7 USD
100 USD
Acquisition cost = 100 USD
What does that mean?
Your goal should be a cost of
customer acquisition less than the
first year's  average revenues per
customer. 
Unless your company is super ultra very cash flow positive!
If avg. rev. per customer is 85 USD
and acquisition cost is 100 USD
YOU ARE RUNNING
OUT OF CASH
Acquisition cost
Total CPC
Conversion Rate=85 USD
Either you need to
decrease CPC from 2 USD
to 1.7 USD
Or you will have to
increase the conversion rate
to more than 2.4%
100 USD
Acquisition cost = 100 USD
What does that mean?
Your goal should be a cost of
customer acquisition less than the
first year's  average revenues per
customer. 
Unless your company is super ultra very cash flow positive!
If avg. rev. per customer is 85 USD
and acquisition cost is 100 USD
YOU ARE RUNNING
OUT OF CASH
Acquisition cost
Total CPC
Conversion Rate=85 USD
Either you need to
decrease CPC from 2 USD
to 1.7 USD
Or you will have to
increase the conversion rate
to more than 2.4%
You can not bargain
with Google
100 USD
In our case at least 24 of 1000 visitors
have to make purchase
Segmentation
We would like to identify common characteristics shared by
visitors  with high conversion to revenue rates, and  even better
with high recurring revenue and lifetime value.
When we segment our customers into groups and identify
common characteristics, so we can figure out what kind of visitors
later become  our best customers and focus on attracting more
like them
Segmentation Where did a visitor to our website come from?
Sponsored search, they click on an ad that we ourselves
placed on a search engine. 
Organic search, they clicked on an unpaid link to our
website that came up in search results,
Or they clicked on a link that we placed in a group email or
in a tweet. 
From a third party website? Someone like a food critic wrote
a blog post or article about us and included a link to our
site. 
Or direct they typed in our URL themselves?
Segmentation
People who click through an organic link, have a much lower
bounce rate (25%) than the people who find us through a
sponsored link, 45%. 
It would make sense to devote resources to improving our
organic ranking in search results, a process called Search Engine
Optimization or SEO. 
IMAGINE YOU FOUND OUT THIS AT THE END OF SEGMENTATION
IN THIS CASE:
Credentials
The content and context of this presentation is mainly structured on the Coursera and Duke University lecture notes of
“Business Metrics for Data-Driven Companies” which is thought by Daniel Egger (Executive in Residence and Director, Center
for Quantitative Modelling).
If you want to discover about the course (you should) please follow the link embedded in the logo.
THANK YOU VERY MUCH.ALPER AKBAŞ
alperakbas@aviationportal.org

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Business Metrics and Web Marketing

  • 1. BUSINESS METRICS & WEB MARKETING ALPER AKBAŞ alperakbas@aviationportal.org
  • 2. Warnings! 1. This is gonna be a little long presentation (especially if you ask questions) 2. This presentation is not designed for the old fashion “P<adv.>nic” device located in the ceiling. Better viewed in technologic devices. (I will share it, if you want it.) 3. There is too much information in. Don’t worry, the purpose is to know that such concepts exist in the business life. 4. The information encompasses all industries. But I will also touch aviation on the surface. 5. I ask questions! 6. I talk too much!
  • 3. What is the highest and best you can create for the business? VALUE ?
  • 4. What is the highest and best you can create for the business? VALUE ? To find out the right question to ask.
  • 5. To find out the right question to ask. • Then, find the best answer you possibly can in the time, and with the resources available.  • Ensuring that your answer has practical impact by translating it into a specific call to action. • A specific recommended action, communicated to the relevant decision makers. • Using visual metaphors and non technical language.
  • 6. What is always the right question?  What change, in our business processes can and should we make RIGHT NOW? To increase revenues, maximize profitability, or reduce our risk.
  • 7. What is always the right question?  What change, in our business processes can and should we make RIGHT NOW? To increase revenues, maximize profitability, or reduce our risk. RIGHT NOW?
