Experimental Design
The Challenge
In today’s market, consumers are overwhelmed by the amount and variety of marketing messages they receive every day. Whether it’s through TV, phone, web, or mail, they are constantly exposed to hundreds or thousands of stimuli that try to persuade them to buy something. But how many of these stimuli actually work? How many of them get noticed, remembered, and acted upon?
The practice of testing various forms of a marketing or advertising stimulus isn’t new. Direct marketers, in particular, have long used simple techniques such as split mailings to compare how customers react to different prices or promotional offers. In credit card marketing, the possible combinations of brands, co-brands, annual percentage rates, teaser rates, marketing messages, and mail packaging can quickly add up to hundreds of thousands of possible bundles of attributes. Clearly, you cannot test them all.
The Solution
What if there was a way to test and measure the impact of different stimuli on customer behavior? What if there was a way to find out which combination of factors would produce the best results? What if there was a way to do this faster and cheaper than traditional market testing?
That’s where experimental design comes in. Experimental design is a technique that allows marketers to test and measure the effects of various stimuli on customer behavior. It can help marketers identify the optimal combination of attributes and levels for a marketing message. It can also help marketers quantify the effects of each stimulus on customer response. It helps marketers reduce the cost and time of testing by sampling a subset of possible combinations.
Experimental design can help marketers increase their browse-to-buy conversion rate and their return on investment of their marketing campaigns. This is where DataWisdom's expertise comes to play. Our data science teams have helped numbers of small financial institutions to boost their marketing ROI.
The Results
But how does experimental design work in practice? And how can you apply it to your own marketing challenges? To answer these questions, we will show you some examples of how our experimental design helped boosting the marketing ROI:
- A financial institution offering travel credit cards online. This institution wanted to test different promotions, APR's, banner ads, and ad placements for its products. DataWisdom was able to use experimental design to test 81 possible combinations of these stimuli with only 16 experiments which resulted in an increase in the sales by 12%.
- A handful of companies have already applied some form of experimental design to marketing. They include financial firms such as Chase, Household Finance, and Capital One, telecommunications provider Cable & Wireless, and Internet portal America Online.