One of the most impactful and immediate revenue opportunities that companies can seize is so close that you could almost touch it. However, many business leaders across Australia are still failing to recognise it.
It’s something that Jeff Bezos attributes as a major contributor to Amazon’s success and that Forrester claims can spearhead a company’s growth by 30% more than those who don’t apply it.
If you haven’t guessed it yet, I’m referring to digital experimentation.
Digital experimentation is centred on asking the question ‘why?’ and being curious and humble enough to use data, rather than gut instinct, to find the answer. In the world we live in today, we have a level of access to data and information that just wasn’t possible before. Digital experimentation is one of the best ways to unlock it.
So immediate can its impact be, for every few experiments that you run, you’ll typically find one that increases your company revenue by 5% or more. This means it’s feasible that if you started experimenting tomorrow, you’d put yourself in a position to start growing your business exponentially almost immediately.
This may sound far-fetched, but with the following intricacies and foundations, businesses can swerve into the fast-growth lane and leave companies with old, rusty growth or customer acquisition engines for dead.
A culture of experimentation
What many business leaders fail to recognise is that experimentation isn’t just a practice, it’s a culture. Success requires a level of humility and customer-centricity that must start at the top and bleed its way through the entire company.
The aforementioned Jeff Bezos and Amazon is probably the best example of this. He has mastered putting the customer first and using experimentation to give them exactly what they want.
Many leaders rely too heavily on gut instinct. Being humble enough to admit we can be wrong and that the customer is (almost) always right, is the linchpin for successful decision making. This is the essential first hurdle that needs to be overcome in order to build a culture of experimentation.
Sophisticated optimisation programmes require a huge amount of person-power and expertise. In order to get it right, you need to be able to run accurate experiments at scale and at speed.
Most tech and digital product teams have years of experience in UX, front-end development, web analytics, SEO and SEM. They are often investing in, and deploying, optimisation tools, however, they generally lack the skills needed to run high velocity, reliable digital experiments.
A major thing that businesses fail to do is call on outside support when it’s needed and harness the power of collaboration. Rarely do you see cases of companies that run experimentation purely in-house making it work. A sweet spot is a hybrid approach, where a team of experts within the company works closely with an external agency to execute the activity.
This increases the velocity and precision of the experiments that run, and with more eyes on the data, there’s more chance of seizing on opportunities quickly and not letting them slip.
Velocity is key. According to leading A/B testing and personalisation vendor Optimizely, organisations running between one and 20 experiments per month are, on average, driving 1-4% increases in revenue; whereas organisations that are running 21 experiments or more, are most likely to drive a revenue increase of 14% or more.
In addition, according to Optimizely and VWO, the average ‘win rate’ for A/B tests is between 7% and 10%. Therefore, typically, for every 10 tests that a company runs, only one of those will be a statistically significant winner.
Companies who complete only one or two tests a month, will only have a few winners a year and lack the solid data needed to meet increasing demand, satisfy managers and prove ROI to shareholders.
No time like the present
There are few business decisions that have the potential to grow significant revenue with almost immediate effect and, ignoring it, really is giving a hand to your competitors.
Business leaders and respected research bodies have proven that digital experimentation works and can lead to significant market share, and in Amazon’s case, market dominance.
There’s a revenue opportunity at touching distance. Now’s the time to go out and grab it.
You can help us (and help yourself)
Small and medium businesses and startups have never needed credible, independent journalism and information more than now.
That’s our job at SmartCompany: to keep you informed with the news, interviews and analysis you need to manage your way through this unprecedented crisis.
Now, there’s a way you can help us keep doing this: by becoming a SmartCompany supporter.
Even a small contribution will help us to keep doing the journalism that keeps Australia’s entrepreneurs informed.