Testing ideas using hypotheses has become very important in the digital world as companies try to determine what customers want.
So what is customer hypothesis testing? And how can it help a business?
It refers to a methodology that product or broader teams use to test assumptions about consumers' ideas and features.
The following are examples of prominent product businesses that utilized hypothesis testing:
- Netflix tested its hypothesis that "consumers want a subscription model for watching movies online" by releasing a streaming video service called Qwikster, which charged a separate fee from the primary DVD rental service. This experiment with a control group had a negative result, and the company abandoned Qwikster just seven weeks later
- Twitter: Jack Dorsey tested his hypothesis that "people would want to read short messages" by releasing twttr which evolved into twitter in 2006.
- Facebook: Mark Zuckerberg tested his hypothesis that "many people wanted to stay connected with their friends" by releasing TheFacebook in 2003
Generally, the hypothesis has three main steps :
1) Researching a topic thoroughly to determine if it's worth pursuing as a hypothesis. If you choose the proper subject matter, even just for fun, this will be an exciting process that can lead to important discoveries that have real value
2) Defining the key elements of the hypothesis properly to be tested and assigning statistical significance. This is important because if you define your hypothesis poorly, teams might end up with an incorrect conclusion
3) Experimenting and testing the hypothesis to see what results in it produces. Even if teams think the hypothesis is correct (that is to say, you've done a great job of formulating it), this is a necessary step.
Other real-world examples include:
*Einstein's hypothesis that "if you're traveling at the speed of light, time stops" was tested by accelerating subatomic particles called muons to nearly the speed of light and watching how long they lived for - their lifetime wasn't affected by being so close to the speed of light.
*Galileo also used hypothesis testing to test gravity. He was interested in whether or not the speed of a falling body is proportional to its weight, as Aristotle had claimed.
Galileo dropped objects from the Tower of Pisa and found that all weights fall at the same rate regardless of their mass, contrary to Aristotelian dogma.
Customer hypothesis allows for nimble decision-making because it provides a way to validate new ideas with customers faster.
This approach enables businesses and product teams to test their new concepts on a smaller scale before determining whether to expand or scale up.
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