The 4 Critical Components of a Successful Test-and-Learn Strategy
By Todd Mitchell, CEO R² Solutions
Leading up to the pandemic, brands and retailers who wanted to keep up with consumers’ ever-changing demands leaned into a test-and-learn approach to pricing, in-store merchandising, and trade and shopper marketing. Now, in a landscape without precedent, being agile and willing to push the boundaries of test-and-learn — quickly pushing out the wins or failing fast and moving on — is a business imperative.
If anything, this year taught us how fast everything can change. Before the pandemic, brands, retailers and consumers were slowly migrating business to online platforms. When the pandemic hit, that migration accelerated so quickly, many brands and retailers were caught ill-prepared. In short, consumers said, “I don’t care what you are doing now or plan to do in the future, I’m going to buy my groceries this way now.”
But this explosion of e-commerce is just one extraordinary example of the risk associated with being stuck in a planning-and-discussion mode versus having a bias for action — and test-and-learn mentality.
Here are the essential components of a comprehensive test-and-learn strategy:
1. Have a clear direction.
There is often an advantage to being an early adopter of a new technology or consumer trend before others recognize it’s important. But for any test, you need a clear direction along with progressive steps of implementation. You should also determine clear rules for when it’s time to abandon a specific test.
2. Understand consumer and retail trends — and separate interesting test results from the influential.
Oftentimes, product makers and retailers get caught up in testing something that’s cool or trendy, but ultimately has little impact on sales. Take, for instance, the use of robots in grocery stores for cleaning spills and other tasks. It was really cool to see retailers testing and learning what they could do with robots. But as soon as COVID-19 hit, most robots were pulled because they were interesting but not critical to what was happening in the store. Sometimes you need to do a gut check on a test — did we learn something? If we did, will it genuinely have an impact and move the business forward?
3. Test in small, but meaningful, bites.
Progressive testing steps with clearly defined time limits will minimize risk and yield information to move on to the next phase with insights and speed — or allow for fail-fast-and-move-on learning.
4. Define the desired outcome and measures — and find the right partner.
Sometimes tests are born from discussion around the “art of possible.” In those cases, brands and retailers must clearly define the desired outcomes and ways of measuring success and both must identify which partners are willing — and capable — of bringing that test to life.
In the convenience store industry, for instance, a brand or retailer may ask, “Do you think gravity-fed, single-serve cereal that you see in a hotel breakfast area will work in a c-store?” Picking the right partner for the test is critical. Ask yourself: Does this idea align with this partner’s strategy? Are they open to this innovation? What do we need to do to bring this to life? What’s in it for my partner? Is this brand or retailer able — and willing — to act quickly?
When the strategy, measures and partners align, test-and-learn can be a game (and revenue) changer. This was true for a pet food client whose individual brand strength varies by region. Faced with supply-and-demand issues when the pandemic began, and using data as the foundation of decision making, we tested targeting distribution centers and specific stores with adequate supplies of their strongest brands rather than full SKUs, better managing inventory. The result: The client is outpacing national category growth and its regionally strong brands are realizing share growth. The data-backed test paid off.
Most consumer goods and retail professionals will nod their heads at the importance of a test-and-learn mindset. But we’ve all seen the fate of brands and retailers that stick to the familiar, which is easier, until they’re no longer competitive.
Today, the risk isn’t in testing and learning, but in not testing and, thus, not learning. The future belongs to brands and retailers who have the courage to test, learn and quickly discover what to do — or not to do.