How to run 25,000 A/B tests in 2021

Hi MD,

There's a company that has grown twice as fast as S&P 500. Beating the market consistently for more than 10 years is evidence that what they're doing isn't a fluke.



This company - whose stock price is shown as the blue curve in the graph above - must be having a secret sauce for growth.

What is it?

Well, the company in question is Booking.com, and they are known for their culture of experimentation. They collectively run more than 25,000 A/B tests annually - which means they're launching ~70 tests every single day. Sounds crazy, but according to their leadership, this A/B testing craziness is one of the critical ingredients in their growth.

To see how this culture of experimentation has played a role in their growth, look at their hotel listings page.



Everything highlighted on the listing page is there either because an A/B test found it made an impact on their business or is currently getting A/B tested. More importantly, everything that you don't find on the page is not there because an A/B test proved that it actually hurt their business or made no difference.

To learn more about how Booking.com scaled its testing program to 25,000 tests a year, you can check these two resources:

• Harvard Business Review's cover story on building a culture of experimentation
• VWO's interview with Lukas Vermeer, Booking.com's Director of Experimentation

So, how can you too run 25,000 tests next year?

Well, I understand that not every website has traffic levels of Booking.com. But if not 25,000 A/B tests a year, a site with one-hundredth of Booking.com's traffic should at least be running one-hundredth the tests - say 250 tests a year, which is almost 20 tests a month.

Do you run 20 A/B tests a month? What about 10 per month?

Unless you're an agency or an outlier company, my guess is that the answer would be no.

What I see across many businesses is running occasional A/B tests and if they have a program, they'd be perhaps launching 2-3 A/B tests a month. That's about it. Finding exceptional cultures where experimentation is taken seriously is a rarity. But why?

I think the answer boils down to whether there's a commitment from the leadership. Experimentation is hard. Coming up with ideas, setting up tests, investing in infrastructure, getting variants designed and coded, performing quality checks, and interpreting results take real effort. Combine this with the emotional cost of most experiments not working out, no wonder so many organizations just give up on it too soon.

But giving up on experimentation is giving up on a high-leverage activity that can trigger business growth. This is because an increased conversion rate is only the most direct benefit of experimentation. A full commitment to experimentation transforms the entire culture:

• People in the org start trusting data more.
• A higher percentage of decisions start getting questioned on whether they're someone's pet projects or actual business-needle moving.
• You end up having fewer failed launches.
• And, the best part, the organization gets exposed to deliberate serendipity. Even if an A/B test didn't win in the traditional sense, most A/B tests end up increasing the amount of insight the org has about customers and markets.

Leaders at Booking.com understand how easy it is to give up on experimentation and that is why they've done things like:

• Enabling everyone in the org to launch an A/B test without gatekeepers.
• Having processes in place that ensure that no changes are made to any page until they're A/B tested.
• Make experimentation evangelizing team report into company's leadership.

A culture that prioritizes understanding customers better than competitors is the real benefit that experiments create. The actual conversion rate increase is simply a nice cherry on the top.

So, let me ask again: what would it take for your organization to launch more A/B tests in 2021 than it did in 2020? What's preventing your organization from adopting experimentation as a central part of your growth strategy?

Do reply to this letter as I read and respond to all emails :)

Regards,
Paras Chopra
Founder and Chairman, VWO

@paraschopra on Twitter

PS: These letters are getting cross-posted on our website too. Read my past letters here.

VWO (A Wingify product) 1104, 11th Floor, KLJ Tower North B-5, Netaji Subhash Place, Pitampura, Delhi – 110034, India
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