Case Overview

Every site visitor is a potential customer. Visits can help digital commerce businesses acquire new customers or engage existing ones. All businesses want visitors to take actions that can be categorized as a conversion (Here, conversion is defined as a desired outcome, and not necessarily a purchase made on the website/app). The better optimized the conversion funnel, the higher the chance for visitors to convert. And one of the most effective ways to optimize conversion funnel is through A/B Testing.

What is A/B Testing

A/B Testing is arguably the simplest, and most effective method to drive better conversion of site visitors. It is worthwhile to note that A/B Testing scope is limited by one’s imagination, and can be utilized for multiple other business problems e.g. Does 10% discount on a product drive better repeat customer volume or 20% cashback?

A/B Testing is a method of testing two variations of the same outcome against randomly selected user segments at the same time to compare which variant drives more conversion. As is obvious, the variation that drives more conversions is the preferred/better option.

Why A/B Test?

With A/B Testing, a digital commerce platform can discover answers to:

a. Visitor pain points: Visitors on a digital commerce website come for specific purpose. It may be to buy a product, compare products with another platform, know more about the product or to know more about the digital platform. Visitors might find difficulty in navigating a page, search results based on keywords entered or finding customer reviews. Not being able to achieve the purpose of the visit will lead to a bad user experience and a potentially dissatisfied visitor. Browsing data, heatmap analysis and A/B test results can help a digital platform identify the pain points and consequently address them

b. Optimize conversions: Every business is aware of how hard it is to bring a potential customer to their platform. A significant part of all the marketing effort is to acquire new customers. And once a prospect has been brought to the platform – businesses would want to convert most of these visitors. A/B Testing allows platforms to test the conversion rates and optimize the conversion propensity – thereby improving return on investment and better conversion funnel

c. Promotion Effectiveness: Every digital platform is jostling for buyer attention, and one way to drive short-term sales is through promotions. It is however more important to know which promotions work, and are able to drive conversions. A/B Testing can help digital platform optimize promotions at multiple levels – SKU, brand, category level. With the abundance of ‘% off’ tags and 24*7 running offers, it is very important to get the promotion effectiveness right – and A/B Testing can be the panacea

d. Webpage/App optimization: Digital platforms may not be achieving the desired conversions or the KPIs e.g. bounce rate is high, low session time. A/B Test enables platforms to make minor changes (one at a time) on the webpage and understand sections/layouts driving better outcomes. This helps in two ways:

1. Enables faster testing of hypotheses – and make minimal modifications on the existing website/app

2. Lets platform owners draw data driven evidence of the issues with current layout if the website redesign is desired

3. If a new feature is being planned, A/B Test allows to test the best way to introduce the feature – by testing different variations of the webpage.

Making changes based on A/B Test results can make the outcome of a change certain through statistically significant improvements.

 We hope you have a better understanding of A/B Testing and the benefits that can be derived through them. In the next part of the blog, we will discuss how to perform A/B Tests and different types of A/B Tests.

Xtage Labs is an advanced analytics and machine learning based decision insights company. We work with businesses to derive insights from data, and improve the decision making processes.

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