  • 8. Our company has engineered real time, computerized systems. That optimize for certain dynamic metrics. By adjusting our response to customer and market input. With a delay for processing or latency, of no more than a fraction of a second.  A computerized response is not possible. So we respond to individual customers with a human being. Where that human being has access to the full historical record, of that customers interactions with the company. Whether through buying things, customer support calls, actions on our website, etc. The change that we are recommending, can't happen overnight. But it can happen as soon as it has been empirically tested and shown to work. We do testing by making one small change at a time to our website by creating two different versions! BEST2ND BEST STILL GOOD A|B TESTING What do we mean by, right now? 
  • 9. Metrics are special numbers that help us to ask and answer the right business question.  What is a business metric? What decision should we make?  What process should we change right now?  special numbers
  • 10. BUSINESS METRICS Click-Through Rates are a metric. Where we have a 4.75% sales tax, the sales tax is not a metric. There's nothing that we can do to change it. Metrics are numbers that we can impact when we change our business processes.  The percentage of people who viewed our ad on a particular website. Then used it as a link to click through to our homepage can change every time the ad contents and appearance change. 
  • 12. Revenue metrics Profitability metrics Risk metrics All business metrics can be classified into three broad categories. 
  • 13. •Revenue metrics are outward facing. •How well or badly the company is marketing and selling its products? •The company sales force wants to know: ➡How many units of each product were sold over a given time interval and  how this compares to the same time interval last year and the year before. ➡Sales by region, by product and by new versus repeat customers.  ➡The sales funnel, the potential future customers ➡How effective any marketing campaigns may be. ➡How many people have seen a particular advertisement or email marketing piece or mail offer?  Revenue Metrics %Who & What Percentage Responded to our ad campaign?
  • 14. SELLING is a revenue metric.  Everything that relates directly or indirectly to
  • 15. Profitability Metrics have to do with the efficiency of the processes by which the company creates and delivers its products and services to customers.  OPERATIONAL METRICS •Concerns those people in the company responsible for production.  •Anything relates to: ➡How much cash is tied up in the form of unsold inventory ➡How much production is unsaleable? ➡How often the company loses sales because of insufficient production or inventory? ➡How much is spent on variable costs, raw materials and labor, per unit product? Inventory & unsold / unsaleable goods
  • 16. Profitability Metrics Some Profitability Metrics in Aviation Language ASK Available Seat Km. (It is also used to calculate Employee Productivity) CASK Cost per ASK L/F % Load Factor (this is also profitability and revenue) No Shows It is no show FOC Flight operating costs (Crew, Fuel, Maint. etc.) 
 - Costs per block-hour of operations - Block-hour daily utilisation / Aircraft Utilization - Departures per Day ASK / D Aircraft Productivity (ASKs per day) RPK Revenue Pass. Km’s
  • 17. Profitability Metrics Some Profitability Metrics in Aviation Language ASK Available Seat Km. (It is also used to calculate Employee Productivity) CASK Cost per ASK L/F % Load Factor (this is also profitability and revenue) No Shows It is no show FOC Flight operating costs (Crew, Fuel, Maint. etc.) 
 - Costs per block-hour of operations - Block-hour daily utilisation / Aircraft Utilization - Departures per Day ASK / D Aircraft Productivity (ASKs per day) RPK Revenue Pass. Km’s Mainly Revenue Metric (Weighted Revenue) C/RPK which means “Yield” is a Profitability Metric.
  • 18. Can often achieve significant increases in profitability by focusing on improving operational efficiencies.  LARGE ESTABLISHED COMPANIES WITH RELATIVELY LITTLE ROOM TO INCREASE REVENUES ? Profitability Metrics What does it mean in aviation language?
  • 19. Can often achieve significant increases in profitability by focusing on improving operational efficiencies.  LARGE ESTABLISHED COMPANIES WITH RELATIVELY LITTLE ROOM TO INCREASE REVENUES ? LOW COST CARRIERS & HYBRID CARRIERS Profitability Metrics What does it mean in aviation language?
