More and more we are having discussions with businesses about a different way of approaching business challenges, from digital marketing to analytics and insight. A way of working which allows the business to inform their longer-term strategic decision making whilst seeing positive business benefits in the short-term. An approach which excites customers and empowers employees, whilst being cost-effective and flexible enough in today’s ever-changing digital world.
More and more we are talking to them about a Test & Learn approach.
Test & Learn, simply put, is a set of practices that allows a business to try out new ideas and concepts, either with a small subset of customers or in a limited number of locations (e.g. in only a handful of stores) in order to understand the impact it has on factors such as customer experience, employee productivity and sales.
There are many reasons why a Test & Learn approach should be considered as part of any business strategy, but I have pulled out three that I consider being both important and relevant in the context of today’s fast-paced consumer culture.
Test with real customers
The beauty of a Test & Learn approach is that, at its very core, it is the real customers or employees that are providing the data upon which the learnings and, ultimately, strategic decisions can be made.
An alternative (and commonly used) option is for the business to spend considerable time and resource on developing a business case and volumetric model. This often involves using an assortment of assumptions, industry metrics and historical KPI data to determine how customers, employee and business functions are likely to react to new initiatives. Often, without any involvement by customers, employees or associated business functions. This is still, of course, a necessary aspect of new initiatives but it doesn't always give the full picture.
A Test & Learn approach puts the initiative - whether it’s a new communication channel, a new reward mechanic, a new process or something else – directly into the hands of the end user (e.g. the customer) to play with. If they like it, you can continue with the initiative in the future. If they don’t like it you can learn from the experience and improve it, or you can choose to scrap it altogether.
Whatever the outcome, you can be confident that the decision that is made will be based on something that is proven, rather than conjecture and theory.
Keep it small and flexible
In the example above, where a decision may be made to scrap an initiative altogether, little harm should come of it if the experiment is set up correctly.
A Test & Learn approach is one that should start off small – either with a particular segment or group of people, or in a small subset of stores – and as results become more repeatable and findings more concrete, the experiments can gradually be scaled up to suit your broader business needs and eventually adopted as business-as-usual initiatives.
Starting off small not only helps to minimise the impact should something go awry, but also offers the business with additional flexibility in the event that experiment conditions need to be changed, and helps to keep spending at a manageable level without having to be overly concerned at the outset about ROI.
Learn what doesn’t work
In order for a Test & Learn approach to be truly successful and embedded in an organisation’s culture, everyone must accept and agree to the fact that sometimes initiatives and ideas will fail. This applies at all levels from the project team running the experiments to the budget holder, right up to the senior strategic decision makers who are looking to the Test & Learn team for solid insights.
It is important for each and every person to understand and appreciate that knowing what doesn’t work is just as important as knowing what does work. When something doesn't end up as expected, questions that should be asked are "what could be done differently next time?", rather than "why didn't you deliver what we expected?".
Forget "failing fast"
The Silicon Valley mantra of “fail fast, fail often” has often been ridiculed as a business philosophy that would never be adopted by anyone with decent business acumen. The meaning of “fail fast” is one that most people can understand – that business shouldn’t be scared to try new things out of fear that they won’t succeed. But with this mantra, failure seems to become the goal.
Where others may embrace the negative of failing fast, failing often, failing forward (and every other permutation with equally few discernible positive outcomes), Test & Learn helps to redefine the positive.
It differs because of its definition of failing and in its objective of goal setting. Here, the goal is to take small, smart steps which allow you to pause and reflect on what has been achieved, and to build your learnings into the next iteration to continue to work towards that end goal.
Of course, failure will inevitably form part of this process. As you aim to take that small, smart step your foot may slip in some mud – but slipping is never what you set out to do. You should analyse what just happened, move on, and take care to avoid the muddy patches in the future.
More businesses would do well to consider adopting a Test & Learn approach and embedding it as a new way of working across their business functions. Strategic decision making informed by data-driven insights and the opportunity to realise immediate business benefits are outcomes that can be expected, but also satisfaction in the knowledge that boundaries are being pushed and progress is being made.
And it is important to remember that you cannot test without learning, and you cannot learn without testing.