Testing is often thought of as a luxury that only businesses in growth mode can afford to invest in. 

As the markets shift and customer loyalty wanes, brands are realizing that testing is a crucial component for all businesses looking to succeed. With disruptors continually emerging in every category, a solid testing strategy is essential for businesses to maintain their market share and share of voice.

Here are some key insights from our January Consulting team on building successful testing infrastructures into your 2024 plans:

  • 20% of a marketing budget should be allocated for testing to remain agile and competitive.
    By devoting 20% of a marketing budget for testing, businesses can explore new tactics, channels, and audiences to discover innovative ways to engage customers. Setting aside an initial 20% ensures that a business can fund and sustain multiple tests throughout the year, without sacrificing tried and true strategies. 

  • Conducting tests with total business goals in mind is crucial for sustained success.
    Ensure testing strategies align with total business goals to support multiple facets of an organization for overall growth and improvement. Testing allows businesses to retain market share and adapt to changing consumer behaviors to combat disruptors.
  • Create structured and measurable testing plans with actionable insights. Prior to launching any tests, ensure there is a clear hypothesis, identified risks, established timing parameters, and agreed upon evaluation metrics. When delivering test results, always provide the recommended next step. 
  • Create a company-wide culture that encourages testing by establishing a shared scorecard template across the organization for how tests will be reported on.
    Establishing a scorecard format for reporting on tests allows for improved transparency and creates cross-team and cross-departmental trust, even when a test may not prove successful. This scorecard format can be used by all teams, not just the marketing team. 

Across many consumer sectors, including retail, beauty and CPG, the past two years brought significant growth - especially online revenue growth. Yet, 2023 has certainly been more challenging, with lingering inflation fears, tighter credit lending terms, and a greater push for businesses to prioritize profitability. 

In times such as these, there is often a tendency to cut investment, specifically marketing investment, and focus only on what has historically worked. However, the current environment demands a constant willingness to lean into the unproven. It is crucial for businesses to prioritize budgets that are allocated to testing.  With recent consumer shifts challenging the status quo, testing new strategies and tactics is a key tool to avoid falling behind. Many brands welcome the idea of testing new marketing tactics, but don’t know where to start or how much to invest. 

At January Digital, we developed and utilize ‘The 20% Rule’, where businesses should invest 20% of their marketing budget into testing at all times. We call this the innovation budget. The innovation budget may encompass a variety of things - expanding into new marketing channels, targeting a new audience, experimenting with a new messaging strategy, building a new landing page experience or entering a new partnership. 

As business executives and marketing leaders approve holiday and 2024 plans, they should prioritize setting investment aside for innovation, and pushing their teams to always be thinking about the 20% allocated to unproven tactics. 

Beyond testing into a new tactic, it is critical for businesses to develop the infrastructure to analyze results and implement learnings. The teams at January Digital and January Consulting consistently follow the 20% rule when developing marketing budgets for all clients to ensure we continue to evolve and optimize marketing strategies. 

Below is some specific guidance to share with your teams as they build out new tests:

1. Confirm testing budgets at the budget planning stage. 
Testing budgets should be determined at the budget planning stage to ensure there are sufficient and devoted funds. January Digital and January Consulting follow the 20% rule to ensure clients have sufficient budget to invest and draw actionable insights from each test. By devoting 20% of a marketing budget to testing, businesses are positioned to not only run tests on platforms already in their marketing mix, but also have the ability to test into new and emerging platforms before they become oversaturated by competitors. It is important to consider the learning phases of tests on different platforms and to account for that in budget planning. 

2. Determine the appropriate budget for the test. 
Following the 20% rule will allow for sufficient budget to fund a multitude of tests throughout the year. The individual budget for each test can be fluid depending on a brand’s goal. As a rule of thumb, running tests on a platform or channel that brands regularly run on requires a lesser investment than launching a new campaign type or platform. Once appropriate budgets are determined, it is important to constantly monitor the campaign to ensure that the budget is sufficient enough to draw actionable insights to apply to future campaigns.

3. Identify opportunities to test. 
It is essential to understand overall business goals to determine tests across marketing channels that will support those goals. A business’ desired audience is also a key consideration in finding new opportunities as the ultimate goal is to attract and connect with these users.  Tests should span all facets of marketing such as image, copy, media channels, audience targeting, products and platforms. This will ensure that the marketing mix, campaigns and strategies are constantly improving and being optimized.

4. Conduct robust reporting post-test.
The true impact of testing occurs once the test is complete. Following a new initiative, in-depth reporting should be completed and leveraged across the business to improve future marketing initiatives and overall strategy. Delivering this reporting cross-functionally is essential to ensure that team members across the organization are aware of what optimizations need to be made in future campaigns to run more effective marketing strategies that support the total business. 

In a rapidly evolving consumer environment, it is essential to remain on the forefront of innovation. The 20% rule serves as an anchor for businesses to invest in innovation. Testing allows brands to realize the optimal means to serve their customers' ever-changing needs by exploring new tactics. For future marketing plans, implement the 20% rule within your marketing program to remain competitive and advance overall business goals.

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