I am opening a new business, and I want to manage it in a way that ASSUMES we will have a large percentage of repeat customers (customers that come back at least once a month, as opposed to one per year). But this assumption will radically change how we operate (different pricing to get people to come back, higher expenses to ensure the experience for each visit compels them to return, etc...), and I have limited, and potentially biased data that makes me believe this assumption should be what we build the business on. So I went through the sample questions you provided, and they helped me figure out how to test this assumption.
This might have just been a coincidence, but the ORDER of your sample questions was useful in prying my mind open to the possibility that the assumption is legit. Then, when I arrived at the final question, which is "What small experiment could test this?" I was already primed to WANT to run a legit experiment (as opposed to running a half-assed one with the intentions of validating my assumption that I admit that I WANT to be true.
To give you the conclusion, my assumption is that a large percentage of our customers will come back at least once per month, and therefore we should focus on encouraging that kind of repeat business. (low prices, maybe a changing menu, etc...) So the test I'd like to do is have one entrance ticket cost about $5. But before the customer leaves, I'd like to offer them to purchase a pass for only $2.50 which gives them THREE entrance tickets to use whenever they want. This is a savings of over 80%, and would destroy my business if I kept it going, but this is a small test. If someone comes into my business, and says "no" to such a ridiculous deal, that proves that they have no intentions of coming back. If I struggle to sell these, then I should question my assumptions that repeat customers will make up a chunk of our business. But if it's easy to sell them, I will stop with the 80%+ discount and go for say, 50%, and see if the interest remains.
I'm excited for this test, and thank you Raj for this article because this assumption really can make or break my business. This article could have honestly changed the trajectory of my business.
I am opening a new business, and I want to manage it in a way that ASSUMES we will have a large percentage of repeat customers (customers that come back at least once a month, as opposed to one per year). But this assumption will radically change how we operate (different pricing to get people to come back, higher expenses to ensure the experience for each visit compels them to return, etc...), and I have limited, and potentially biased data that makes me believe this assumption should be what we build the business on. So I went through the sample questions you provided, and they helped me figure out how to test this assumption. This might have just been a coincidence, but the ORDER of your sample questions was useful in prying my mind open to the possibility that the assumption is legit. Then, when I arrived at the final question, which is "What small experiment could test this?" I was already primed to WANT to run a legit experiment (as opposed to running a half-assed one with the intentions of validating my assumption that I admit that I WANT to be true. To give you the conclusion, my assumption is that a large percentage of our customers will come back at least once per month, and therefore we should focus on encouraging that kind of repeat business. (low prices, maybe a changing menu, etc...) So the test I'd like to do is have one entrance ticket cost about $5. But before the customer leaves, I'd like to offer them to purchase a pass for only $2.50 which gives them THREE entrance tickets to use whenever they want. This is a savings of over 80%, and would destroy my business if I kept it going, but this is a small test. If someone comes into my business, and says "no" to such a ridiculous deal, that proves that they have no intentions of coming back. If I struggle to sell these, then I should question my assumptions that repeat customers will make up a chunk of our business. But if it's easy to sell them, I will stop with the 80%+ discount and go for say, 50%, and see if the interest remains. I'm excited for this test, and thank you Raj for this article because this assumption really can make or break my business. This article could have honestly changed the trajectory of my business.