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Inside Retail & New Republique

How to build a culture of experimentation and be like Amazon

Highly successful companies like Amazon and Facebook share one important thing in common: they were founded on a culture of experimentation. Their commitment to optimising the customer experience through constant testing and learning is one of the key reasons they’ve been able to build such large and loyal followings over the years. 

They’re not the only ones that understand the value of experimentation. The telco and banking industries are some of the most advanced when it comes to making decisions based on data gathered from thousands of small tests on websites and customer interactions.

But with the exception of some digital-native retailers, the retail industry as a whole has been much slower to embrace experimentation. New Republique is trying to change that. 

“Organisations are focused on one thing – output – but most output doesn’t actually deliver revenue,” said Nima Yassini, CEO of New Republique, a digital consultancy specialising in designing and optimising the most influential brands in the world. 

“That’s why we’re trying to bring the ethos of experimentation that digital-native companies like Amazon and Facebook have to corporate Australia.” 

No more ‘testing in a teacup’

Yassini believes that if retailers took the time to run experiments before making decisions, to see whether a proposed course of action really solves the problem they’re trying to solve, it would transform their business.

Take the running shoes brand Brooks, for instance. The company was able to reduce its return rate by 80 per cent after identifying that a significant number of people were buying two pairs of shoes in different sizes because they didn’t know which size they were.

“They ran an experiment where every time a customer put two sizes of the same pair of shoes in their cart a chat window would open up asking if they needed help finding their size. They saved millions of dollars in returns from that one little experiment,” Yassini said. 

Business leaders tend to embrace experimentation pretty quickly after they realise it can help them cut costs or grow sales. But there’s a difference between hiring a small team to run experiments on an ad hoc basis – what Yassini calls ‘testing in a teacup’ – and making experimentation part of a company’s culture and overarching strategy. 

“Executive teams need to have an ideology where staff are able to test and learn on customers and feel safe to fail,” Yassini said. “To be able to say, ‘I’ve learned something, it cost money, but I’ve learned’, and genuinely be OK with that.” 

Learning from the best

One of the challenges businesses face in building a culture of experimentation is that many of them don’t have anything to compare their programs to, so it’s hard to know if there’s room for improvement.

This lack of insight is what inspired New Republique to launch The Pulse Report: The experimentation maturity index 2020, which it plans to turn into an annual publication. 

Based on insights from dozens of leading brands across retail, banking and automotive, the Pulse Report aims to show businesses what ‘great’ looks like when it comes to experimentation. 

“We’re studying the top 65 brands and their experimentation programs to reveal what it is about their programs that helped them catapult their growth,” Yassini explained.  

The report reveals the five stages of experimentation maturity (most businesses are in the ‘building’ and ‘scaling’ stages) and the four pillars that underpin a culture of experimentation. They include: having clear business goals, being customer-centric, creating a culture of trust and having executive buy-in. 

A ‘score card’ shows how well businesses are currently performing in each of these areas, while questions about key challenges, investment plans and the main types of experimentation being conducted paint a clear picture of the current state of the industry.  

“In a retail space that is so busy and competitive, especially online, where you’re competing with people in the US, UK and the person down the road, I want to show there’s a better way to add value than knocking $20 off every item in your store. There’s a better way than offering free shipping to buy loyalty,” Yassini said.

“Sometimes just making the experience easier will win you customers. And the best way to do that is by understanding what others are doing in the experimentation space and learning from good.”

Click here to download The Pulse Report: The experimentation maturity index 2020