Operation Experimentation: How to Use Trial and Testing for Your Retail Business

From ad campaigns to email subject lines to new product introductions, testing new approaches, products, and messaging can help you determine the best next moves for your business. Through testing, retailers can increase customer engagement, sales conversions, and return on investment (ROI), says Sheri Lambert, assistant professor of marketing and managing director, Fox Executive Education at Temple University. “It all comes down to data,” she says.

Adopting a data-driven approach to managing your retail business will provide a better understanding of your customers and help you create a shopping experience that turns first-time buyers into loyal customers.

Maximizing sales

From the outset, Jessica Weiss, who started her mobile flower shop Bar Fiore in 2020, has “definitely done some testing,” she says, to better understand her customers’ preferences and buying habits. In addition to her own observations, Weiss relies on the data generated from her Square account to improve her new business, which operates out of Macedon, New York. That data has helped her make smart decisions about marketing, pricing, and inventory.

Weiss has experimented to see when her Instagram posts get the most engagement, what people are willing to pay for her various local flower stems, and which flowers customers are most likely to buy, in order to reduce the amount of unsold inventory she has at the end of the day. One of the key things she learned early on was that “customers are willing to pay more for unique flowers and those that are harder to grow, such as ranunculus and dahlias.” So, she stocks as many of those as she can when they are in season.

That kind of data testing has enabled Weiss to stock a selection of flowers most likely to sell at a price that maximizes her profits. She’s also learning what and how frequently to post regarding upcoming pop-up events in order to optimize attendance.

Testing through small change

So, how can you test various aspects of your operations? It’s as simple as changing one element of how you market, price, promote, or treat customers and tracking the impact those changes have on the business, good or bad.

“Traditional experimentation looks at user behavior on one channel, not across multiple ones. Omnichannel testing goes across channels and devices,” says Lambert, to give a richer understanding of how customers react to small changes made in the business.

That’s the advantage of a POS system that supports an omnichannel strategy: cross-platform data analysis. According to Lambert, a robust POS system like Square can provide the small retailer with information about:

  • Customer experience ratings/scores
  • Insights into customer behavior and what sells best
  • What customers prefer
  • Frequency of purchasing
  • Real-time data on spending

Armed with that data, retailers can make small changes and monitor the impact. For example, a brand can deliver the same advertising concept across multiple channels and see which platform or outlet sparks the highest sales. Or they can compare results from various images shared on social media platforms like LinkedIn, YouTube, or Instagram, depending on their audience. They also can send website visitors retargeting ads or email messages specific to their recent buying behavior, Lambert explains. Increasing the frequency of marketing emails from three times a week to four might encourage customers to make more frequent purchases, or those tactics may push them to unsubscribe in larger numbers. You won’t know until you test them.

Lambert says cultures that lead with experimentation, from digital marketing to the rest of the organization, may find themselves more agile and seeing better return on their investments.