Why we experiment?

Trying new things is the basis of experimentation and can be crucial to survival in business. So, why do we experiment?

There are several reasons, but I believe at its core we experiment to remove uncertainty in our minds. We do this by testing ideas or hypotheses. For example:

  • If you want to increase prices, but don’t know how your customers will react
  • If you want to run ads on Facebook, but don’t know how it will affect your sales.

Overall, experiments are a crucial tool for advancing our knowledge and understanding of your ability, business and the world.

Experimenting can of course bring large business benefits, whether that’s through reduced cost, increased revenue or decreased churn.

Testing and experimentation

Testing is often synonymous with experimentation, but I believe that it’s more a subset of experimentation and how we measure the results.

There’s an overhead to experimentation, and I’d be lying if I said every experiment should be tested, these are a few broad guidelines on how to test:

  • When you’re uncertain of something. If you know something to be fact, there’s no need to test it.
  • When the potential payoff is high! This is quite a big one, it’s easy to consider testing when there is no potential payoff from doing so.
  • If the potential payoff is low, testing can still happen, but you should try to minimize the cost and time of the test. Think email marketing for example.

Experimentation can mean very different things for SMEs. If you’re digital, you can really start to explore experimenting with prices, images, campaigns. If you’re brick and mortar, things are a little tougher, but exploring store layouts, promotions, even supply chain changes can bring real benefit to your bottom-line.

Get in touch if you’d like to hear more - we’re always ready for a free consultation.