“I’m really good at what I do. I’m right 53% of the time.” – Howard Diamond
Like many entrepreneurs, I am faced with uncertainty all the time. I have limited information to make decisions, especially when trying to launch a new business.
I’m constantly asking myself questions like:
- What do my customers care about?
- What do they want to know?
- Should I give content away or charge for it?
- How do I find new customers?
- How do I keep customers?
- Etc.
The list is endless…
The reality is that the uncertainty of not knowing the best next step will always be there, but we can do things to lessen the uncertainty.
When I worked at Capital One as a business manager, we had a philosophy of “test and learn.” An analyst (or product manager) would come up with an idea for a new credit card product or product feature. The analyst would then run a small direct mail marketing test by selecting a random segment of customers and mailing a small percentage of them the new product offer while the rest received the old product offer (the current “winner”). Results like the percentage of customers who responded to the offer, how much in balances they transferred from an existing account to their new account and how much they purchased each month would be measured and compared.
Many times the tests were not profitable. They lost money.
Yet, the tests still provided valuable learning. Even if the product tested was not financial viability, the boost in customer response to the offer might suggest that there was some feature of the new offer that the customer liked better. So the analyst would tweak the product based on the new information and run another test. The process continued until a profitable product was found or another new idea came along.
Test and learn is an iterative process and the tests will not always be successful, but the learning you gain will be invaluable.
David