November 10, 2020

But I Cannot Afford THAT Many Customers

This is the part of the discussion where the Virtual Chief Performance Officer hears the grumbles, from near and far.

  • "We cannot afford to test THAT many customers!"
You can't afford NOT to test THAT many customers.

When I worked at Nordstrom, the Online CEO and I had to negotiate the size of the "testing budget". I needed a lot of customers, he needed a lot of sales, and he needed to learn things. So compromises had to be met.

I'd pull out a graph that looked something like this (don't worry about the y-axis at this time ... worry about where it is high vs. where it is low).

If we only sampled 10% of the audience, we had a lot of sampling error ... and that meant we'd never be certain we had the "right" answer.

If we sampled 40% of the audience, we had minimal sampling error ... and that meant we'd likely have the right answer but would give up a lot of sales to learn the right answer.

So we'd agree that "x" percent of the population was appropriate for how much we wanted to learn vs. the amount of sales/profit we were willing to pay to learn the information.

That's what we're talking about:
  • How much profit are you willing to pay in order to learn something about your business?
For too many of you, the answer is $0. You're not willing to pay anything to learn.

And as a result, you don't learn anything.

It costs money to learn something. You already know this, you attended college, right? So as a 20 year old, you were willing to pay something to learn. But as a seasoned 40 year old Professional, you're not willing to pay anything to learn. Hmmmmmm.

Be willing to pay something to learn something.

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