Growth experimentation ledgers provide crucial insights into how early-stage startups validate their product hypotheses.
So many early-stage startups don't know how or where to invest their freshly raised capital to grow their company — or even know what works. There are a lot of decisions to make, assets to build, and it's hard to know which ones will pay off.
We suggest discovering growth opportunities by using a growth experimentation ledger. It's a way to track your efforts and results to see what's working, and what's not. Most importantly, it will be a way to tracking learnings.
At RevPipes we firmly believe that early stage companies that learn the fastest, grow the fastest.
Let's talk about the growth experimentation ledger, how it works, and how you can use it to grow your business.
What Do You Need to Run Experiments?
For early companies, there are two things you need to consider:
1. Do we have people with the bandwidth to perform highly effective experiments?
2. How fast can we get data back?
Unfortunately, bandwidth and expertise, especially in varied growth channels, are things that startups don't have much of. One of the biggest shifts in the last four years is that growth has become more a team sport than ever.
Here's Why Experimentation Is Still a Good Idea
Experiments can cost you time and money. But, if done correctly, experiments can save your company from making big, costly mistakes. Most importantly, they expose opportunities of growth for you to double down on. Let us explain why.
1. Experimentation is Cheaper Long Term
Conducting more than one experiment might seem like a waste of resources at first. In the long run, it's cheaper to find out what doesn't work than it is to fix a mistake that could have been avoided.
Instead of making a decision and then finding out it was wrong, experiments allow you to pause or stop your current course without risking a major investment.
2. Eliminate Uncertainty and Reduce Risk
You might think, "Hey, some companies didn't have to go through this experimentation phase, and they turned out just fine."
But the truth is, getting lucky isn't a plan. It's not repeatable. You can't predict when you'll get lucky, but you will eliminate uncertainty by running experiments.
You need a solid framework that ensures dependable, methodical progress despite inherent uncertainty. Luck doesn't do that. You have to know why you chose your current go-to-market (GTM) strategy and how it compares to alternatives. That's how experimentation will result in growth.
Additionally, market opportunities are constantly changing. Experiments give you the ability to pivot rapidly when you need to.
3. Experimentation Saves Time in Long Run.
Experimentation requires a time investment, but not as much as bad decisions do. Going down the wrong path can have serious consequences, in both financial and opportunity costs.
Experimentation provides a balance between collecting data and making decisions. You'll use data from your experiments to make informed decisions quickly before spending resources on the wrong path.
Setting up a framework for experimentation also avoids analysis-paralysis because you can validate your options with evidence, enabling you to focus on what's important: your growth.
Experiments provide you with a clear decision-making process. And it's not as difficult as you think. It's relatively straightforward. Here are three criteria you can use to determine which experiments are best to start with:
- Impact: Will this experiment move the needle for us?
- Confidence: Can I run this experiment with the resources I have?
- Ease: What is the level of complexity of this experiment?
4 Stages of Experimentation
This can be the most challenging part of the process. You're starting from scratch, creating and coming up with ideas, and trying to understand what might move the needle. Asking the right questions and developing a system to test their validity is the challenge at this step.
Set up the experiment.
Use this phase to set out the goals, metrics, and KPI's you hope to track and see an impact in. Define what success looks like, what failure looks like, and what the next step would be should you see either success or failure. Create a timeline, and plan the logistics of the experiment.
Learning from experiments.
After running your experiments, you'll be able to gather data and see what worked and what didn't. From there, you can decide what to do next. Was the experimental outcome valid? Can you refine the experiment and iterate? Did the result lead you to more questions you need to answer by setting up new experiments?
Iterating and creating new experiments.
After learning from your previous experiments, it's time to set up new ones. This is an ongoing cycle as you develop a growth strategy that works for your business.
How Do I Set Up A Growth Experimentation Ledger?
Let's have a look at setting up a growth experimentation ledger.
Run 10 to 20 Experiments
You're trying to develop a high-growth marketing strategy. The best way to do that is by running a lot of experiments.
Aim to run at least 10 to 20 experiments per month. This might seem like a lot, but it's necessary to hone in on a high-growth marketing strategy that'll work best for you. (Note: If you can't hit 10 to 20, start with 3-5.)
Design your marketing experimentation ledger to record the following metrics:
Setting up a budget for each experiment is important. This will ensure that you're not overspending.
Set your budget for each experiment based on its expected return on investment (ROI).
If an experiment has a high ROI, you can afford to spend more on it. But, if an experiment has a low ROI, you should limit your spending and be open to changing your tack.
This metric shows you how much money you've spent on each experiment.
It's necessary to keep track of your spending so that you don't overspend on experiments that aren't still providing valuable insights.
Your experiment's status lets you see which ones are active, which ones are being analyzed, and which ones have been completed.
A marketing experimentation ledger helps you keep your hypotheses straight. Do they overlap? Are there equivocal or conflicting outcomes among various hypotheses? The ledger helps you see higher-level patterns in your experimental outcomes that grant insights isolated experimental results can't.
The marketing experimentation ledger enables you to quickly see all of your experimental learnings in one place.
This information will help you improve your data by revealing opportunities to design new experiments.
The results of each experiment will help you determine whether or not the experiment was successful.
If an experiment's results don't match your hypothesis, that doesn't mean it was a failure. It just means that you're one step closer to finding a high-growth marketing strategy. By revealing patterns of success and failure in your overall experimental outcomes, a marketing experimentation ledger helps you see what your next steps should be.
After analyzing the results of your experiments, you should be able to develop a plan for what to do next.
This might involve re-running the same experiment with a few tweaks or setting up a new set of experiments altogether.
A Growth Experimentation Ledger Is a Dependable Framework
A marketing experiment ledger gives early-stage B2B companies a framework to design and test small experiments to figure out what growth channels work.
At first, every new marketing experiment feels like a shot in the dark. But over time, a marketing experimentation ledger can help you see emerging patterns. What works for your business might not work for another company, and that's perfectly fine.
The goal is to find a marketing strategy that works for your business and then scale it up.