How targeted testing uncovers hidden profit opportunities

Most small business owners track their numbers, but the details that matter most often get buried in averages. Averages give a sense of the big picture while concealing the performance gaps between what works and what works far better across headlines, salespeople, lead sources, and price points. Understanding that variability and testing it consistently is where the real profit lies.

On today’s episode of Strategic Edge, Jay Abraham, Executive Coach, Founder and CEO of the Abraham Group, explains why variability is the most important data point in any business, and how owners can start using it to their advantage.

Don’t depend on averages

Most business owners think they have a handle on performance because they track the numbers. Abraham says that habit creates a blind spot. Averages compress data into a single figure that smooths over gaps between top and bottom performers.

"If you don't know those things because you don't analyze the variability of different responses, different dynamics, you are leaving enormous profit on the table."

“When you come from the world that I come from… You realize that different ways of doing things, saying things, pricing things, positioning things, proving things, can produce dramatically different outcomes,” Abraham said.

The same ad spend, the same market, and the same audience can yield wildly different results depending on how a business executes. Abraham says most owners never discover that because they stop at the average and never look deeper.

Understanding variability

The fastest way to understand variability is to change one thing and measure what happens. Abraham gives a headline, email subject line, or opening sales pitch as an example of one such variable. Keeping everything else the same and changing just that one element can show you what works and what doesn’t. Changing just that one variable can lead to major results overall.

“You can change that alone, all things being the same, same amount of spend, same amount of market, same amount of space if it’s an ad, and it can be up to 21 times. That’s 2,100% by doing that. Now, it’s rare, but I’ve seen regularly three to five times better,” Abraham said.

Abraham points to other variables, testimonials, guarantees, warranties, risk reversals, bonuses, and price points, as other areas that can be independently tested. 

“If you combine them, it’s hundreds of percent from the same amount of spend, the same audience, the same recorded ad, if it’s a commercial,” Abraham said.

Real world examples

Abraham pointed to three examples where changing just one variable resulted in major shifts in performance.

The first example involves a cheap two-way radio. A friend of Abraham’s found that a cheap Japanese-made walkie-talkie could replicate the CB radio experience for about a thousand feet on the highway and cost only about two dollars. At first, he marketed it as a walkie-talkie, but sales were slow. He repositioned it as a pocket CB and saw sales rise to over 10,000 units.

The second example is the classic business book Think and Grow Rich. Originally, the book had a much sillier title, How to Use Your Noodle to Make a Boodle, but it didn’t sell. Simply changing the name and nothing else led to hundreds of millions of copies sold.

The third involves a gold investment client. The client’s ads ran in the Wall Street Journal, Forbes, and Barron’s, promoting two-thirds bank financing on silver and gold. The ads were profitable, but Abraham saw a better headline. Gold was selling at $300 an ounce at the time, and the bank would finance two-thirds of the purchase.

“What it means is if gold is selling for $300 an ounce, if you send me $100 an ounce, I’ll buy you all the gold you want. And I said, that’s the outcome. That’s the benefit,” Abraham said.

The headline change produced a fivefold increase in buyers. The headline should always state the highest and most significant benefit or outcome, not just a simple fact, he says.

Lead quality vs. lead volume

Many dealers and small business owners set a flat cost-per-lead target and treat all leads as equal. Abraham says that approach misses the point.

“When you go very, very granular and very nuclear and very analytical in analyzing lead flow, you’ll see that certain sources of leads are much more valuable than others,” Abraham said.

Certain propositions attract better buyers. Certain ad approaches produce customers who spend more and return more often, Abraham says. Owners who don’t analyze lead variability at that level are leaving significant profit on the table, not because their marketing isn’t working, but because they have no idea which parts are working best.

Play to your strengths

Every sales team has strengths and weaknesses, but most businesses never identify them. Without that information, businesses often assign new leads to salespeople on a rotation, and Abraham says that approach leaves significant profit untapped.

“That is very inefficient because salesperson one may not be the best suited for the need of prospect one,” Abraham said.

A first-time buyer routed to a truck specialist is a mismatched opportunity. Abraham suggests a concierge model, where a dedicated person routes customers to the best-matched salesperson. The result is a higher closing ratio and greater gross profit per customer.

Certain people are better at opening accounts, others at holding margins, others at retaining customers, Abraham says. Most businesses assign opportunities randomly and never capture the performance gap between their best and least effective salespeople.

“I look at selling as if you inherited a very rich parcel of land that you retained a tenant farmer to work. That beautiful parcel had the ability to produce four very rich crop yields a year. But the person you put in to work it had never made a lot of money, never learned how to get the maximum number of bushels,” Abraham said.

Seeing past the ceiling

Abraham says the root of the problem is that most small business owners accept their current results as the ceiling because nobody has ever shown them otherwise.

“Most people are not taught, not trained, not exposed to the fact that in all probability, what they do, how they do it, the way they do it, where they do it, who they use doing it. They think that’s all that’s possible,” Abraham said.

He estimates that 85% of small and medium business owners don’t understand variability. Most local agencies, online service providers, and sales trainers don’t understand it either, he says. 

"They don't test to see if that's the best thing to say. They don't test to see if that's the best voice to use. They just say, okay, I'm going to give it this. In my world, that's the most promiscuous, wasteful thing to do." 

It’s something Abraham is seeing as more businesses utilize artificial intelligence. Abraham says most businesses building AI agents simply assign them a script and a voice and deploy them without further testing.

Don’t tell the market what to think, ask

Abraham traces his philosophy to a mentor who gave him a principle he has carried throughout his career, asking the market rather than telling it.

“Neither you nor your clients or their directors, investors, stakeholders, or family have the right to tell the market. They have the responsibility and the opportunity to ask the market, because the market will tell you the best and better things to do by their response,” Abraham said.

Testing one approach against another is how the market answers. It’s something Abraham has done for large corporations, but he says it scales to a business of any size. A single word change at the point of sale could add $1,000 per week for a small operation or $100,000 for a larger one.

Simply start testing

Abraham says he could identify 500 testable variables in any business at any given time. But the starting point doesn’t have to be that complicated. The key, Abraham says, is simply to start testing and making changes based on the results.

“If you don’t test these kinds of assumptions and hypotheses and variables, you’ll never uncover the enormity of stored value and unrealized profit that just sits in what you do and who you do it with,” Abraham said.