@andrewchen

Subscribe · Featured · Recent · The Cold Start Problem 📘

Conservation of Intent: The hidden reason why A/B tests aren’t as effective as they look

When a +10% isn’t really a +10%
OK, this is an infuriating startup experience: You ship an experiment that’s +10% in your conversion funnel. Then your revenue/installs/whatever goes up by +10% right?

Wrong :(

Turns out usually it goes up a little bit, or maybe not at all.

Why is that? Let’s call this the “Conservation of Intent” (Inspired by the Law of the Conservation of Momentum 😊)

The difference between high- and low-intent users
For all your users coming in, only some of them are high-intent. It’s hard to increase that intent just by making a couple steps easier – that’ll just grow your low-intent users. Doing tactical things like moving buttons above the fold, optimizing headlines, removing form fields – those are great, but the increases won’t directly drop to your bottom line.

In other words, the total amount of intent in your system is fixed. Thus the law of the conservation of intent!

This is why you can’t add up your A/B test results
If you’re at a company that A/B tests everything and then announces the great results – that’s wonderful, of course, but just run the thought experiment of summing together all of those A/B tests. And then look at your top-line results. Rarely does it match.

The most obvious way to see this is to test something high up on a funnel, for example maybe the landing page where a new user hits, or an email that a re-engaged users opens – you can see that a big lift on the top of the funnel flows down unevenly. Each step of friction burns off the low-intent users that are flowing step-by-step.

Be skeptical of internal results, but more importantly, external case studies too
If you’re at a big company and another team publishes a test result, make sure you agree on the actual final metric you’re trying to impact – whether that’s revenue, highly engaged users, or something else. Make sure you always review that.

Similarly, this is a reason to be skeptical of vendors and 3rd parties who have case studies that’ll increase your revenue by X just because they increase their ad conversion rate (or whatever) by X. In these kinds of misleading case studies – often presented at conferences – not only do vendors have the ability to only cherry pick the best examples that reinforce their case, but also the metric that’s highest impacted! Be skeptical and don’t be fooled.

Unlock increases to the bottom line
First, understand what’s really blocking your high-intent users. Those are the ones who’d like to flow all the way through the funnel, but can’t, for whatever reason. For Uber, that was things like payment methods, app quality (for Android especially!), the forgot password flow, etc. If you can’t pay or can’t get back into your account, then even if you use the app every day, you might switch to a different app that’s less of a pain in the ass.

Also, you can focus your experiments. You obviously get real net incremental increases on conversion the further down the funnel you go. By that point, the low-intent folks have burned off. You’re closer to the bottom line. Look the steps right around your transaction flow – for ecommerce sites that might be the process to review your cart and add your shipping info, or the request invoice flow for SaaS products, etc. Think about high-intent scenarios, for example when you hit a paywall or run out of credits/disk space/resources/etc. All of these can be optimized and it’ll hit the bottom line quickly.

Make sure your roadmap reflects reality
When it comes to your product roadmapping, yes you can definitely brainstorm and ship a bunch of +10% increases, but you need to add a discount factor to your spreadsheets to reflect reality. Can’t just add up all your results.

When you focus on low-intent folks, you’ll have to get creative to build their intent quickly. Things like being able to try out the product, having their friends into the product – these are the “activation” steps that generate intent. Here’s a great place to start – a highly relevant essay on getting users more psych’d, guest written by Darius Contractor from the Dropbox growth team.

Conservation of Intent
Many of you have directly experienced the “Conservation of Intent” but now you have a name for it! It’s tricky.

This is really a reflection of how working on product growth is really a combo of psychology and data-driven product. You can’t just look at this stuff in a spreadsheet and assume that a lift in one place automatically cascades into the rest of the model.

[Originally tweetstormed at @andrewchen – follow me for future updates!]

PS. Get new updates/analysis on tech and startups

I write a high-quality, weekly newsletter covering what's happening in Silicon Valley, focused on startups, marketing, and mobile.

Views expressed in “content” (including posts, podcasts, videos) linked on this website or posted in social media and other platforms (collectively, “content distribution outlets”) are my own and are not the views of AH Capital Management, L.L.C. (“a16z”) or its respective affiliates. AH Capital Management is an investment adviser registered with the Securities and Exchange Commission. Registration as an investment adviser does not imply any special skill or training. The posts are not directed to any investors or potential investors, and do not constitute an offer to sell -- or a solicitation of an offer to buy -- any securities, and may not be used or relied upon in evaluating the merits of any investment.

The content should not be construed as or relied upon in any manner as investment, legal, tax, or other advice. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment. Any projections, estimates, forecasts, targets, prospects and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Any charts provided here are for informational purposes only, and should not be relied upon when making any investment decision. Certain information contained in here has been obtained from third-party sources. While taken from sources believed to be reliable, I have not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. The content speaks only as of the date indicated.

Under no circumstances should any posts or other information provided on this website -- or on associated content distribution outlets -- be construed as an offer soliciting the purchase or sale of any security or interest in any pooled investment vehicle sponsored, discussed, or mentioned by a16z personnel. Nor should it be construed as an offer to provide investment advisory services; an offer to invest in an a16z-managed pooled investment vehicle will be made separately and only by means of the confidential offering documents of the specific pooled investment vehicles -- which should be read in their entirety, and only to those who, among other requirements, meet certain qualifications under federal securities laws. Such investors, defined as accredited investors and qualified purchasers, are generally deemed capable of evaluating the merits and risks of prospective investments and financial matters. There can be no assurances that a16z’s investment objectives will be achieved or investment strategies will be successful. Any investment in a vehicle managed by a16z involves a high degree of risk including the risk that the entire amount invested is lost. Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by a16z and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by a16z is available at https://a16z.com/investments/. Excluded from this list are investments for which the issuer has not provided permission for a16z to disclose publicly as well as unannounced investments in publicly traded digital assets. Past results of Andreessen Horowitz’s investments, pooled investment vehicles, or investment strategies are not necessarily indicative of future results. Please see https://a16z.com/disclosures for additional important information.