Good Metric, Bad Choice

Good Metric, Bad Choice

The pursuit of profit has rarely yielded the best decisions.

For example, the 80/20 rule. Typically, 80% of your business comes from 20% of your customers.

Also, 20% of your customers take up about 80% of your time.

Flip the numbers around, focus 100% on the 20% of your customers who make 80% of your revenue while only eating up 20% of your time.

Or…something like that.

I worked for an adTech company that held everyone to one standard: money in the door. This is a pretty good metric at judging the value of a sales team; it's also a useful metric if you are legitimately selling something.

It's strange when the figures at the top shout down the line: "Hey, where's the money?"

I think that's when I knew the only business I would be happy with is one of my own.

Also, the place was far, far from 80/20.

Most days, it was 95/5. Or worse.

In digital advertising, when a traffic source pops or a buyer goes crazy with their spend, everyone around the office gets excited at the climbing revenue numbers. It always took a few weeks to ask, "well, why is the number climbing?"

We hadn't changed anything. Usually, the client had found a way to exploit our system - sometimes to the tune of hundreds of thousands of dollars over a month.

The 5% who brought in 95% of the business wasn't anything spectacular. We didn't outwardly advertise that we were working with them. Exchanges and arbitrages are like that - like when everyone says, "we trade on the NYSE."

The 95% of clients we did tell people about got 5% of our time and brought us less than 5% of our revenue. These were people who owned their own websites and created great content. The sales team, always looking for the next big account to pop, promised each one the moon and usually delivered a handful of sand.

We rarely knew what the websites looked like or how the advertisement displayed or what the end user thought of the experience. We always knew exactly how much commission the site would be worth.

To this 95% of clients, their websites received 150% of their time, attention, and care. We offered them 5% of our time, and because the attention delivered was so minimal, we usually fucked something up.

Advertising shouldn't be a game of scale, but that's what it turned into. As much as possible, for as little as possible, hoping the right thing pops.

On "That"

On "That"

A Series Of Questions

A Series Of Questions