Development
Why A/B Testing is Crucial in Product Development
Michelle Li
Oct 19 2023 · 1 min read
A/B testing is a time-tested experimental strategy for enhancing existing products and launching new ones. Product managers employ A/B testing to understand user behavior and develop products that resonate with customers. For over two decades, A/B testing has played an integral role in leading tech companies such as Google, Amazon, Netflix, and Uber, guiding decisions that have ultimately added significant value and generated billions of dollars of revenue for these companies.
Why do both large corporations and startups alike implement A/B testing? The answer lies in its role as fuel for rapid growth. A/B testing allows companies to launch more features and scale quickly. Rather than getting bogged down by small details, this low-cost and straightforward method empowers companies to focus on overall strategy and innovations for large-scale growth.
Consider Netflix, which implemented A/B testing to try out various subscription buttons in 2021. Their objective was to assess whether changing the call-to-action button (CTA) would affect sign-up rates. After conducting the experiment, the “Get Started” option yielded the highest-performing result, which was subsequently incorporated into production.
Now that you understand the importance of A/B testing, here is a high-level overview of how A/B testing works:
Step 1: Formulate a hypothesis
In the case of Netflix, the hypothesis is that changing the CTA will result in higher sign-up rates.
Step 2: Define parameters for the test
This includes defining the control and experimental groups, target customer segment, sample size, and test duration. For Netflix, the top-left CTA in
the image, reading “Sign up here,” was the control group, which was the same button for non-participants. The other three CTAs were the experimental groups.
Step 3: Deploy the test
Once the test goes live, product managers meticulously track specific metrics relevant to the experiment, such as new user sign-ups. The experiment runs until there is sufficient evidence to support a statistically significant conclusion. By implementing A/B testing, companies position themselves to develop better products and improve their business.
Source:
