Beta testing plays an integral role in the development and success of any technology product. It can be difficult, however, to pinpoint and quantify exactly how your beta program is impacting your company’s finances. You may have a feeling that beta improves the quality of your product and the success of its launch, but it can be difficult to see exactly where the return on investment (ROI) of your beta test is coming from. Here are five places to look to see the savings beta brings to your company’s balance sheets.
1. Post-Release Defect Correction
Finding and fixing bugs during beta can feel costly, but it’s nothing compared to fixing bugs in a released product that’s already in the hands of thousands of paying customers. Solving bugs at that stage can involve long hours, emergency patches, or even a complete recall of your product. The general maxim is that the earlier you find a bug, the less expensive it is to fix it. This is one of the easiest places to measure beta ROI, because you can simply take the number of bugs you fixed during beta and compare the cost of fixing those bugs to how much you would’ve spent fixing such issues after launch and easily see the value your beta brought to the success of the product.
2. Product Returns
In the United States, the total value of products returned every year is estimated at $100 billion, making returns a significant source of lost revenue. Beta testing improves the quality of your product by unearthing critical bugs to be fixed, identifying problems with the out-of-the-box experience, and preparing your support team. These improvements can decrease the likelihood that a customer will return your product, saving you the lost revenue and the cost of handling returned products.
3. Support Costs
A solid beta test can help your support team immensely as they prepare for your product launch. Most obviously, by finding and fixing bugs during beta you’re preventing your support team from spending time helping customers deal with those bugs. This provides a clear ROI for your beta test by itself, but you also need to consider how your beta test has helped your support team handle the remaining support challenges. During the beta test your support team gathers valuable data on how customers use your product, feedback on support documentation, and information about known bugs your customers may encounter. This makes their job easier and smoother once your product is released into the wild, which improves your customer’s experience and your bottom line at the same time.
4. Product Warranties
While there’s a lot of variation among warranty policies, most companies hold a portion of their sales income in an account to cover estimated warranty costs for the duration of the warranty. Holding this money in reserve can tie up a significant sum for your company (usually between 2.5% and 4.5% of revenues). By running a thorough beta test, some companies can reduce their estimated warranty liabilities, which can have a huge impact on the amount that needs to be tied up. Consider, for example, a hardware product with $50 million in gross sales. If beta testing can help them reduce their estimated warranty liabilities by .5%, that’s $250,000 in savings that can be attributed to your beta program.
Finally, sales is where beta can have the largest (but most difficult to quantify) impact. The quality of your product is going to be reflected in product reviews and word of mouth. If customers are confused during the installation or setup of your product, or if your support team isn’t able to help them with the problems they discover, you can bet they’re going to talk about it to others. Nearly 70% of U.S. adults say they actively research products and services online before purchasing, with 80% saying negative information caused them to change their mind about a product. That kind of influence can severely affect the sales of your product. A good beta test can mitigate these risks and even give you a pool of enthusiastic brand evangelists to praise your product once it’s out.
These five areas are great places to look to see the impact of your beta program. If you want to take it to the next level and quantify this impact, consider downloading our ROI kit. Our kit has a whitepaper that walks through how we calculate the ROI of beta in all these areas and includes a calculator for you to measure the ROI of your beta tests.