Optimization is the Difference Between Success and Failure – Here’s How to Get Dangerously Good at It

As we drove home from jiu jitsu training together yesterday, I had the pleasure of explaining ads optimization to my 6-year-old, Harvey. One would think that if this topic “goes over the heads” of even smart grownups every day...how could a 5-year-old possibly understand it?

Every night, Harvey runs through a process with me called “questions” where he asks about everything. The opportunity to give him a proper answer yet make it understandable has led me to many breakthroughs in thinking.?

“Any darn fool can make something complex; it takes a genius to make something simple.” — Albert Einstein

“What projects are you working on tomorrow?” Harvey asked.?

I said, “Tomorrow, I get to work on writing my book. Do you want to know what it’s called?”

“Yeah!”

“It’s called X-Factor Optimization, can you say that?”

“Sounds complicated, dad. What’s it about?”

“Well, it’s basically, which ad you should spend more on, to make the most money”

“Oooooooh.”?

“It’s basically this... let’s say you have 3 flavors of ice cream that are available. We could buy 3 large sizes and see how we like them...but then you might have one flavor we don’t like, so no one eats it. Then we just wasted money and ice cream.”

“That would be bad.”?

“It’s not ideal. So, the better way is to buy the smallest size of that ice cream instead and see which one the family likes the most and buy more of that.”

“That’s much better.”?

“There is a better option, though. Remember when we the nice people at the ice cream store at the dairy farm let you try tiny spoonfuls of the different? ice creams to see if you like it?”?

“Oh yeah. I love that.”?

“Here you taste all three flavors of ice cream before you decide to invest your money into a particular flavor.”

It was a really wise and helpful reminder to me, though, that we need not overcomplicate things.

How do you spend more on the right ad?

How much should you spend?

What’s the most you can spend?

And on and on.

X Factor Optimization

We have a process called X Factor Optimization.?

One of the first things we do is test ad headlines. We’ll write up 20, 30, even 40 headlines and test them. Which are the most popular headlines? Which headlines draw the most clicks and click throughs?

Here we are just getting warmed up. The purpose is to microtest our way to valuable, insightful data.?

We do a deep dive on this data to select the ad headlines that are going to get the most attention from potential customers.?

Next is the XFO - X factor optimization. It is a core concept; it is a metric that is your X factor metric at any moment in time in any system. If you optimize toward that, everything else will be more efficient and effective.

For one client, we wanted to identify those customers who would be the most valuable in the medium and long term. Of course, you can’t wait 90 days to see if a customer will stay with you or cancel their account and request a refund.

However, we identified those customers who joined a revenue recurring continuity program. They are billed every month, quarter, etc. They can be your X factor optimization metric.

Using this metric enabled one of our customers to go from zero to $1.4 million in ARR in one year. Just this past month, they added $244,000 in recurring revenue.??

X factor optimization is that leading edge strategy that gives you the most leverage and insights with data driven decisions. Next time you run a campaign, look to do X factor optimization instead of just focusing on ROAS.?

Andrew James is the CEO and Founder of Cerebro Analytics, in Park City, UT. He is an expert in direct response marketing on the internet, revenue optimization, and advertising analytics. He helps advertisers maximize their advertising strategies to increase gross profits.?

People are so used to treating advertising as a cost or an expense, and they forget it should be treated as an investment.

And when you have an investment that works, you want to have as much in it as you can, not the other way around.

If you would like to talk, you can get on Andrew’s calendar here.

Let me help you. Want to be a master of X Factor Optimization? Get a free copy of my book - XFO: How to get higher ROAS the more you spend.?

DM me to get details.