I don’t hold an MBA from Harvard, neither do I have $20M of venture capital in my bank, and I can’t predict the future.
But a simple idea that I’ve used running my company has helped us outgrow and beat the 300+ competitors, some of which have had the first two qualities above and thought they had the third.
Entrepreneurs have a vision of what the future will look like. Many of us are so convinced that no amount of counter evidence can change our mind. Great entrepreneurs have an almost unrealistic belief in their own ability to succeed. This quality helps them stay motivated when the going gets tough as well as inspire others around them to do the best work they can.
Is it not uncommon however, that this same trait that is essential for success, also becomes a weakness preventing us from it.
Companies rely on good product and marketing decisions to succeed. That is why we have market research and experts to consult and help us make better decisions. It turns out, however, that most product and marketing decisions should not be made by a company’s management or experts but rather by its’ customers.
I don’t mean asking customers what they think, in most cases customers don’t know what they want. Rather letting customers vote with
their credit cards. A/B testing that is. That is simply testing the new idea, price, design, format against the old. You will quickly see which one creates more sales, A or B. It could be as simple as a leaflet handed out to potential customers on the street or as advanced as pricing models. It’s a simple idea, yet rarely put into disciplined practice.Whenever a change is made to a product or marketing material or a new idea is launched, it must be tested against the current version (A vs B).
There is perhaps nothing more depressing than seeing a designer talk about how they know why this new design is better and then launching it without testing it. Or a group of board members sit around a boardroom table discussing their personal feelings about price
changes, a new feature or a design change.
If your change relates to a product/service or marketing hosted on the Internet, it is easy to test. You simply use a tool like Google conversion optimizer or build a more sophisticated tool in house. However not all businesses have this convenience, but even traditional businesses that are less internet oriented can do A/B testing continuously inside their brick and mortar shop every time they talk to or send letters to their customers.
”I’m as good at predicting customer behavior as I am predicting tomorrow’s stock market”
A while ago I started keeping track of all the ideas we launched and the results from the A/B tests. I call this our batting score. Together with my team, we spend countless hours each week talking to customers, examining competitors, reviewing data and reading customer
feedback email. After looking at the previous 6 months, I can tell you that I am about as good at predicting customer behavior as I am
predicting tomorrow’s stock market. No rational person would surely bet their own money on such random short term predictions, yet I
see CEOs, board members, product managers, designers and marketing executives do it every day with their shareholders money.
If you are planning on sending Christmas greeting cards this year, if you’re spending a significant money here and don’t know what your return is, you should do what we did at DealDash. Send greetings to half of your customer base, and see how quickly the investment pays itself off. Our competitors are surely reading this so I will not give away our results, all I can say is that the results are very surprising.
Not even the greatest CEOs are right about all the product and marketing decisions they make. So unless you can earn a living as a fortuneteller why not A/B test your next idea and save a dime or two. It may be a sobering experience, so remember to leave your ego at the door.
William Wolfram
CEO & Founder
DealDash Oy