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The ROI of Experimentation

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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, that likely leaves some unanswered questions. How does experimentation benefit a business and, most importantly, how can it help you grow? What is the ROI of experimentation?

The Benefits of Website Experimentation

Experimentation culture and digital optimization pose several unique benefits. Here are some of the largest factors to achieve a positive ROI of experimentation:

Experimentation Supports Innovation

It’s no surprise that companies with a strong experimentation culture, like Booking.com, Facebook, Microsoft, and Google, stand out as some of the most creative and innovative companies in the world. These companies have embraced the concept of experimentation as a core value, recognizing that it is a crucial element in driving continuous improvement and staying ahead of the competition.

By routinely running in-person or online experiments, these companies are able to gather valuable data and insights about their customers, products, and services. This allows them to make informed decisions and continuously refine and optimize their offerings. 

Through experimentation, these companies are able to identify and implement new ideas, features, and approaches that have the potential to revolutionize their industries. Moreover, the regular updates and improvements that result from experimentation demonstrate a commitment to providing the best possible experience for their customers.

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 your overall 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. Now that's some positive ROI of experimentation!

Experimentation 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.

The majority or forerunning content management systems (CMSs) and website hosting software are already implementing an A/B testing feature within their programs to streamline process efficiencies for teams.

Simple Tactics to Begin Experimenting in Your Organization 

You can boost your organization’s marketing ROI with experimentation and help improve your processes 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 within your organization. Here are some simple tactics to deploy in order to achieve a positive ROI on experimentation:

1. Develop an Experimentation Strategy

The first questions you need to ask yourself are: "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. This data-driven approach allows you to make informed decisions, identify successful strategies, and optimize your overall business performance.

In addition to these popular metrics, there are numerous other key performance indicators (KPIs) that you can consider based on your specific business objectives. These may include metrics such as customer retention rate, average order value, click-through rate, bounce rate, and more. The choice of metrics depends on the nature of your experiments and what you aim to achieve.

4. Understand the “What” of Optimization

There are three primary components of optimization to achieve a positive ROI on your experimentation:

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 earning a ROI of 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

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