Drive incremental revenue by testing marketing offers

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Jeffrey Boorjian
Jeffrey Boorjian

We often discount our business turning to "couponing" as the last bastion in our marketing toolboxes to spike sales and momentarily hit revenue goals. Recently, like clockwork, we perused the cache of options we had stashed in our coffers, selected the one we forecasted would have the swiftest impact, mailed the offer and waited for the results. As expected, our volume picked up within a week — customers began pouring through the doors, and our short-term revenue woes ceased. 

Nevertheless, my exuberance was tempered by the fact that once again, I had bastardized one of our core brand tenets. Did we drive incremental trips with these offers or simply shift play from one day to another? Consequently, it was imperative to understand what impact these near-term wins had on our long-term business, which led to our establishment of classic test and control groups.

While it is challenging to pinpoint the effect price promotions have on the health of our brands, we are able to measure the impact on customer behavior and profits. Thus, 
establishing these distinct test and control groups is vital for a clear understanding of the value of our marketing. Follow 
these seven tips to ensure a successful and measurable 
marketing campaign:

• Identify the one independent variable that you're looking to test. Target the critical element you'd like to test and keep all other factors constant.

• Confirm that the unique offer will only be offered to a select group of customers. 

• Randomly select a valid control group sample size, preferably 10% of the population. 

• Ensure equal treatment between test and control groups.

• Compare test and control groups' response rates, revenue and profitability. 

• Measure the possible incremental effects of the offer. Analyze customer behavior beyond the specific promotional days and instead over a month of spend. Did the coupon shift their spend to a discount day or did it drive an incremental trip that the customer may not have otherwise made? 

• Apply the results to efforts moving forward and remain disciplined to the outputs they provide.

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