Data-Driven Marketing: Benefits Of A Test-And-Learn Approach

Originally published in MarTech Advisor

“Don’t Be New Coke”

This marketing mantra dates back to 1985, when Coca-Cola’s misguided consumer testing suggested that consumers preferred Pepsi’s sweeter taste. As a result, the company introduced a new, sweeter version of its popular soft drink. Within a matter of months, Coca-Cola reintroduced the classic formula and flushed an estimated $34 million down the drain.

The internet contains thousands of articles with suggestions about how to test new a new product before launch. But these best practices also eat up plenty of time and money. What are resource-strapped entrepreneurs to do? The answer: use an agile test-and-learn approach.

An agile test-and-learn approach involves a small media investment, a short timeframe, and real consumers. Data-driven marketing enables marketers to test the efficacy of their message, platform, channel, and product before making major investments in a full-scale campaign.

Test-and-learn involves a small media investment, a short timeframe, and real consumers.

In 2014, entrepreneur Jonathan Beekman was able to validate the market for Man Crates using a $1,000 budget. How? He populated an e-commerce storefront with mock images of his product, pushed Google searches to it, and waited to see whether consumers took the bait. They did, and that data has helped Man Crates reach its estimated revenue of $10.2 million.

Beekman and others are using a test-and-learn approach on products within their markets using the leanest means possible. Once product managers, business owners, and marketers embrace data-driven marketing, they can quickly learn what will connect best with their target audiences.

The Need for Speed

A test-and-learn approach can lead to sizable savings in time and money. It also helps marketers become more agile — allowing stakeholders to have the information they need to pivot on a dime. This process can be applied to any foundational marketing principles, but it works exceedingly well in these five areas:

Launching New Products

A test-and-learn approach provides an effective way to forecast market validation, similar to how Beekman validated Man Crates. A straightforward webpage and pointed Google searches to your new product is a quick way to test whether your market is receptive to your offering.

Pricing Strategy

Beyond market fit, you can also test price points. Quickly put up multiple landing pages with different prices in an A/B/C test, and then sit back to measure the impact. This allows business owners to assess how high they can push a price before consumers drop off, providing crucial information to fuel future discounts to increase sales during peak periods.

Promotional Strategy

Quickly testing multiple promotions against each other allows business owners to assess the lines between increased sales versus increased profits.

Data-Driven Design Of Products

Then there’s aesthetic design: Should your product branding be clean and modern or nostalgic and neon? Test-and-learn in A/B landing pages or via social ads to help inform aesthetic direction with confidence.

Messaging Strategy

Rapid testing can even be applied to a messaging strategy. If you have 10 potential value propositions for your offering, you can measure what your buyers care about most by creating 10 quick Google paid search ads and running them against prominent market keywords.

You can test and learn from each of these principles in digital channels with minimal investment and minimal time — even before you have a final product.

Test-And-Learn The Right Way

When it comes to validating direction, few approaches are more effective than test-and-learn. Here are three steps to make sure you capture data you can use to make marketing decisions:

1. Clearly define what you want to test.

Start with a question like “Does a market exist for this product?” Keep a singular focus to avoid overcomplicating the test. The more you try to discover, the more time and resources you’ll need to collect the necessary data points.

Focus on the S.M.A.R.T. goal concept: Is your goal specific in focus, measurably defined by a small set of KPIs, attainable for your existing resources, relevant with your overall sales or business objectives, and timely in its execution? If the answer to any of these questions is “no,” you’ll want to make tweaks before you test.

2. Understand the audience you want to reach.

Established businesses likely have an idea of their customer bases, but startups must conduct some R&D to gather this information. Use keyword research to understand how buyers are currently seeking similar products or competing solutions. Scour the results of these keyword searches to understand what customers value, which should help inform where you will test.

Let’s pretend I’m trying to market an email security service. By using the Google AdWords Keyword Planner, I can see that “email security” is an important keyword; more digging shows that “email security free” and “best price email security” are also quite relevant to my service and have a substantial number of monthly searches. That information shows that my audience is concerned about price.

Deeper investigation will help me learn even more about my audience, allowing me to understand what, where, and how consumers would research my service when it’s time to initiate primary testing. It should be noted that these initial discovery methods shouldn’t add significant time or money costs to the rapid-testing process.

3. Think through the thinnest execution possible.

Digital marketing tactics are typically the most cost-efficient to test, so start there. What is the fastest way to get your product in front of people and vet their interest to buy?

You will likely need a few landing pages that contain a clear call to action to buy, one or two ads that explain your product in a compelling manner, and at least one channel where you know your audience members are shopping. The easiest channel for testing purposes is often Google — people searching on Google often are ready to buy and might already be looking for a product like yours.

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A test-and-learn approach can provide you with the blueprint you need to take your business — whether it’s fledgling or booming — to incredible heights. You might have an initial direction, but more formalized development, actions, and testing can launch your profits into the stratosphere.

A test-and-learn approach can provide you with the blueprint you need to take your business — whether it’s fledgling or booming — to incredible heights.