Step-by-Step Instructions

Click to open worksheet

In this exercise, you'll learn how to design your currency experiments, so you can convert your hypotheses into real data.

Problems it Solves

1. What currency should you measure? You've got multiple steps in your Currency Ladder, so which one should you start testing?
2. How do you define your Success Metric for currency experiments?
3. What happens if your experiment fails?

Recall Your Offer Experiments

This exercise is going to look very similar to designing your Offer Experiment. You'll replace some fields, but the guidelines remain the same.

Design Your Experiment

Take out your Currency Experiment worksheet.

Step 1

Fill in the currency you want to measure. You'll pull this from your Currency Calculator spreadsheet, but the question is, which currency do you pick?

B2C

If you're selling directly to consumers, I recommend testing all the way to your Victory Currency. In other words, you are going to try to pre-sell your product.

The sales cycle of B2C products is typically short enough that you should be able to tell whether a statistically significant number of customers are going to climb your Currency Ladder during a two week experiment.

The one caveat to this suggestion is that if you're B2C, but your sales cycle takes longer than a week (i.e. your typical customer won't give you your Victory Currency within seven days of encountering your Offer), then proceed to the B2B model.

B2B

To decide the currency you want to measure in a B2B scenario, take a look at each of the steps in your Currency Ladder and ask yourself...

How many steps will your average customer take up your ladder in a single week?

Whatever step you think takes about a week for your customers to get to, is called your One-Week Ladder Level, and is the one you should currency test. Why?

Because ideally your currency test will run for two weeks, or until you reach statistical significance, whichever comes first. 

By measuring how many people make it to your One-Week Ladder Level during a two-week experiment, you're giving yourself one week to expose customers to your Offer, and another week to see how far up the Ladder they make it.

If your One-Week Ladder Level doesn't provide your Victory Currency (i.e. doesn't reach the top of your ladder), then assuming you meet your success criteria for this experiment, you'll simply go up the Ladder another week and test until that point.

You'll continue testing the currency "one week up" your Ladder at a time, until you've validated your success metrics through your Victory Currency.

My Example

In my case, I'm B2C and my customer will decide within minutes of seeing my Offer whether or not they want to pay for it, so I'm going test all the way up my Ladder to my Victory Currency.

I'm going to use "Landing page sales revenue" as my currency.

Step 2

In the time box, fill in the start and end times for your experiment. Again, ideally you're looking for something in the 2 week range so that you can give the experiment enough time to run it's course, while also not slowing down your momentum too much.

Step 3

Next, you will fill in your Success Metric Stoplight.

The first part of this Stoplight is to fill in metric you'll measure. If you recall, on your Currency Ladder worksheet, you wrote in a Metric for each type of currency you wanted to collect.

In my case, my metric for measuring my Victory Revenue was "Revenue per Visitor."

Next, for the Success and Failure Criteria, you can reference your Currency Calculator.

On the Currency Calculator, I have my currency conversion rate (2.44%) and my Price for each purchase. To get my Success Criteria, I can multiply:

2.44% x $99 = $2.42

I then set my Failure Criteria at half of that, or $1.21. Why half? Because if I can't even get halfway to my Success Criteria, then I don't think this path will lead to my Victory and I'll need to pivot.

Next, I can write in my next steps.

If I achieve my Success Criteria ($2.42/visitor), I can proceed to Utility Testing where I'll begin building the product I pre-sold to my customers.

If I get anything between $1.21 and $2.42 per visitor during this experiment, I'll keep optimizing this step of my Ladder to see if I can break the $2.42 mark. I can do that by:

• Changing the price
• Changing the description of the solution
• Changing what I offer in the solution
• Etc.

If I don't reach $1.21/visitor, I'll recognize optimization isn't going to cut it and I'll look to pivot via my Failure Protocol.

Remember, We All Fail

Just a quick reminder about why we do this Failure Protocol.

FACT: We all fail.

You will fail. You are supposed to fail.

The FOCUS process is predicated on the fact that you will make an assumption and test it, meaning that some of these assumptions will prove false. Knowing this, accepting it, and preparing for it, will move you toward success faster.

Just like with any natural disaster, you know that they will come, but you can prevent them from having a devastating effect on your ability to function. You can prepare yourself to take the hit and keep on moving.

This is why we do the Failure Protocol now, before you've failed.

Steps 4-7

Just like you did in your Offer Experiment design, you're going to complete each of the steps of your Failure Protocol.

In this case, I'm making a plan to Go Camping if I fail so I can find time to regenerate and regroup away from technology for a few days. Next, I'm going to connect with two other founders who can empathize with my plight so I can get the support I need.

Next I will Re-Declare my Victory, which I will fill out when the time comes. Leave that empty for now, but come back and fill it in if your experiment fails.

Finally, I am going to complete the Re-FOCUS step. This is the step I will take if my attempt at earning my desired currency fails. In my case, I'm thinking that if my Revenue per Visitor metric comes back lower than I need, I will analyze the reading habits of visitors to my landing page and see if there's something I need to change in the first step of my Currency Ladder.

This Re-FOCUS step comes directly from my Currency Calculator spreadsheet, where I had laid out the steps of "currency" my customers had to give me before making a purchase. This will help me easily identify where I need to look if my outcomes are not as expected.

By analyzing the conversion rate of each step in my Currency Ladder, I can get a sense of which steps customers aren't taking. I'll start with the first step, measuring how much of my landing page customers are reading.

Whatever that next step looks right for you, make sure you write it down so if things go poorly, you can get right back up on the horse and start experimenting again!

What's Next

Congratulations! You've just designed your first currency experiment.

You also have specific metrics for what you expect to see and you have a plan for what to do no matter what happens during your experiment!

Next, you will learn techniques to increase your conversion rates using A/B testing.