  • 20. major financial institution32.8% individuals & others 7.4% mortgage pools or trusts 22.1% federal & related agencies37.7% have to do with tracking and where possible reducing the many potential dangers a company faces.  Risk Metrics !
  • 21. major financial institution32.8% individuals & others 7.4% mortgage pools or trusts 22.1% federal & related agencies37.7% have to do with tracking and where possible reducing the many potential dangers a company faces.  Risk Metrics ! •If a company is spending a large portion of its net cash flow every month on interest on its debts, then even a small drop in revenues caused by some external shock, like a recession, could cause the company to become insolvent and collapse (How did you acquire the aircrafts?, Are there any plane sleeping in the park?).  •Secured creditors have the right to seize a company's assets if they're not paid on time and that would close down the business. SECURED CREDITORS !
  • 22. major financial institution32.8% individuals & others 7.4% mortgage pools or trusts 22.1% federal & related agencies37.7% have to do with tracking and where possible reducing the many potential dangers a company faces.  Risk Metrics ! •If a company is spending a large portion of its net cash flow every month on interest on its debts, then even a small drop in revenues caused by some external shock, like a recession, could cause the company to become insolvent and collapse (How did you acquire the aircrafts?, Are there any plane sleeping in the park?).  •Secured creditors have the right to seize a company's assets if they're not paid on time and that would close down the business. GOVERNMENTSECURED CREDITORS ! In our case GOVERNMENTS, Regulations….. ALSO SEE PASSENGER RIGHTS | What happens if you cancel a flight?
  • 23. major financial institution 32.8% individuals & others 7.4% mortgage pools or trusts 22.1% federal & related agencies37.7% NET CASH OUT is always the most important metric to track. How many months can the company survive at the present burn rate?  Risk Metrics ! Adjusted Net Debt | Cost of Capital If it relates to leverage, it also relates to Risk MetricsALSO
  • 24. Churn Rate as a Risk Metric ! :) >:( ???? The rate at which new subscribers / customers drop off within a year, runs  the risk that over time, there are fewer targets who have never been customers and it becomes impossible to maintain revenue growth or even hold steady. 
  • 26. DYNAMIC METRICS TRADITIONAL METRICS •Three attributes make a business metric Traditional: ➡ The metric DOES NOT change significantly over intervals of a month or less. ➡ Specific actions CAN NOT visibly
 or significantly impact the metric in the short term ➡ Impacted by dozen of different factors (like quarterly revenues) and Many of these factors are completely outside the control •Standard financial and managerial accounting •Quarterly statements of net cash flow, profits and losses •Three attributes make a business metric Dynamic: ➡ Will the metric change significantly over intervals of a month or less ➡ Are their specific actions the company can take that can visibly or significantly impact the metric in the short term ➡ Small changes in process, can lead to big impact NEW ADVERTISEMENTThe Great we launched last week
  • 27.
  • 28. This PR / Ad Action affect your sales? May Answer is: You don’t know but have to track to know
  • 29.
  • 30. which is a bit COSTLY! A PR / Advertisement Campaign ! You have to track & know: How it affected your sales in different demographic zones by means of segmentation! CEO & CFO will ask about it! Repeatedly
  • 31. Online sales are extremely sensitive to average page load times.  Edge Caching Studies have shown that pages that load in three or more seconds are much less likely to lead to sales than pages that load in less than three seconds.  40% of web users will abandon completely,  a web page that does not load in three seconds.  This is why there's an entire industry devoted to what's called edge caching. A perfectly dynamic revenue metric
  • 32. Online sales are extremely sensitive to average page load times.  If your company does not already do load time performance testing for mobile devices in all global markets where it is active, It should start immediately.  Edge Caching ! Studies have shown that pages that load in three or more seconds are much less likely to lead to sales than pages that load in less than three seconds.  40% of web users will abandon completely,  a web page that does not load in three seconds.  This is why there's an entire industry devoted to what's called edge caching. A perfectly dynamic revenue metric
  • 35. Marketing Deliberate, measurable process of first creating and then continually increasing positive awareness and interest for a specific brand, product or service offering within a target demographic. 
