It’s a bitter truth, but these days in business there is no option but to try to continuously improve your products and services. Competition is simply too fierce, and those that aren’t constantly striving to keep a step ahead of their rivals are unlikely to succeed.
The days of launching a product and leaving it to chance are gone. Profitability is everything, so it’s critical that organisations make sure that there is minimal wastage in their everyday operations – every pound invested has to work as hard as it can to make a return.
And there’s really no excuse. Analytics are so widely available now that pretty much anything can be measured, from the volume of website visitors to in-store purchases.
This can be both a blessing and a curse. According to the Norwegian research association SINTEF, more data was created in the past two years than in the entire previous history of the human race. The challenge for organisations is that they need to be able to interpret these vast quantities of data, and use the learnings to inform their business strategy.
So how do they do that?
The secret is being able to derive meaningful insights from the data that can be easily translated into real-life test scenarios, or experiments. More and more companies are starting to do this, under the banner of digital optimisation – a term that encompasses activities like split testing and personalised messaging.
Split testing is not a new phenomenon. Direct marketing giants like Claude Hopkins were doing it in the 1920s, sending subtly different direct mail messages to two separate groups of customers, and gauging the result. It provides an effective feedback mechanism for rapid decision making, and resists intuition.
The reasons for engaging in test and learn activities are numerous, but the main ones are:
- Without testing you will never know whether the changes you make to your products and services are working.
- You can get a steer on whether you are wasting budgets and resources.
- Without it you will only ever have anecdotal feedback from your customers about what they think about you. When you test, you can see the reality of how they interact with your brand
Who’s been successful with test and learn?
Toyota are generally held up as the classic example of a continuous improvement or ‘kaizen’ company. They are considered to be the pioneers of test and learn in the manufacturing environment, with the Toyota Production System.
Etsy, a peer-to-peer ecommerce company that sells handmade and vintage items, is another more recent company that has continuous experimentation as part of its DNA. Lacy Rhoades, iOS Software Engineer at Etsy, says “Experimentation at Etsy comes from a desire to make informed decisions, and ensure that when we launch features for our millions of members, they work.”
It seems to be working for them, as the company reported 21.3% growth in merchandise sales year on year for 2015, and projects double digit growth for the next three years.
Failing fast and continually learning is key to the success of entrepreneurial small business. The Lean Startup model, developed by Eric Ries, was born out of a need to de-risk starting a business, but its tenets can also be applied to larger, more established corporates. It’s turning the traditional model of
business case > funding > waterfall rollout > complete product launch
on its head. No wonder 75% of start-ups fail, according to the Harvard Business Review.
These days it is far more common for a company to launch a minimum viable product (MVP) that can then be developed and enhanced based on customer feedback, and aided by split testing experimentation.
Digital test and learn is still very young as a concept, and we are yet to see its full impact. But be sure that it is here to stay – and that the future will be very exciting as a result.
