News: Freedom (from friction) isn't free 🌙

Friday, October 16, 2020

Freedom (from friction) isn't free 🌙

"Unless the last thousand years of pandemic have somehow rendered you amnesiac, you may recall that The We Company filed documents to go public in 2019 and got laughed at so hard its founder and CEO Adam Neumann had to quit.

"Also, the IPO was canceled."

💬 Elizabeth Lopatto writing for The Verge and showcasing an excellent variant of the Smart-Ass Historian we can only hope to channel sometimes.

The article's headline is equally 😏 and we'll repeat it as it stands: "The company formerly known as WeWork will be known as WeWork again." She managed to work in a Once and Future King reference somewhere. Props. 😆

We honestly don't care about WeWork except in the most tangential way. This article's writing was just gold, or so it struck us at the time.

Every now and then, we'll find a source article which has some unique value despite its own best efforts. Such is the case today with this (sponsored) article from MarketingProfs.

We don't usually say this, but... we're not gonna try and convince you to click the source link. It's there and it's not bad. Like, it's okay. Decide for yourself.

No? Then let's discuss what we found interesting, shall we?

Conventional wisdom dictates that less friction is always better. This is a principle we've consistently taught and, before that, it's something we've tried to consistently apply for years now. But sometimes the ground shifts beneath your feet, and this is becoming one of those times.

In the past—and specifically in the context of email marketing, which is the lifeblood of our business here—we've applied the Minimal Friction principle when designing lead-capture forms, for example. We've always had the chance to collect tons of (first-party) data at sign-up, but until now, we've elected for the absolute bare minimum: just the email address. That's the path of least resistance friction, where you'll see the highest conversion rate on the form and the biggest possible short-term swells in subscribership.

The trouble is that 'conventional wisdom' makes some strategic assumptions which are quickly falling apart these days. For instance: we've long assumed that the friction caused by extra signup fields isn't worth the first-party data, but (in the past) this has silently presumed that third-party data is a buyable option. In the very near future, it won't be an option any more, and the only data you'll have is what you can cleverly collect yourself.

We forget, too, that the long arc of commerce bends toward specialization and that marketing was (in this sense) always going to become more critical as businesses struggled more and more to find (and mine) their bullion niche in the digital-commerce era.

More to come in the future. Stay tuned!

If you want to be productive...

... check out the new-and-improved Google Analytics. Aaaaaaaaaand already a huge chunk of our readers have said NOPE and moved on down to the next block. But that's okay! More for the people still reading, right?

Ahem. So we've got a couple of good links on the subject so you can explore in greater curated detail. First, this pretty-good overview from SEJ on four big new features within the GA interface — and second, this more-specific explanation from TechCrunch on the new machine-learning, data-highlighting features that can show GA the information they're likeliest to need the most in real time for closing sales.

If you want access to a new corner of the cooking world...

... get yourself a cast iron pan. Cast iron is weirdly divisive among home cooks; some people are obsessive about it while other people can't seem to stomach the idea. After a few years cooking with a cast iron pan, we think of it as simply a unique tool; it's poorly suited for some things, but incomparably good for other things and definitely worth having around. You can find some beauties at yard sales—the really old ones are cast differently, and they're often smoother—but the 10-inch, $20 Lodge version works great too. Serious Eats published a really, really good myth-buster on cast iron pans, which doubles as a beginner's guide AND a scientific explanation of how cast iron behaves differently than typical pans. Last thing: care and cleaning is different, but not really harder in our opinion... mostly, just keep it away from cool water (so don't leave it in the sink).

If you wanna rage, rage against the dying of the summer...

... (re)watch Mad Max: Fury Road. We totally forgot this movie existed, and we were reminded of it when we read that a Furiosa-focused prequel is in the works. No Charlize, sadly—apparently it's set well before the events of the previous movie—but mad scientist George Miller will be returning to co-write and direct, which is good enough for now.

Describing Fury Road is tough, but we'll try. Best single sentence: it's a masterpiece of bat-s**t action insanity. We want whatever drugs George Miller is on, because you get a contact high just from watching this movie. There's not much plot and even less dialogue; instead of those things, you get two hours of the best post-apocalyptic fever dream you could never imagine yourself. It's lurid, vivid, beautifully shot, and it never slows down. You won't know what in the hell hit you, but you'll be glad it did... assuming you're in the mood for something shamelessly R-rated. (If the kids are around, put on Babe instead. Believe it or not, that is also a George Miller movie. And it's adorable.)

First, a semantic clarification: this metric goes by a few annoyingly similar names and the acronyms can vary accordingly. We're gonna stick with CLTV as our acronym of choice because it matches our headline.

Still, the nutshell definition awaits: what is Customer Lifetime Value, exactly? It's the total revenue you can expect to earn from a (typical) customer over their entire "lifetime" as a customer of your business.