  • 36. Enterprise & Traditional Retail sales Personal Traditional metrics predominate Computer sales sales Impersonal Traditional metrics predominate Marketing Deliberate, measurable process of first creating and then continually increasing positive awareness and interest for a specific brand, product or service offering within a target demographic.  >>>What’s next?
  • 37. Analytics related to them lead directly to increasing sales.  Web Marketing Metrics [Revenue Metrics] Even small changes you make, can lead to rapid and significant changes in these metrics.  For example, in your website's homepage text or in the AdWords that you purchase for sponsored links on search results. DYNAMIC
  • 38. A Target Demographic? Deliberate,  measurable process of first creating and  then continually increasing positive awareness and interest for a specific brand, product or service offering within a target demographic.  MARKETING
  • 39. A group of people with common characteristics, such as all being between 18 and 35 years of age, being from the same country or geographic region, etc. Target demographic A Target Demographic? Deliberate,  measurable process of first creating and  then continually increasing positive awareness and interest for a specific brand, product or service offering within a target demographic.  Marketing is COSTLY Bymeansof Money & Time Because marketing requires effective use of limited resources, marketers  seek to focus their efforts on groups whose members are much more likely than the average person to be willing to learn about the product or service offering, to buy it, and ultimately, to become high value, recurring revenue customers. MARKETING
  • 40. Flying Pizzas Cong! You opened a pizza house in a town! You have a perfect sign on the window. There are 770 residents in the town. +You are the only pizza restaurant in the town. NOW It is time to GROW YOUR BUSINESS
  • 41. Flying Pizzas Welcome to the new city! With 6 Billion population & 70,000 pizza houses A new threat for the revenues. Global Distribution Super Markets Now, You suffer from “Burn & Churn Rates” GDS - Super Markets Cheap Frozen Pizzas GDS GDS
  • 42. Flying Pizzas Welcome to the new city! With 6 Billion population & 70,000 pizza houses A new threat for the revenues. Global Distribution Super Markets Now, You suffer from “Burn & Churn Rates” GDS - Super Markets Cheap Frozen Pizzas GDS GDS Welcome to Web Marketing
  • 43. Welcome to Web MarketingYou should try to identify a much smaller group within that 6 Billion, your target demographic that are likely to want pizza, and more importantly, are likely to want your pizza.  Find out much more likely than average to respond favorably to your unique message! NOW
  • 44. with your potential customers how you are different than the other 70,000 pizza places out there.  You have to communicate Welcome to Web MarketingYou should try to identify a much smaller group within that 6 Billion, your target demographic that are likely to want pizza, and more importantly, are likely to want your pizza.  Find out much more likely than average to respond favorably to your unique message! NOW
  • 45. market differentiation. message of difference is YourThe idea is to match your market differentiation to a target demographic. How to match a target demographic? 
  • 46. Target Demographic? 100 hours of videos are uploaded to Youtube every minute
  • 47. Target Demographic? Over 500 million Daily Tweets 100 hours of videos are uploaded to Youtube every minute
  • 48. Target Demographic? 3,600 images are posted to Instagram every second Over 500 million Daily Tweets 100 hours of videos are uploaded to Youtube every minute
  • 49. Target Demographic? Over 1 Billion Facebook Users 41,000 post / second 3,600 images are posted to Instagram every second Over 500 million Daily Tweets 100 hours of videos are uploaded to Youtube every minute
  • 50. Target Demographic? 40,000 Google search /second 3.5 Billion a day Over 1 Billion Facebook Users 41,000 post / second 3,600 images are posted to Instagram every second Over 500 million Daily Tweets 100 hours of videos are uploaded to Youtube every minute
  • 51. One of the most focused ways to reach who have an interest in your offering is by purchasing Adwords.  Adwords are offered by Google on an auction basis There are also a number of other similar alternative venues and pricing schemes. ADWORDS
  • 52. What are we talking about?
