Businesses require cash flow to continue with daily operations and they need profit to survive and grow. When a company invests money into a project, a new product line, or some kind of business expansion they will expect and hope to make money on their initial investment. This metric is known as return on investment or ROI and shows how much an investor made.
While this is all very well, there is no guarantee that a company will make a return on their investment and they could indeed make a loss that can lead to a loss of confidence from shareholders or cause serious financial problems for the business.
Therefore, companies require ways to minimize the risk of any type of cash outlay and to look for ways to improve their chances of success. A/B tests are one such way that companies look to control any business risk.
What are A/B tests?
These are a way to monitor the success or lack of, in your marketing campaign. This might mean emails, websites, landing pages, or other aspects of marketing. A/B tests are also known as split-tests or split testing and involve showing different versions of say, a website, to different groups and seeing how these users respond to them.
Why use A/B testing on websites?
When companies look to reduce their business risks A/B testing is one way that is proven to work. Launching a website can be a huge investment in time, money, and effort. There is the design work, coding, SEO, and digital marketing. The transition from the old website to the new one needs to be smooth and trouble-free.
Users become accustomed to website layouts and may even be attached to an old design and boycott a site after it is redesigned. Many websites have lost users after rolling out new versions or have encountered other issues such as security. There are many considerations for a successful website redesign and these include search engine optimization and user experience.
To minimize the risk of your visitors not liking the new website you can use A/B testing. This applies equally if you are launching a website for the first time as well as for a revamp.
What are the benefits of split testing?
There are many benefits but the main one is that it is a low-cost way of evaluating the potential success of a marketing component. You could try having two articles about the same product written differently and seeing how two test groups react. Does one article lead to more sales than the other one?
The benefits you will receive from A/B testing can include all or any of the following:
- Lower bounce rates – once you see where the problem areas are you can fix them.
- Better user engagement – by making small changes each time you can see what works and what doesn’t for engaging your audience.
- More sales conversions – testing will show which pages are working and which are failing.
- It’s quick – there is no long-term analysis with split testing so you get your results very quickly.
- It is inexpensive – unlike other methods of gathering marketing data, A/B testing is less costly.
- Reduced business risks – by testing your website first you can have a better chance of a successful roll-out and avoid losing valuable customers.
Ways to use A/B testing
Email campaigns can be tested very simply by making two different mailing lists and sending out two different versions of your latest campaign. You can make wholesale changes to the email including images and colors or you might simply change the call to action button.
A/B testing is sometimes as simple as changing the color of a button or the position of it and seeing how many more click-throughs or conversions were gained. Other times you may want to change everything and offer two totally different-looking websites.
So, when choosing how to use A/B testing there are a few considerations:
Start out small – try changing a few small but key areas. The hero image on your front page or maybe just the headline.
If it ain’t broke, don’t fix it – this saying goes perfectly well in A/B testing. If you have sales landing pages with high conversion rates then don’t change them and don’t let them be tested. They are already working!
Find the problem areas – are you finding there are drop-offs on certain pages? Then try making some changes there first. There are many design principles in making a high converting landing page and finding out where yours is going wrong could make all the difference.
Go big – instead of just changing the headline, go for a complete revamp as long as it stays on-brand you may see a huge difference in how your audience reacts to a new site.
What is to be gained by A/B testing for websites?
By sending two different website designs to two different groups of users the owners can then gather and analyze various data from the test. This can include the amount of time spent on each site or various pages. They can see if there was a high bounce rate knowing this will have negative effects later on and they can also see how many sales conversions were made.
Instead of launching a website to a negative reaction and losing customers a business can use this relatively cheap way of testing to lower any risk of their site not being successful.
What is a confidence interval?
Understanding what confidence intervals are is a vital part of collating data and preparing reports on A/B testing. With certain measurements, there can sometimes be a degree of uncertainty.
For instance, if you were conducting a split test on two sales-landing pages or checkout pages then you would give them to your test groups to see how they perform. After the test was concluded you might conclude that webpage A is going to be more successful than page B.
While this may be true it is also wise to add in a range of values to allow for some uncertainty in the results. If the same A/B tests were repeatedly conducted you would start to show a truer picture and the confidence interval will show the degree of certainty (or uncertainty) of these test results. You can use an online confidence interval calculator to calculate confidence bounds on different statistics for one or two samples.
A/B testing is a proven way to reduce risks in business and to help improve areas of marketing. The benefit of A/B testing is that they can be as simple as changing the color scheme of a website or making a new headline, or they can be used to gauge the audience’s reaction to a full marketing campaign or revamped website.
Geolocation allows digital marketers to target geographical locations and therefore different markets. By using this technology along with A/B testing a company can employ two different advertising campaigns and then judge the performance from each one. If campaign A has a high conversion rate then it can then be transferred over to another region in place of the failed B test version.
All businesses want to lower the risk of losing money and improve their profits and A/B testing is an important way to achieve this.