SHOULD YOU LOOK AT THE TOTAL CONVERSION VALUE IN FACEBOOK REPORTING? – Shopify Drop Shipping Tutorial
In this post, I’m going to answer an amazing question from Gabriel about Facebook reporting. Continue reading or watch my video to find out the question and my answer.
WATCH THE VIDEO BELOW
Should You Look At The Total Conversion Value In Facebook Reporting?
Gabriel’s question is “when you look every day at your Facebook reporting, do you look at the total conversion value to make your decisions? What do you look at in order to know if you lower or raise the budget?”
A lot of people get confused about that. They don’t know what to look for. Should they look at the total conversion value, total website conversion value, or something else? A lot of people are complaining that these numbers look way off. The truth is, these numbers, must of the time, are really way off.
Total Conversion Value vs Website conversion Value
For the total conversion value, what you have to remember is that it includes “add to cart”. If someone adds the product to their cart even if they don’t buy it, the count is still added to the total conversion value. That’s why this number is way off. Unfortunately, not a lot of people know about that.
The website conversion value is inaccurate most of the time. I used to look at these numbers before. I used to compare the amount spent and look at total conversion value and website conversion value. Then, if I see a huge gap between the two, I would raise the budget. That’s how I used to do it. But then I realized that I was calculating my profit every day and something was way off. That’s when I started to do things differently.
How to accurately compute your profit?
I highly recommend that you watch the video 2-3 times so you won’t get confused. What I’m going to explain is super important. I’m going to tell a way to know for sure how much money you’ve made for each particular product. With that method, you’re not guessing your profit.
The first thing you have to know is that inside Shopify, you can look at reports. If you own a basic plan, you can still look at a few reports but you can’t access the “By Product” report. You can’t analyze data for a specific product. There is no way to look how many of that particular product you’ve sold that day. That’s why I highly recommend everybody to upgrade to the Shopify plan (2nd plan available) that allows you to have access to this report. This report is super accurate.
If Shopify report tells you that you’ve sold 10 units of a particular product, you can be sure that you really sold 10 units. Compared to Facebook reporting where the numbers are way off. One of the reasons why that happens is because people do not install their pixel correctly. But, even if their pixel is installed correctly, their numbers from Facebook reporting are still off.
The second thing you have to do is to calculate the profit that you make on that product before the Facebook ads. It is really simple to do that. Take a piece of paper or you can do it in Excel, like what I do. Let’s say you sell a product for $45 and you charge $5 for shipping. So the total amount that you’re going to collect for that product is $50. Then, calculate the total cost of that product to ship to the client. Let’s say the product costs $7 in Aliexpress plus $3 for ePacket shipping. Total cost is $10. Now, your total profit for that product is $40 ($50 – $10 = $40). Each time you sell one unit, you make $40. But remember that $40 is the money you make before you spend on Facebook ads.
Now, you need to access your Facebook reporting and look at the column “Result” or “Website Purchases”. What I found out is that these numbers are pretty accurate. Let’s say the Result column says 1 for one of your products. It means you sold 1 unit of that product that day. If you want to have a piece of mind, the only thing you need to do is to go to Shopify and look at the “By Product” report. Around 95% of the time, the data in Results or Website Purchases is the same as the data in Shopify “By Product” report. If the what’s showing in Shopify is the same as what’s in the Facebook reporting Results or Website Purchases column, then you can say that the data is legit.
How do you compute how much money you’ve made? It’s pretty easy. What we know so far is that you make $40 every time sell one product before you spend on Facebook ads. So the next thing you need to know is the amount you’ve spent on your Facebook ad. To get that data, you just have to look at the column “Amount Spent”. Let’s say the amount you spend is $20. So your total profit for that particular product is $20 ($40 – $20 = $20).
By knowing that, you can decide now whether to raise or lower the budget. With our example, you should raise the budget. So that’s what you should do for each of your ad sets. That’s what I do on all of my businesses and it doesn’t take that long.
That’s the way to check if you’re making money or not. I see some people raising their budget because of their website conversion value or total conversion value. Again, it is not advisable to do that because those numbers are inaccurate. It is better to use the “By Product” report from Shopify and “Result” or “Website Purchases” data from Facebook reporting. I highly recommend that you follow the steps I gave you and you’re going to know your profit accurately.
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