  • 53.
  • 54. This is Ad Words
  • 55. Can be improved by SEO This is Organic Search Results This is Ad Words
  • 56. Can be improved by SEO This is Organic Search Results This is Ad Words This is Google Mainly Python Java, JavaScript Paid Links
  • 57. GOOGLE identifies the ad words Ad Words Terms advertisers bid on Match Topic “Emergency Pet Care” Key Words “Veterinary hospital “ First, when a user enters search terms into Google Google identifies ad words,  terms that advertisers have placed bids on that match the searchers topic.  How does it proceed?
  • 58. GOOGLE identifies the ad words Ad Words Terms advertisers bid on Match Topic “Emergency Pet Care” Key Words “Veterinary hospital “ First, when a user enters search terms into Google Google identifies ad words,  terms that advertisers have placed bids on that match the searchers topic.  How does it proceed? Here you accept to pay! Here you pay!
  • 59. Advertisers bid on their keywords by setting a maximum cost per click-through, or Max CPC for each keyword they are interested in. CPC bidding is also sometimes called pay per click, or PPC. Typically, winning adword bids are sold for less than the maximum CPC.  The actual CPC is typically 1 to $2.  CPC & ACPC Cost per Click (Pay per Click) & Actual Cost Per Click
  • 60. Advertisers bid on their keywords by setting a maximum cost per click-through, or Max CPC for each keyword they are interested in. CPC bidding is also sometimes called pay per click, or PPC. Typically, winning adword bids are sold for less than the maximum CPC.  The actual CPC is typically 1 to $2.  CPC & ACPC Cost per Click (Pay per Click) & Actual Cost Per Click The most expensive adwords Per-click through prices Attorney $54 Mortgage $47 Insurance $47
  • 61. How the ranking works? Note that Google gets paid only when someone clicks through  a sponsored link to the advertiser's landing page. Google ranks the links that it shows. Therefore to maximise the revenues it uses the below calculation: Ad Rank = (CPC bid)(expected click-through rate)
  • 62. How the ranking works? Note that Google gets paid only when someone clicks through  a sponsored link to the advertiser's landing page. Google ranks the links that it shows. Therefore to maximise the revenues it uses the below calculation: Ad Rank = (CPC bid)(expected click-through rate) Quality Score = Weighted Average of expected click-through rate ad relevance and landing page experience Ad Rank = (CPC bid)(Quality Score)
  • 63. How the ranking works? Note that Google gets paid only when someone clicks through  a sponsored link to the advertiser's landing page. Google ranks the links that it shows. Therefore to maximise the revenues it uses the below calculation: Ad Rank = (CPC bid)(expected click-through rate) Quality Score = Weighted Average of expected click-through rate ad relevance and landing page experience Ad Rank = (CPC bid)(Quality Score) In Google's words what this means is the quality of your ad text and landing page in the context of what a user is searching for.  Why Quality Score? To prevent exploitative misdirection that would hurt the Google brand. For example, imagine if a liquor store decided to buy adwords related to emergency pet care on the theory that people with a sick pet could probably use a drink. 
  • 64. How this ranking works? Ad Rank = (CPC bid)(Quality Score) Why Quality Score? To prevent exploitative misdirection that would hurt the Google brand. For example, imagine if a liquor store decided to buy adwords related to emergency pet care on the theory that people with a sick pet could probably use a drink.  =
  • 65. How this ranking works? Ad Rank = (CPC bid)(Quality Score) Why Quality Score? To prevent exploitative misdirection that would hurt the Google brand. For example, imagine if a liquor store decided to buy adwords related to emergency pet care on the theory that people with a sick pet could probably use a drink.  =Google automatically parses the text of the sponsored link, and of the web page the sponsored link points to, the so-called landing page. If either text does not contained primarily language directly related to the medical care of animals, the liquor store would get a very low quality score for that bid.  Google aims to offer sponsored links to landing pages that are as similar as possible in subject matter, quality, and click-through rates to the webpages that Google ranks highest in its unsponsored or organic search results.  SEO = Search Engine Optimization
  • 66. Some Definitions to save the day! This is Google This is you!
