The difference between flying and floundering – How to use Test & Learn methodology to drive true value
15th October 2019
Author Gregory Franco
Why should we experiment?
Customer expectations about the timeliness, relevance, and value of marketing interactions are set by a small number of elite businesses that deliver exceptionally good customer experiences – think Amazon, Air New Zealand, and PlayStation. Other organisations must transform to compete. Those that do transform tend to fly; those that don’t transform tend to flounder.
A thorough understanding of your customers, efficient use of data, technology that can deliver efficient consistency across all channels, and the ability to rapidly design and test new ideas are all mandatory components to deliver optimised customer experiences.
This final point – the ability to rapidly design and test new ideas – is incredibly important in ensuring every step your company takes is moving you towards achievement of your goals.
What can we gain from experimentation?
The concept of continuously marching toward success through experimental Test & Learn methodologies has been fairly-well embraced for digital solutions, such as websites and apps, over at least two decades. This practice is commonly known as Conversion Rate Optimisation (CRO).
CRO harnesses the scientific method to continuously and iteratively improve the value of the customer experience delivered on digital channels. However, this scientific approach has been slow to move across a typical business from digital to other teams. Marketing, sales, and service teams could gain just as much value from embracing this concept, but cultural and traditional barriers typically stand in the way.
When marketers embrace a Test & Learn mindset, they see four very important benefits:
- Reduced risk. See results sooner and fail or succeed quickly.
- Knowledge of what’s working. Establish a causal relationship between design decisions and any progress made towards business objectives.
- A data-driven approach to prioritisation. Choose initiatives based on potential business value, confidence in ROI and complexity to implement.
- A snowball of value by applying knowledge gained from experiment results. Fuel future design decisions. Be insights-driven. Even variations that “lose” can bring incredible value through knowledge gained and mistakes avoided. Marketing teams become insights engines that spread knowledge of customer behaviour across the business.
We apply an adapted version of the traditional scientific method as a framework that guides every design cycle in the marketing teams we work with.
Acquisition, cross-selling and up-selling
Lately, our clients have been testing ways to cheaply and effectively use emails to sell to their customers. For example, one found that carefully embedding “ads” for premium products in emails that promote new content can double the number of premium products sold over the next week. This simple tactic contributed an estimated $50k of additional revenue from those products per year. Another found that simplifying landing page calls to action (CTAs) increased their click-through rate by 150%.
Increasing customer engagement
One of our clients made an important discovery about the role of their social media channel in keeping their customers engaged with their products. They found that supplementing an email campaign with a targeted Facebook ad campaign didn’t increase the number of customers that engaged with the advertised products, but it did unexpectedly increase the number of previously “disengaged” customers who “reengaged” with their brand by returning to the site and engaging with products in general by 10%. Now this client views their social media channel as less of an “advertisement” channel, and more of a “reengagement” channel.
Retaining and winning back customers
Some of our clients are exploring the value of segmenting the messages they send to new customers. For example, one client observed customers who came from digital channels tend to churn quickly. They believed this churn was because in-person channels do a much better job of describing the benefits of being a longer-term customer than digital channels do. When onboarding comms for digitally-acquired customers focused on communicating the value of staying with the brand long-term, they retained approximately 2000 more customers over the course of the experiment.
Another of our clients discovered that simply sending a second automated “reminder” email to people whose yearly subscriptions are about to expire helped retain two and a half times more customers compared to when only one email was sent.
When a business graduates from doing the occasional ad-hoc A/B test to embedding a full-scale Test & Learn framework into their daily processes, they can gain immense value. New ideas can be tested for effectiveness quickly, additional value can be attributed confidently, and design decisions are based on customer insights consistently.
Gregory Franco is Davanti’s Customer Intelligence Manager. He is tasked with evolving and evangelising our capability in this space and specialises in helping clients establish Test & Learn programmes to optimise their digital and marketing performance.