3 Ways to Validate Your Product Idea by Testing a Hypothesis

Having a product idea is great… But how do we know if the problem we are trying to solve actually exists? Learn the ways you can do this! 

A/B testing is the most common approach used to validate your hypothesis.

Online Mortgage Lead Gen Flow Overview

• Bigger focus on a single transaction (‘lead’) 

• Sensitive to market conditions (Ex. Increase in interest rates)

• Impacted by government regulations (Ex. HARP extension)

• Marketing-driven (Ex. changes in marketing costs)

• Highly competitive and dynamic

  Lead buyers exert great influence on the quality and price for leads they accept

3 Tactics to Test Your Product Idea

1. A/B testing

A way to compare two versions of something to see which one performs better.

• Benefits:

  • Allows for distinction between causation and correlation

  • Streamlined and easy to use tools available (ex. Optimizely)

  • Can yield significant improvements to KPI goals

• Cons:

  • Does not maximize value across audiences

  • Not easily adaptable to changes in user behavior or market conditions

  • Can be time-consuming to get statistically significant results and business value

• Use Cases:

Appropriate for testing fundamental changes in the online experience.

1. Test fundamentally different designs or user experiences (Ex. LMB)

2. Test difference in a number of steps and grouping of questions for online forms (Ex. LMB)

3. Longer forms and moving deeper in the funnel (Ex. LT)
   

2. Personalization

Customizing a service or a product to meet the specific needs of a segment of consumers.

• Benefits:

  • Maximizes the business value from specific consumers’ groups

  • Presents the best customer experience to specific consumers’ groups

• Cons:

  • Difficult to discover differences in audiences

  • Costly to implement personalized experiences at scale

3. Predictive Personalization

Use predictive technologies to determine the variations of the product or service which performs best for specific consumer groups.

• Benefits:

  • Maximizes the business value across all consumer groups

  • Presents the best customer experience across all consumer groups

• Cons: 

  • Fewer commercial tools are available

  • Costly or complex to implement technology in-house

Personalization Examples

The ideal approach for sustainable ongoing optimizations, capturing incremental value and maximizing value.

• Examples:

  • Engaging headlines on landing pages

• Convenient ‘common’ answers

• Consistent CTA placements

• Setting expectations and progress indicators

• Effects of branding and site logos

Summary

• Use A/B testing to find the best base site experience

• Use personalization to optimize for different audiences

• Leverage predictive personalization if available to:

  • Maximize business value and consumer satisfaction

  • Adapt to changes in market and consumer behavior

  • Streamline ongoing optimizations

Have you ever applied any of these approaches? Which one worked for you? Share your comments with us!