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A/B Tests

Updated: Dec 22, 2018

An A/B test in marketing is when you test out one concept versus another. For instance, it can be testing two backgrounds for your website, or two competing headlines. A/B tests are interesting because they have a couple of factors we’ve talked about on their side.

For one, you get instant feedback, which creates a better environment for learning.

Second, there’s this idea of iteration and constantly putting things into practice.

For these two main reasons A/B test are very powerful marketing tools. But we can also use the same concept in life.

Let’s say you’re trying to break a bad habit, perhaps you’re trying to quit smoking. An A/B test here would include trying a bunch of different things, and optimizing for the things that seem to be working the best. Your current situation would be the A part of the test and your new methods for breaking the habit would be the B portion.

Each day you can try one new method to break the habit. Some methods will work and some will be useless. The important thing is the rapid iteration.

One failed attempt is better than years of wishing you would do something about your smoking habit. It’s not necessarily about breaking the habit immediately because that sets unrealistic expectations. It’s about putting small actions into practice and testing things to gain momentum.

So the first day you might try willpower and fail. Well you’ve already learned something. The second day you're a little more successful with Nicorette. So now you’ve learned two things. Sure, you could’ve read about these things, but putting them into practice makes it more real to you. The third day you could try scouring the Internet for any unconventional methods to stop smoking. The fourth day you can get an accountability partner.

So after four days there’s a good chance you’ll still be unsuccessful, it’s just the reality of how hard that habit is to stop. But you'll have learned four things and have a better sense of what works for you.

Further, rapid iteration isn't easy.

For one, it takes a little bit of creativity to come up with new ideas. The downside to this is that maybe a certain amount of focus on one thing maybe more effective in the long run but the short term you’re not getting the results you want to see. In this case, pivoting to another method might actually be counterproductive.

So the method I propose is two weeks of rapid iteration, trying as many different things as possible and taking detailed notes so you have feedback. If you aren’t recording the results, then you won’t have the data for the next part of the process.

Once the two weeks are over and you have your data, double-down on the one thing that seemed to work the best. So it’s this process of first exploring all the options and then viciously paring them down.

Let’s call it Explore then Cut. This is the life-equivalent to an A/B test. Constant iteration and feedback and then doubling or even tripling-down on the things that seem to be working the best.

It can be difficult determining which methods are working the best and you might still need to pivot once you are in the Cut stage, but it is important to have that focus.

Going back to the smoking example. If you finish the two weeks of Exploration and your data says there are 10 different methods that could work, you won’t make any progress because you’ll be pulled in too many directions. Just pick one and go for it. Maybe it’s meditation and you go all in on that for one week. If there are still no results after doubling down, it’s your choice to keep going or pivot to another method.

The key is to have a window for Exploration and research and then narrow it down so you can really focus all your energy on that one or maybe two methods.

This technique of Exploration then Cut is not an end-all prescription for breaking bad habits or reaching your goals but it can be a helpful model to remember.

Investing Segue

This methodology can be applied to your stock research process as well. Say you’re looking for a new stock and you come up with a list of 10 possible companies.

That would be your Exploration. Then, pare it down with your own checklist. From there, you can dive deep into the company researching it more before deciding whether to invest and how much you should buy.

We probably do this without even assigning a name to it. It’s just researching then ultimately choosing.

To End

Sometimes a more formal framework is helpful to get the ball rolling. I hope so. As always, we’d love to hear your thoughts…

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