What Makes Calculating the ROI of Beta Testing So Difficult?

Emily Hossellman Posted November 1st, 2016 by

For anyone that’s had to stand in front of their executives and justify their budget or make the argument for additional resources, you know that calculating the return on investment (ROI) of a business process is both incredibly hard and incredibly valuable. If you can show the impact your team is having on the company, you can justify additional spending and resources to increase that impact. But if you can’t, you’ll have trouble holding onto your budget and expanding your efforts.

For teams looking to justify the spending on their beta program, calculating ROI is particularly challenging. Conceptually, it’s easy to see the value of beta testing. You’re making improvements to your unreleased product that should lead to a more successful launch and, ultimately, a more successful company. But the numbers to back that up can be evasive. Let’s look at why.

1. It touches so many parts of the product

The first thing that makes beta ROI challenging is that beta testing touches so many different parts of your product. A good beta program will lead to improvements in your development, product management, support, quality assurance, marketing, and sales processes. Finding reliable data in just one of these areas can be challenging, but being able to track all the areas where your product is affected can feel like a monstrous task.

2. There are lots of moving parts to consider

It’s not just the beta team that’s looking to release a successful product. Every team involved is making tweaks and improvements to release the best product possible. If you see an increase in sales from this release, is it because of your beta test or because of that new marketing channel? Or is it because of that new feature that your customers were begging for forever? It can seem impossible to tell.

3. There aren’t existing standards

Beta testing is still part of an industry in its infancy, so there isn’t a robust body of research out there on this kind of testing. As a result, there’s no well-established methodology for calculating the costs and benefits of beta testing. This can make it very difficult to even figure out where to start with establishing the ROI of your beta program.

4. It’s really hard to measure

Even with the right methodology, there’s a lot of data that needs to go into a robust ROI calculation. Often, you can fairly easily determine how much your team spent on labor, units, logistics, tools, and incentives to get a good idea of the company’s investment. The tough part is quantifying the cost reductions and increased product sales that come from your beta testing efforts. Even if you’re lucky and your company has a lot of data on previous beta tests and resulting product launches, you will still probably have to make a lot of assumptions to build a complete ROI calculation.

Still, estimating the ROI of your beta can be done. With 15 years of experience and hundreds of beta tests under our belt, we’ve seen all of these challenges with every product type under the sun. We’ve funneled that experience (along with months of research) into the model we use today to evaluate the ROI of beta testing.

While every product and company is different, our model and calculations give you the language and starting place to see where your beta program is contributing to your company’s bottom line and model out the potential impact. In our recent webinar, we took a deep dive into beta testing ROI and how to conceptualize it, calculate it, and present it to your executives. If you’re looking to better understand the value beta brings to your organization, you should watch the recording and then download our complete Beta Test ROI Kit.

Download the webinar recording now!

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