  • 67. Some Definitions to save the day! This is Google3.5 Billion Search a day 1,000peopleclickedyourlinkonGoogle andlandinyourpage! This is you! Butyoureceived2,000visitors fromallthirdpartywebsites. Inthiscase,yourCTRfromGoogle is50% CLICK-THROUGH RATE 50%
  • 68. Some Definitions to save the day! This is Google3.5 Billion Search a day 1,000peopleclickedyourlinkonGoogle andlandinyourpage! This is you! 400 of these 1,000 stayed in your site Butyoureceived2,000visitors fromallthirdpartywebsites. Inthiscase,yourCTRfromGoogle is50% 600 of these 1,000 stayed in your site for a few seconds and immediately left! BOUNCE RATE60% CLICK-THROUGH RATE 50%
  • 69. Some Definitions to save the day! This is Google3.5 Billion Search a day 1,000peopleclickedyourlinkonGoogle andlandinyourpage! This is you! 400 of these 1,000 stayed in your site However only 20 of 1,000 made a purchase Butyoureceived2,000visitors fromallthirdpartywebsites. Inthiscase,yourCTRfromGoogle is50% 600 of these 1,000 stayed in your site for a few seconds and immediately left! BOUNCE RATE60% CONVERSION RATE2% CLICK-THROUGH RATE 50%
  • 70. Some Definitions to save the day! This is Google3.5 Billion Search a day 1,000peopleclickedyourlinkonGoogle andlandinyourpage! This is you! 400 of these 1,000 stayed in your site However only 20 of 1,000 made a purchase Butyoureceived2,000visitors fromallthirdpartywebsites. Inthiscase,yourCTRfromGoogle is50% 600 of these 1,000 stayed in your site for a few seconds and immediately left! BOUNCE RATE60% CONVERSION RATE2% CLICK-THROUGH RATE 50% This is so bad! You throw away this money!
  • 71. Some Definitions to save the day! This is Google3.5 Billion Search a day 1,000peopleclickedyourlinkonGoogle andlandinyourpage! This is you! 400 of these 1,000 stayed in your site However only 20 of 1,000 made a purchase Butyoureceived2,000visitors fromallthirdpartywebsites. Inthiscase,yourCTRfromGoogle is50% 600 of these 1,000 stayed in your site for a few seconds and immediately left! BOUNCE RATE60% CONVERSION RATE2% CLICK-THROUGH RATE 50% This is so bad! You throw away this money! Question: What is the right question to be asked here?
  • 72. Ad Words is just the beginning The question is how much a converted customer costs you?
  • 73. Ad Words is just the beginning Once we develop some experience with bidding on ad words, we will have data on the typical actual cost per click through, actual CPC we are paying.  We can track just the users who come to our website through a sponsored link and determine what percentage of them ultimately buy our product at least once. This percentage is our conversion rate for sponsored links. The question is how much a converted customer costs you?
  • 74. Acquisition cost Acquisition cost Total CPC Conversion Rate =
  • 75. Acquisition cost Acquisition cost Total CPC Conversion Rate = What we pay to Google for CPC $2 From google ad words 1,000 people visited the page but only 20 people made purchased 2%
  • 76. Acquisition cost Acquisition cost Total CPC Conversion Rate = What we pay to Google for CPC $2 From google ad words 1,000 people visited the page but only 20 people made purchased 2% In this case, we are paying 100 USD (2 USD / 2 %) to acquire one customer from google
  • 77. Acquisition cost Acquisition cost Total CPC Conversion Rate = What we pay to Google for CPC $2 From google ad words 1,000 people visited the page but only 20 people made purchased 2% In this case, we are paying 100 USD (2 USD / 2 %) to acquire one customer from google Question: What is the right question to be asked here?
