How “Optimization” Can Improve Your E-Communications
Split-testing, sometimes called an “A/B split,†allows marketers to deliver a different offer or creative treatment to two statistically identical audiences (Audience A and Audience B). When the two groups respond to message, the marketer examines the response rates to know which variable was the most productive. Split-testing can be done relatively easily in direct mail, and sometimes in print advertising
But the ideal environment for split-testing is online. Testing is cheap and easy to set up online, and the results can be read in a matter of days, or hours. Now, testing software is available on a hosted ASP basis, allowing marketers to set up their tests quickly, without bothering their IT departments.
A consumer marketing example
JoAnn.com is a leading specialty retailer of tools and materials for people who enjoy crafts like sewing, jewelry-making, scrap-booking and embroidery. Their website does a thriving e-commerce business, offering thousands of SKUs (Stock Keeping Units, meaning individual products). The question they need to answer is: What are the most productive ways to select the best products and develop powerful offers?
The store used hosted software from Offermatica to test a wide array of website promotions to determine which one drives the highest conversions for sewing machine sales. Their first test focused on promotional offers: “Free shipping,†versus “Buy two sewing machines and get 10% off.â€
Since consumers typically don’t purchase two sewing machines at a time, the marketers at JoAnn.com were convinced that free shipping would be the better offer. After running the tests for four weeks, they were surprised to find that “Buy 2 sewing machines and get 10% off†was the highest performing promotion. It not only increased conversions by 30%, but it also drove an increase in average order value of 137% and improved revenue per visitor by 209%.
“We were shocked to discover that 10% off two machines was the better offer,†said Linsly Donnelly, COO. “But we found that Joann.com customers were pulling their friends together to purchase. This is a perfect example of why testing is so critical. Guessing just doesn’t work.â€
Automating the management of your split-testing is a wonderful example of how the Internet is taking marketing to a new level. But it’s even better than that. The latest technique is moving beyond the split-test to the complex world of multi-variate testing. Using hosted software, marketers can test the productivity of multiple variables at a time, variables like copy, layout, images, and navigation, on home pages, landing pages, and registration forms, in a process known as optimization.
A business-to-business case
For example, Palo Alto Software asked another hosted software company, Optimost, for help in improving the landing page conversion for its flagship product, Business Plan Pro. In this situation, conversion meant actual sales of the shrink-wrapped product, priced at $99.95. The team selected 11 different variables that they thought were important in driving sales, such as the layout and images at the top and bottom of the page, the product description copy, and the placement of the submit button.
Then they created alternative versions of each element, to test. The variations were loaded onto Optimost’s server, and as the campaign progressed, various permutations were delivered to the prospects as they clicked through. This many variables results in over 41 million potential permutations, so the variations were tested in a series of 5 waves of about 15,000 page views each, with a control group of 29,000.
Eventually, Palo Alto identified the optimal page version, which raised overall conversion from the baseline of .75% to 1.06%, a lift of 41.3%. They were also able to identify the variables that had the most impact, in this case being the top image (a lift of 16.8%), the bottom layout (+12.3%) and the product description area (+11.9%). With this information, Palo Alto Software can design more powerful campaign landing pages, and know the hot areas where they should focus their attention.
In the online world, test and control methods of improving communications are faster, cheaper and more convenient than ever before.