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6731Re: basic math question - percentages

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  • matpflum
    Jun 2 10:43 AM
      Stephane,
      I am glad you brought that point up. Besides the math logic and
      terminology, that was actually my point in asking the question. You
      could see conversions going from 1.0% to 1.2% and proudly announce
      that there was a 20% increase in conversions. But what if the goal
      is 1.5% - the 20% good news has to be taken with a grain of salt. It
      drives me crazy when the marketing types take only the 20% increase
      (or whatever the biggest number is), spin that to upper management,
      and before you know it, somebody is wildly happy about a 20%
      conversion rate. Because I have gotten burned by this in the past
      (and it seems you have also), I favor reporting on "differences" in
      these instances and not percentage increases.
      Maureen

      --- In webanalytics@yahoogroups.com, "S.Hamel" <shamel67_news@...>
      wrote:
      >
      > Ho boy do I love Web analytics and this newsgroup!
      >
      > I have seen so many times people running around with a single
      number and
      > spreading wrong interpretations... Your example is a gem that
      should be
      > printed in all Web analytics manuals. What's important is the
      interpretation
      > of the numbers, not the numbers themselves. This exemlpe also
      highlight how
      > important it is to look at the numbers from various angles. In your
      example,
      > the average sales price could be the same, say 25$, but the
      revenues for the
      > month would be 40% lower! (10*25$ vs 6*25$)
      >
      > That's why a web analytics solution doesn't do any magic, it's the
      people
      > using them that makes all the difference! :)
      >
      > Cheers,
      > Stephane
      >
      > ----- Original Message -----
      > From: "Peter Michael Sopp" <peter.sopp@...>
      > To: <webanalytics@yahoogroups.com>
      > Sent: Thursday, June 01, 2006 4:56 AM
      > Subject: Re: [webanalytics] Re: basic math question - percentages
      >
      >
      > > I'm just a poor sociologist not a mathematician. Nevertheless I'm
      hoping
      > > I could clarify the points already mentioned by others.
      > > The main point is to understand that the result of a substraction
      is a
      > > difference and not a percentage.
      > > The difference is April - March, so 1% - 1.2% = 0.2%-points. The
      result
      > > of a substraction is always a absolute number and never a
      percentage!
      > > To calculate the percentage growth or percentage increase you
      need a base:
      > > (April-March)/March = simple growth rate. Now you can multiply it
      by 100
      > > and you get 20% (= growth rate in percent: The difference of the
      > > percentages is related to the percentage of March).
      > > Let's give an interesting example:
      > > a1t1 = absolute number of visitors in March
      > > a2t1 = absolute number of buyers in March
      > > pt1 = percentage buyers March (buyers related to visitors:
      > > (a2t1/a1t1)*100)
      > > a1t2 = absolute number of visitors in April
      > > a2t2 = absolute number of buyers in April
      > > pt2 = percentage buyers April (buyers related to visitors:
      > > (a2t1/a1t1)*100)
      > > Now the following could happens: The number of visitors as well
      as the
      > > number of buyers decrease. Nevertheless the growth rate is
      positive
      > > because relativly more visitors has converted to buyers in April
      as in
      > > March.
      > > For example: In March you have a simple conversion rate of
      > > (10/1000)*100 = 1% and in April (6/500)*100=1.2%.
      > > The conclusion is - well that's up to you!
      > > Hope this was helpful
      > > Peter
      > >
      > > matpflum schrieb:
      > >> I have always struggled with the logic behind this seemingly
      simple 0
      > >> rate was 1% in March and is 1.2% in April, that the rate
      increased
      > >> by .2% and not 20%? So it's a simple subtraction. I'm not a
      > >> mathematician, but I think that it is wrong to compute a
      percentage
      > >> of a percentage because the percentages were calculated off of
      > >> different bases. Are there any mathematicians who can explain
      which
      > >> way is correct? Thanks.
      > >> Maureen
      > >>
      > >>
      > >>
      > >
      > >
      > >
      > >
      > >
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