The ROI of Experimentation
If you run in tech circles, you may have heard the phrase “ a culture of experimentation.” We’ve discussed the concept on our blog before.
Today’s brands are supposed to build cultures that focus on experimentation and optimization, and continue to nurture that creativity in their workplaces.
For many teams, though, that “should” leaves some unanswered questions. How does experimentation benefit a business and, most importantly, how can it help you grow?
In this post, we’re going to discuss the ROI of experimentation, and how to start experimenting in your organization.
Let’s dive in.
The Benefits of Website Experimentation
Experimentation culture and digital optimization pose several unique benefits.
Here are a few of the largest:
Experimentation supports innovation
It’s probably no surprise that companies with a strong experimentation culture, like Booking.com, Facebook, Microsoft, and Google, stand out as some of the most creative in the world.
These companies routinely run in-person or online experiments, and regularly update their services, offerings, and approaches, as a result.
Website experimentation can boost ROI
ROI stands for “Return on investment,” and tells people whether they’re getting their money’s worth from marketing initiatives, products, and other investments. Econsultancy found that more that 70% of companies achieved a sales increase because they tested their landing pages before launching. In the short-term and long-term, experimentation can uncover successful (or unsuccessful) campaigns, messages, graphics, CTAs, and offerings and boost ROI.
It also helps teams make better decisions, minimize the risk of impacting current business metrics with new features, and prioritize efforts within the organization. Wordstream recently published a study that found that the websites with the top 25% conversion rates tested 4 landing pages to find the 1 awesome landing page and overall see a 2 times higher conversion rate. The top 10% of them tested 10 landing pages to find their unicorn and have a 5 times higher conversion rate.
Experimentation eventually becomes part of the process
Think about A/B testing - the process of testing two variants of the same web page to see which drives key metrics or outcomes.
Most successful agencies and companies use some version of A/B testing. Eventually, that daily experimentation becomes commonplace and companies learn to implement experiments as a matter of course.
Simple Tactics to Begin Experimenting in Your Organization
Experimentation can boost your organization’s marketing ROI, and help you become more effective across the board. Still, it can be difficult to get started. After all, only 1 in 8 tests create significant changes in yields, and only 14% of marketing tools utilize A/B testing.
Fortunately, you can begin experimentation within your organization. Here are some simple tactics to deploy:
1. Develop an experimentation strategy
The first question you need to ask yourself is what is your question, and what are your metrics? What will you test (and why), and how do you deliver success to your customers?
When you develop an experimentation strategy and a test prioritization framework, it guides your A/B testing so it’s as streamlined as possible. Before you can begin testing effectively, you need to understand which tests you want to run, and how to experiment as efficiently as possible.
2. Know your customer
Know your customer, understand their behavior, and design your tests so that you’re targeting the right people. This produces more efficient campaigns and drives better results. Before you launch a new experiment, define your target audience (or audiences), and design an experiment that will both appeal to and provide value for them.
3. Identify metrics
What gets measured gets managed. For your experiments to be effective, you need to define your “north star metrics,” or the right metric to guide your measurement. Popular examples include customer value, conversions, and more.
4. Understand the “what” of optimization
There are three primary components of optimization:
- Targeting. Who are you going after, which customers are going to interact with this, and what rules-based targeting do you need to employ to draw them?
- Testing. How will you learn from the behavior of your users and the outcome of your experiments?
- Recommendations. How will you automate your experiments so that you don’t need to have a person actually targeting content to specific customers?
5. Know what to test
When you know your customers, you’ll have a better idea of what kind of content to test, and how to personalize your recommendations when it comes to your control and variations. The more you test, the more data points you'll have to empower you to keep testing and learn what is best to test for you.
How RDA can Help
The world around us is changing rapidly, and it’s our job to adapt. Here at RDA, we specialize in helping companies build competitive agility.
Whether you’re looking to start experimentation or want to learn how to optimize your experimentation efforts, our services and strategy can help you boost your business performance and become more experimental at every phase of the game.
Stop feeling stuck in one place. Build a generative, ROI-boosting culture of experimentation with RDA. Learn more now.