If you have a Perfectly Average Customer in front of you, CLTV is the total amount of money they will have handed you before they stop being a customer (for whatever reason).

Clarification № 1: Lifetime value is NOT the amount still "predictively outstanding" from each customer. Some of your customers only have one purchase left in 'em, while others are brand-new and spritely with a whole Lifetime of purchases ahead of them. Put another way: your customers are all at different stages of that "Lifetime" with you, so proceed conservatively with your estimates. (When in doubt, assume the average customer is at the halfway point.)

This is all simple enough in concept—but like anything fun and dangerous, there are important asterisks afoot. As marketing metrics go, CLTV is like a sniper rifle: it sees a long way, it packs a lot of power, and in skilled hands it just might change the course of history for you—but good Lord be careful before you pull the trigger.

Before we provide a bare-bones formula, we'll mention Clarification № 2: These calculations can be as simple or complex as you want. The usual tradeoff of Effort vs. Precision applies.

Simple CLTV = AOV x AOC, where...

AOV = Average Order Value ($)

AOC = Average Order Count (#)

That's the quickest and dirtiest form. The next step up in complexity would involve breaking AOC into smaller component pieces like Average Order Frequency and Average Customer Lifespan, which would then give you a sense of how those CLTVs play out on the long-term marketing calendar.

Having defined CLTV in simple terms, a few notes on its power when used correctly and its danger when used incorrectly:

Why CLTV is an Important Metric
In short: it frames the entire game that direct-response marketers play. We're all rightfully neurotic about Costs for marketing (especially for ads in particular), but it doesn't really matter whether we think our costs seem high or low. What matters is how Costs measure up against Income—and CLTV is one all-encompassing measure of that Income. In this case, it's the all-encompassing measure of Revenue for one customer, the whole customer, and nothing but the customer (may they rest in peace when they're gone).

As marketers are concerned, CLTV's job is essentially to "set the budget" which delineates profit and loss. If your CLTV is $500, that's like saying that you can spend $500 on that customer (over their lifetime) before you're losing money on them. CLTV is a hugely important piece of information because it gives marketers objective boundaries for success and failure, as opposed to "that seems high" or "that seems low."

Why CLTV Can Be Dangerous
We reviewed a dozen articles before writing this, and the lone 'bullseye sentence' came, no joke, from the Wikipedia page on CLTV. And we quote (emphasis ours):

"The biggest problem with how many CLV models are actually used is that they tend to deny the very idea that marketing works (i.e. that marketing will change customer behavior). Low-value customers can be turned into high-value customers by effective marketing." 😲

CLTV is ultimately a descriptive (if extrapolative) metric, and we therefore tend to treat it like a fixed value, like a reality we need to work around. As marketers, we forget that we have an influence on the very reality CLTV ends up describing—and that we don't need to paint ourselves into corners by assuming that what we're getting is all we'll ever get. (CLTV is the result of an equation, not an assumed input.)

It's usually wisest to err on the conservative side with your CLTV figures. To put it mildly: CLTV is a far cry from guaranteed cash flow. You don't wanna bank too hard or play too aggressively against this value, or else you'll burn thousands of dollars only to figure out later that you used the entire CLTV "budget" just on the initial acquisition. 😬

So we were looking back and realized that OH, and THIS... has been all about space this week. May as well be consistent for this week's final entry, yeah?

Apparently NASA is investing a total of $370M in companies who are close to bringing "tipping-point technologies" to market or other commercial use. This TechCrunch article on the subject was fairly interesting on its own, but then we got about ⅔ of the way down and could only 😑 at the Nokia entry.

It's the one item on the list that was like "Seriously, y'all? Like, seriously?"

'> OR <' ANSWER: the AirPods Pro.

Consider this a caution, issued to you as we issue it to ourselves: prolonged use of earbuds at full volume will damage your hearing. Anyhow, the math:

For the AirPods Pro, we're looking at a max sound level of 109 decibels (dB) according to a StackExchange lookup (couldn't find that info directly on Apple's product pages).

The rock-concert piece involves some actual math. If we were right next to the speakers, it'd be typical to see levels in the 120dB range at a rock concert—but we specified that we're in the nosebleeds 200 feet from the speakers (and we specified 'open-air' so we could ignore indoor reverb and such).

To find the volume level D while standing X feet away from the sound source (with source volume level A), the equation is:

D = A + 20 log(3.3 / X)

Plug in our numbers and we get a volume level around 85 decibels, or roughly 70% as loud as the sound source.

Here's more info from the CDC if you wanna put those levels in context, and here's a list of the loudest live events ever recorded.

Friday, October 16, 2020

Freedom (from friction) isn't free 🌙

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