Thursday, July 9, 2020

Test -- Question everything -- guard your money!

    Even a simple, imperfect test can save you a lot of money and embarrassment -- or clear the way for a major success!

    Marketers test in order to evaluate opportunities without, spending much money. When daily newspapers were the test vehicle for mail order companies, many  offered advertisers a split run. A split run -- or a "perfect A/B split" as it was known -- involved printing two versions of an ad on a rotary press where plates for both pages could be mounted. When the press was run, every other paper off the press would carry the "B" version of the ad. When the newspapers were stacked and bundled for distribution, one paper would carry the "A" version of the ad and the next in the stack, the "B" version. Regardless of how distribution of the newspapers was carried out, regardless of the demographics of any particular neighborhood, half the readers would see the "A" version and the other half would see the "B" version.

    I recall one particular split run in which I was involved. The marketer had an ad that had been a success but was willing to run it against a new ad in a split run test. The new ad produced dramatically improved results and became the first stepping stone in developing a multi-million dollar business.

    General advertisers have also used newspapers for tests. An ad for a new product would be run with a store coupon in a small city newspaper. If enough coupons were redeemed, testing would be expanded until national distribution was achieved.

    Because daily newspapers are read and tossed, their special value was the quick answers they produced. In a few days the marketer could judge whether the product would be a success. When people read an ad in a newspaper, either they respond or they don't. Very few people redeem a coupon that has been saved for more than a week. Response, or lack of it, shows up within three or four days.

    Moving closer to testing opportunities that might be useful to you, upstart marketers such as the young Estee Lauder have gotten their start by making arrangements with an established retailer to allow them to set up a display table within the retailer's store to pitch a product of their own. For Estee, it was her first product, a skin cream. Success within the retailer's store gave the retailer good reason to stock her product. This was done without any large advertising expenditure.

The need to have a product to test

     To make a test it is assumed that you have a product to test. For a new perfume, this can be a problem if you're looking at the need for a run of 10,000 bottles or more to get the few dozen bottles you want for your test. Ten thousand bottles is a major commitment. If you can find a way to test the waters before making this commitment, it makes sense to do it.

"Reserve your bottle now"

    You can test the appeal of your fragrance and your promotion by giving potential customers a chance to "reserve" a bottle so they will be the first ones to receive a bottle when the product becomes available.

    This is a variation on the classic "dry testing" technique -- advertising a product you don't have, producing it if you get enough cash orders, and simply refunding buyers and dropping the product if it doesn't bring in enough orders. The genius and the problem with dry testing are that you're taking money for something that doesn't exist. The genius part is that you get a statistic on how many people are willing to part with their money and not just make a worthless commitment to buy it, if and when. The "problem" is in taking of money for something that doesn't exist. There are laws about this, even if you make instant refunds.

The dummy product

    Testing with a dummy product can teach you whether or not you can sell perfume (or whatever it is you're selling) but it won't tell you whether or not you can sell your perfume. Perhaps the best way I can explain this is to give an example from my own experience.

    We wanted to sell a fragrance to a particular audience, a particular demographic, but we weren’t sure if these people would buy it. A competitor was selling a product similar to what we wanted to sell so we tracked down the competitor's source and bought a small supply. Our purpose was not to make an immediate profit but to see how well this product would sell. If it sold well (which it did) our plan was to knock it off (which we did). By having this other product -- a dummy product (fragrance but not our own fragrance) -- we were able to make our test, spending no more than a few hundred dollars for the inventory and next to nothing for the advertising. This simple, inexpensive test gave us "numbers" that showed we could make good money by developing and selling a fragrance of our own.

Buy for a larger quantity but fill only a handful of bottles

    Sometimes you must plan to produce 10,000 or more bottles of your fragrance in order to get the juice made and to purchase the particular bottle you want. But you don't have to fill all 10,000 bottles. You might fill only 500 or so and do some test marketing with them. By doing this you give yourself two advantages. First, if your promotion flops and you can be pretty sure that the flop isn't due to the scent, you can rename the fragrance, fill another 500 bottles and take another shot at it with the new name and a new promotion.

    Then, if things really go badly for you, you can simply sell the empty bottles, the bottles you didn't fill or label, along with the caps or sprays that went with them. Your boxes will be a total loss unless you can find someone who wants to try and sell your fragrance (or their own) using the name on the box.

How do you use these ideas?

    For a retail store, testing is always difficult. What is important is to track your inventory and sales. When certain items sell better than others, you want to spot this quickly and take advantage of it. You'll need precise numbers, not hunches.

    Beyond this, keep your eyes open. Question. Be alert for new ways to test that relate to your situation. Decisions based on hard data -- facts which may or may not please you -- are what will make your business grow.

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