Testing your assumptions

Product Management quick wins, inspired by the business founders appearing on Shark Tank Australia

Image courtesy of Ten Network Australia

In the latest episode of Shark Tank Australia, Vanessa Babuin, founder of Sonsee Woman, was attempting to raise funds for her business; with one of her goals being to move into the US market.

Initially, the Sharks were unsure if she should make the move into such a crowded market, especially since her numbers didn’t seem to support her expansion plans.

Vanessa backed her position through web traffic metrics and as her business is an online retailer, page views are a valuable way to measure customer acquisition. According to the numbers, she was seeing approximately 17,000 unique visitors coming to her website; of those total visitors, around 50% of them were from the US . This piqued the Sharks’ interest, until she mentioned there was only a 5% conversion from US visitors to sales. Vanessa’s assumption was that the high cost of shipping is a barrier to sales for overseas consumers.

This is a testable assumption!

One way to test this assumption would be to run a quick test to see if shipping price affected sales to the US. For the small cost of subsidising the shipping over the period of a month, the conversions would soon indicate if the initial assumptions were correct. This would eliminate ambiguity as to whether the market’s appetite exists or not, and should there be a significant up-take in sales, then further assumptions can be validated with more tests. For example: “Is drop-shipping my product an effective substitute for a local distributor”?

In addition to testing the assumptions around shipping costs, Vanessa could look at testing the broader advertising initiative by introducing A/B style tests for her Search Engine Marketing campaigns; using the results to validate which campaign message generates more click conversions. Audiences in different regions often respond to different marketing messages, so a campaign running in Australia may not be as effective with a US based audience.

Testing assumptions is not only an important part of building successful products, it can also be a valuable way to validate strategies for other parts of the business.