Test and learn uses a scientific method that determines the impact of an assumption to increase sales profit. Retailers experiment using traditional and new marketing strategies on a small scale and learn from the results. These test and learn opportunities provide information on how a marketing technique affects sales without allocating a great deal of money to market a product if assumptions are wrong.
This evidence-based management tool allows planning driven by results at certain checkpoints along the way. If a marketing strategy does not pay off, it can be scrapped before too much is invested. When the assumptions are correct and result in higher sales, a program can be implemented on a large scale. Test and learn basically reduces the risk of failure when ideas are put into practice.
The first step of the test and learn method involves planning, which leads to theories to increase profits. One idea might include colors used in advertising materials that prove more pleasing to the eye. An assumption might follow that more pleasing colors cause customers or potential customers to read a brochure or advertisement, leading to higher sales. The hypothesis can then be tested by a sampling of customers inclined to use the product.
Marketing experts say the size of the test group should be large enough to ensure the results are statistically relevant. If the product is generally purchased by women, the test group should exclude men to obtain accurate information. A test group and control group make the testing process scientifically more valuable.
Both groups might receive marketing materials, but ads in the new colors go only to the test group, while the control group might receive an older example. Both groups should be randomly selected to make them as identical as possible. Timelines should be defined to implement the test and learn experiment.
When the time period expires, results are typically evaluated. If the test group purchased more than the control group, the assumption made about color is more likely true. The company may decide to adopt the tested marketing products based on test and learn data.
Software might be purchased that analyzes the entire test and learn model. It might be used by chain stores to test a new product in a select number of retail establishments to obtain statistics. Test and learn software can also be used to evaluate hours of operation, effectiveness of online advertising, and staffing impacts on sales.