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April 2008 - Strategy Magazine
What next?

Qualcom takes the guesswork out of marketing

by Annette Bourdeau
page 25

What if cashiers wore burgundy smocks instead of plum? Would sales increase if the font on signage were bigger? What if stores smelled different?

Improving in-store sales isn't an exact science: that's where a little math can help. A formula used by Knoxville-based consulting firm QualPro, called multivariable testing (MVT), allows marketers to test as many as 40 different variables at the same time. QualPro uses the formula to identify which elements are boosting sales, and which are actually doing more harm than good.

David Cochran, VP operations at QualPro, says data from more than 150,000 ideas tested with MVT shows that about 25% of the ideas companies implement to improve sales work, while 22% cause damage and 53% make no difference.

The formula can also be applied to other categories to gauge efficiency and DM variables. Clients include Pacific Bell (AT&T), American Express, Staples, Circuit City and Progressive Insurance. "It's focused on creating breakthroughs," says Cochran.

MVT recently helped Wayne, NJ.-based Toys"R"Us unearth a somewhat bizarre breakthrough. An employee suggested that Babies"R"Us stores try using aromatherapy to boost sales. Executives laughed at first, but since they were able to test so many variables, decided to throw it in the mix. Lavender-scented plugs were found to boost sales by a "significant" amount.

QualPro engages executives, sales associates and agency partners to determine which variables to test. "It's common to have hundreds of ideas on the table," says Cochran. From there, they choose the most practical, and create "recipes." Each includes about half of the ideas, and the combinations are tested randomly at different stores. If there are 30 ideas being tested, there will be 32 different recipes. QualPro then uses mathematics to "statistically untangle" each variable's impact on sales. "It takes the guesswork out of executive decision-making," says Cochran.

QualPro, which can take on Canadian clients, charges from US$300,000 to US$1 million. Cochran says they won't take on a project unless they see the potential for an ROI of at least five times the cost in a year. www.qualproinc.com

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