A fascinating article about how Google works from Wired Magazine. They have so much data that mathematicians, statisticians and economists are making important decisions about how the business is run. They test everything and measure everything and then check everything.
In 1923 Claude Hopkins wrote a short book called Scientific Advertising. Nearly a hundred years ago he suggested that any one who wanted to be successful in business needed to measure everything and test everything. He applied this principles to advertising and made a fortune. He was given a blank cheque by his employer every year and told to fill it in himself. He was the Google of the day.
Here are a few things that anyone running an on-line business can do now to benefit from testing and measuring:
- Make decisions based on data, not on opinions.
- Set up your analytics well, so you really know which pages, products, acquisition sources, etc, your money is coming from. Understanding your data, becomes knowledge and knowledge really is power.
- Carry out split tests (A/B tests or multivariate tests).
- Reward people for carrying out tests, celebrate failure – you learnt something.
This is not work – it is liberation. You will end long debates by saying “let’s test it and see who’s right”. You will make business decisions based on insight. Each decision you make will be tested, so you know whether it was the right thing to do or not. Less stress and less worry, you know your budget is being spent correctly.
It is worth reading the Wired Magazine article and then Scientific Advertising. It would be an hour well spent.
Here is the download for Hopkins_Scientific_Advertising