  • 78. Acquisition cost = 100 USD What does that mean? Your goal should be a cost of customer acquisition less than the first year's  average revenues per customer.  Unless your company is super ultra very cash flow positive!
  • 79. Acquisition cost = 100 USD What does that mean? Your goal should be a cost of customer acquisition less than the first year's  average revenues per customer.  Unless your company is super ultra very cash flow positive! If avg. rev. per customer is 85 USD and acquisition cost is 100 USD YOU ARE RUNNING OUT OF CASH
  • 80. Acquisition cost = 100 USD What does that mean? Your goal should be a cost of customer acquisition less than the first year's  average revenues per customer.  Unless your company is super ultra very cash flow positive! If avg. rev. per customer is 85 USD and acquisition cost is 100 USD YOU ARE RUNNING OUT OF CASH Acquisition cost Total CPC Conversion Rate=85 USD 100 USD
  • 81. Acquisition cost = 100 USD What does that mean? Your goal should be a cost of customer acquisition less than the first year's  average revenues per customer.  Unless your company is super ultra very cash flow positive! If avg. rev. per customer is 85 USD and acquisition cost is 100 USD YOU ARE RUNNING OUT OF CASH Acquisition cost Total CPC Conversion Rate=85 USD Either you need to decrease CPC from 2 USD to 1.7 USD 100 USD
  • 82. Acquisition cost = 100 USD What does that mean? Your goal should be a cost of customer acquisition less than the first year's  average revenues per customer.  Unless your company is super ultra very cash flow positive! If avg. rev. per customer is 85 USD and acquisition cost is 100 USD YOU ARE RUNNING OUT OF CASH Acquisition cost Total CPC Conversion Rate=85 USD Either you need to decrease CPC from 2 USD to 1.7 USD Or you will have to increase the conversion rate to more than 2.4% 100 USD
  • 83. Acquisition cost = 100 USD What does that mean? Your goal should be a cost of customer acquisition less than the first year's  average revenues per customer.  Unless your company is super ultra very cash flow positive! If avg. rev. per customer is 85 USD and acquisition cost is 100 USD YOU ARE RUNNING OUT OF CASH Acquisition cost Total CPC Conversion Rate=85 USD Either you need to decrease CPC from 2 USD to 1.7 USD Or you will have to increase the conversion rate to more than 2.4% You can not bargain with Google 100 USD In our case at least 24 of 1000 visitors have to make purchase
  • 84.
  • 85.
  • 86.
  • 87.
  • 88. Segmentation We would like to identify common characteristics shared by visitors  with high conversion to revenue rates, and  even better with high recurring revenue and lifetime value. When we segment our customers into groups and identify common characteristics, so we can figure out what kind of visitors later become  our best customers and focus on attracting more like them
  • 89. Segmentation Where did a visitor to our website come from? Sponsored search, they click on an ad that we ourselves placed on a search engine.  Organic search, they clicked on an unpaid link to our website that came up in search results, Or they clicked on a link that we placed in a group email or in a tweet.  From a third party website? Someone like a food critic wrote a blog post or article about us and included a link to our site.  Or direct they typed in our URL themselves?
  • 90. Segmentation People who click through an organic link, have a much lower bounce rate (25%) than the people who find us through a sponsored link, 45%.  It would make sense to devote resources to improving our organic ranking in search results, a process called Search Engine Optimization or SEO.  IMAGINE YOU FOUND OUT THIS AT THE END OF SEGMENTATION IN THIS CASE:
  • 91. Credentials The content and context of this presentation is mainly structured on the Coursera and Duke University lecture notes of “Business Metrics for Data-Driven Companies” which is thought by Daniel Egger (Executive in Residence and Director, Center for Quantitative Modelling). If you want to discover about the course (you should) please follow the link embedded in the logo.
  • 92. THANK YOU VERY MUCH.ALPER AKBAŞ alperakbas@aviationportal.org