The Top 500 retailer buys Campus Deals, which offers mobile coupons to college students.
Scientific Site Strategy
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Four main effects were clearly significant: Product selection had the largest effect. Conversion rate increased by 10% when best-_selling products (D+) were promoted instead of “unique” products. A larger headline with color (J+) increased conversion by 8.9%. Offering three products decreased conversion by 8.2% vs. one product (E-). Finally, the creative subject line (A+) beat the direct subject line by 6.9%.
Immersed deeper within the unique statistical structure is a wealth of information about interactions. On the surface, main effects show individual changes that increase conversion. Interactions show how these effects may ebb or flow depending on the relationship among marketing-mix elements.
The line plot on p. 76 shows the AB interaction. The main effect of A (subject line theme) changes significantly depending on whether certain words are capitalized in the subject line (_element B). Supporting the main effect in the bar chart, the creative subject line is always better than the direct offer (going from left to right), but the impact is much greater with no capitalization (B+, orange line). This interaction shows that (1) capitalizing words in the subject line does have an impact (B+: no capitalization) and that (2) without capitalization, the effect of the creative subject line (A+B+) is about 40% larger than shown by the main effect in the bar chart. Interactions not only offer deeper insights into the true relationship among elements, they also help better quantify the impact of the optimal combination of elements.
What’s the difference?
In this case, what was the advantage of using multivariable testing? Well, if the team had used simple split-run techniques instead:
l Testing all 18 elements in one drop, not one effect would have been significant, since the line of significance would have been 2 1/2 times higher (only effects greater than 16% would be significant).
l For equal confidence, the team would have to test only one element per drop, requiring 18 campaigns, with no way to separate seasonality or differences among campaigns.
l The team would never have seen the AB interaction (and others) and capitalization would appear to have no impact.
An extreme case of multivariable testing was one banner ad test of 26 elements. Testing 10 graphical elements, 9 messages, pop-ups, drop-downs, animation and other marketing tactics, the biggest challenge in this test was defining the elements and managing recipes to avoid completely absurd combinations (imagine all these words and graphics stuffed into one banner). In cases like this, the “art” of testing-defining clear, bold, independent test elements and creating a test design with recipes that push the limits of market knowledge without falling apart in _execution-is equally as important as the science. In this case, eight significant main effects and one very profitable interaction led to a 72% jump in conversion. The test was completed in four weeks. For equal confidence, split-run tests would have required 14 months.
An Internet retailer of consumer gifts ran a landing page test of 23 elements for three weeks and pinpointed seven changes to increase sales (and six “good” ideas that hurt) for a 14.3% jump in sales. 23 separate A/B splits would have required over 40 weeks to achieve equal statistical confidence. This test paid for itself 10 days after results were implemented.
Multivariable testing is most effective for retailers who have many ideas to test and the flexibility to create numerous recipes within a high-value marketing program. Key decisions in launching a retail test include: choosing the right test elements and levels for each, deciding which of all possible combinations should be executed for a valid test, creating and executing all recipes, and collecting data and analyzing results.
Software platforms offered by firms like Optimost and Offermatica can simplify the process of creating recipes and analyzing results for Internet tests. Consultants focused on the specialized statistics and strategies of _testing can help guide you through the process, especially for e-mail and offline programs (like direct mail, media _advertising and in-store tests). For outside assistance, you may want to budget about $10,000 per month for ongoing support. In return you can expect to reduce your learning curve and increase your testing efficiency and return on investment. Another option for small firms is the free, barebones service from Google for Adwords advertisers called the Website Optimizer.
Testing remains an integral part of every good marketing program. Like trading in your dinghy for a clipper ship, launching a multivariable test brings you the power and freedom to move faster through turbulent marketing channels. With an experienced guide to show you the way, scientific testing offers greater agility to respond to market changes, streamline your retail programs and explore new opportunities for growth.
Gordon H. Bell (above) is president of LucidView, a marketing consulting firm specializing in scientific testing techniques, and can be reached at firstname.lastname@example.org. Roger Longbotham is senior statistician at Amazon.com Inc., where he oversees the multivariable tests on Amazon.com and conducts data mining studies related to customer behavior. He can be reached at email@example.com.