As an entrepreneur, you are responsible every day to put in place new ideas. Having new ideas is very important to your business success. But, it’s not enough to achieve that success. You need to implement them. But, the right implementation process will require from you to use different business experiments in order to test and validate the ideas. Here are four reasons why you should begin with business experiments in your company.
You will install many of your ideas, but the question is do they bring the results. It’s not about any results, but results that you want from their implementation to bring.
To be sure, and base your decision on facts, you will need to start using business experiments.
In such a case, the problem is that often you don’t have any real evidence how your ideas will practically work. Because of that, it is important for you to base your decision regarding the implementation of ideas on strong data-driven techniques.
Here, the business experiments come as an important activity for your company.
It’s not enough to have a good feeling about the ideas, that you will have for sure. You need numbers because you can’t make a plan and follow until the success. Your business operates in an uncertain environment and it is not possible.
Many times when I work with small business owners, they tell me that they “think” or “probably it is true”. I don’t want such a communication. Because of that, I ask them to bring me the proof. How? We simply don’t know what will happen tomorrow? But, you have available tools that will enable you to experiment and test something before you put in place as a standard solution in your company. Why you don’t use them and learn more about your ideas based on facts, not assumptions.
You need to begin to test. You need to use business experiments as soon as possible. It’s a test-and-learn mindset. Here are four reasons why you should begin with business experiments:
1. With business experiments, you will base your decisions on facts, not on assumptions
If you have installed formal business experiments in your company you can be able to understand what really works. Intuition and decisions based on the assumption will become history for you. You can use business experiments for any part of the business.
As you already know your processes have inputs and transformation steps that transform the inputs into outputs. In such a case, the inputs and transformation steps are simple variations. Changing different variations in your processes will lead to different results. It’s like solving math functions with more unknowns.
For example, changing the button colors on your website will lead to different results of your lead generation process. In such a way, you decide about the button color on facts, not assumptions or what you like. You can install the same process of above business experiment on many things in the company. For example, your new store design, sales presentations, location analysis, production processes or marketing promotion.With business experiments you will base your decisions on facts, not on assumptionsClick To Tweet
2. The feedback you will get from business experiments can bring dramatic improvements in your profit
If you run business experiments for all your important decisions you will save your time and money. It is true because you will abandon implementing something that will not bring the desired results for your company. As you can see from our example, with your website buttons, you will remove all button colors that bring lower results. So, your lead generation process will be more efficient.
In such a way, you will fill your sales funnel with more leads, that will bring increased sales and profitability. Additionally, you will not spend your time with low results buttons.
Your experiments don’t need to be related only to actions related to internet marketing or e-commerce solutions. I have worked with a wholesaler to install business experiments. The experiments were related to decisions about the best discount rates to offer to their two most important segments.
We have designed three experiments for each segment. The variation of the process that we have used was the discount rates. For example, for the first group of customers contacted by email, they have offered a 15% discount rate. For the second and third group, they offer 10% and 5% discount rates, respectively.
The results were totally different from our initial assumptions, intuition or logic. The first offer with 15% discount rate has generated 10% of customers to accept the offer. The second offer with 10% discount rate has generated similar results. But the third offer with the lowest discount rate has generated 25% sales. Because the winner was the third offer, they send it to all other customers on their list.
The end result related to all customers was similar to the experimental results. More than 24% of the customers accept the offer.
With this experiment, the company has generated higher profitability rates with their discount campaign. Instead of offering 15% discount, they have offered a 5% discount. Instead of 10% success rate, they have generated almost 25% success rate.
So, they have increased their profitability using business experiments.The feedback you will get from business experiments can bring dramatic improvements in your profitClick To Tweet
3. The business experiments will not ask more extra work from your side
Using business experiments to make a smart decision will not ask more time-consuming work from your side. If you design them in a right way, you can implement them. It’s true because in most of the experiments almost 90% will be the same activities that you use without testing. The only difference will be planning the experiments and analyze the results.
Business experiments of the wholesaler were successful because they have the possibility to use actions that they use on a regular basis. They already use discount campaigns every three months. The extra work was to design three different offers with only one variation – discount rate. The copy was the same for each segment. Also, at the end of the test campaigns, they need to collect the results, analyze them and compare to choose the winner. An extra factor to simplicity is because the results were easy to measure.The business experiments will not ask more extra work from your sideClick To Tweet
4. If you use business experiments, you will learn from failure
Yes, using business experiments you learn from failure and mistakes. But, failure without catastrophic effects for your company
With this new knowledge, you can refine and tweak your ideas to make them better. It’s a continuous improvement process.
As an entrepreneur, you are willing to fail. Why? Because only with small fails and mistakes you can avoid more costly mistakes in the future. If you want to learn from successful ideas and failures, you will be in the position to decrease the level of uncertainty around your ideas.
What will happen if the wholesaler uses the assumption and intuition? They have expected that the most sales will generate the highest discount rate. Without experiments, they would choose the highest discount rate. In such a case, they will lose in profitability and the quantity of generating sales. Also, another important thing is that they have learned something more about their customers. In business, and especially customers, you cannot expect common sense.If you use business experiments, you will learn from failureClick To Tweet