Gaining A Competitive Edge Through Continual Testing and Insight-Driven Decision Making
“Test-driven marketing” and “insight-driven organisations” are just some buzz phrases that get thrown around in the corporate world. But the fact is, very few organisations know what that actually means and/or are doing it wrong. Leaders in organisations understand the importance of being insight-driven, but struggle to start. If everyone was insight-driven, then it wouldn’t be your “competitive edge”.
Structured testing process and an interactive insight management system is key to any company that is embarking on their insight-driven transformation.
There are 3 key steps to gaining your competitive edge as an insight-driven company:
- Testing and gathering data: no data, no decisions.
- Creating insights from test data: data is good, but what does it reveal, and how can it help your business?
- Turning insights into action: it’s not to turn data into insight, you have to also turn insight into action.
Testing and gathering data:
Unleash your inner scientist and test EVERYTHING! Now, what do we mean by “tests”? Tests are essentially experiments, which have objectives and hypothesis. They are used to collect data, which when analysed generate insights. In the context of a business, these experiments could be, for example, comparing two different packaging for the same product to see if it increases sales, or investigating which colour of a button will result in higher conversion rate.
How do you structure a test?
At Nela, we structure our tests in the following way:
- Background: What prompted you to do this? Why are you performing this test?
- Objective: What do you hope to achieve with this test? What is your goal?
- Hypothesis: What do you think will happen? This give you a reason for conducting the test. If you don’t have a hypothesis, why are you wasting time on this test?
- Method: What method are you going to take? Similar to following a recipe for your favourite food, make a plan on what you need to do, so anyone could replicate the experiment.
- Metrics: What metrics are you tracking? These metrics will vary wildly, but they can be, for example, open rate, conversion rate or average basket.
- Results: What result have you observed? Record any observations, results, or insights that you have found out during the test.
Structuring tests in this way forces you to document tests and understand why certain tests were conducted. It keeps all the details concise and in one central place. By keeping your tests organised, you can not only create insights seamlessly (as all the data you need to back your insight is in the one location), but also avoid re-inventing the wheel (by running tests that have already been conducted.
Converting data into insight.
What exactly is an insight? It seems that a lot of people have a misconception on what an insight is. This misconception is one of the reasons why companies are not as insight-driven as they could be.
An Insight Is NOT…
Let’s start off with restoring the tainted meaning of an insight by looking into what an insight is not.
Insight is NOT equivalent to data.
Everyone emphasises how important data is, and because that a lot of companies believe that the more data you have, the more insight you have. However, they forget that data alone is not an insight, and it does not do your thinking for you. Data is useless unless we analyse it to derive insights.
An observation is NOT an insight.
Observation is just another data point. What is missing from observations is the “why” and “motivation” behind the observed behaviour.
A customer wish or a statement is NOT an insight.
It’s important to understand WHY the customer is asking for the features — find out what is the problem they identify, and ask (or at least think about) why they think that certain feature is a solution. At the end of the day, it’s your job to identify the best solution for them.
So, what is an insight?
The official definition of an insight is the capacity to gain an accurate and deep understanding of someone or something.
This is one of our favourite infographics that accurately depict what an insight is!
Let’s use this as an example: a company “X” is trying to create a new product. They know that people are unhappy with the current earphone range. They are investigating on how to create a product that will be appealing to their customers, using the data they already have to make such a large decision. What will they do?
- First, they will analyse the raw data that exists (i.e. feedback forms, web traffic, social media engagement metrics).
- Then, they will start to make interpretations of the data — this data is no longer just numbers, but information.
- By analysing the information gathered from the data, the team will then start to form links and patterns, adding meaning to the information they received — this is knowledge.
- The company may notice that a lot of the knowledge they discovered is nothing new, but there may be one or two things that really stand out, providing new information about the customer they never knew before — that’s an insight.
An insight is something that provides new understanding of something that makes a difference to decision making, thinking and action. Further link these insights with each other on an even deeper level, it becomes valuable wisdom. And that is your company’s competitive advantage.
Insights take work! It requires deep thinking and creativity to craft an insight. Observations and knowledge is not enough to give your organisation a competitive edge.
How do you know if you have a powerful insight?
If your insight:
- Solves a business or customer problem…
- Leads you to an action to add value to the customer…
- Helps connect with customer on an emotional level…
… then you have a powerful insight that will give you the competitive edge!
Turn insights into action.
This is the final step in developing your competitive advantage. Like data, insights are useless when you do not make them actionable.
The best way to turn insights into action is to discuss it in a group. Reviewing the week’s insights during a weekly meeting gives your team members an opportunity to present and discuss insights, and then determine actions to move forward.
But, managing the whole process sounds like a pain…
The process of insight generation may seem like a lot of work, but, once your team starts doing it in a systematic manner, it becomes a great operating system. The most common way to track your insights and tests is to use a spreadsheet. However, as your organisation conducts more tests and makes more insights, it is easy to lose important data/insights. Spreadsheets also make it hard to collaborate and share findings.
Another alternative is Nela. Traditionally, data management tools can often be overwhelming to those who are unfamiliar with the space. We created Nela to enable every person in the company to contribute directly to the success of the business by democratising data and encouraging everyone to share their own insights. After all, it is very likely that the person next to you knows something about the customer that you don’t.
Our sister company Harris Partners, who are digital transformation experts, identified a common issue among their clients. Valuable information is normally silo’ed, slowing down the progress of teams, and the whole organisation. In some cases, insights were generated on a weekly basis, but abandoned in hundreds of spreadsheets without action. This resulted in more time spent trying to find relevant information and lost opportunities.
E-commerce companies in Silicon Valley and beyond have been using tests and insights to their advantage. Other companies — retailers, telcos, cable companies, especially in the US have caught on, and have drastically amped up their testing efforts. Do the same — start transforming your organisation into an insight-driven one and get ahead of your competitors. No excuses.
So tell us, How do you currently manage your tests, data and insights? Do you have other methods in giving your company a competitive edge? Share your stories with us in the comments section below.
To find out more about Nela check out: https://www.nelaapp.com
