Terms

Champion/Challenger Test

A Champion/Challenger test is a method for comparing different operational decision strategies in a live production environment. This technique pits the current, established approach, known as the "champion," against one or more alternative strategies, or "challengers." By routing a portion of real-time transactions to each, organizations can measure their performance against key metrics to identify the most effective decision logic.

Applications in Industry

The Champion/Challenger framework is widely adopted across various sectors. In finance, it's used to refine credit scoring models and fraud detection algorithms. Insurance companies leverage it to optimize underwriting rules and claims processing logic for better risk management.

Retail and e-commerce businesses apply this method to test dynamic pricing and personalized recommendations. Telecommunications companies can compare models for predicting customer churn. This continuous testing allows businesses to adapt and improve their core operational strategies in real-time.

Benefits and Challenges

While the Champion/Challenger model offers a powerful method for refining business logic, it presents both significant advantages and implementation challenges. It allows for safe, data-driven experimentation in a live environment, directly measuring impact on key performance indicators.

  • Optimization: This approach enables continuous, data-driven improvement of core operational decisions. By testing new strategies against a proven champion, companies can safely enhance performance and adapt to market changes without major disruptions.
  • Complexity: Implementing a proper test requires significant technical overhead. It involves managing traffic distribution, ensuring unbiased sampling, and monitoring results in real-time, which can be resource-intensive to build and maintain.

Champion/Challenger Test vs. A/B Testing

While both methods involve experimentation, their core applications and strategic focus differ significantly.

  • Champion/Challenger: This test is used for optimizing complex, operational decisions in a live production environment. It focuses on improving core business logic, like risk models or pricing strategies, by measuring real-time impact on key business outcomes. It's ideal for enterprises wanting to refine internal processes safely.
  • A/B Testing: This method typically compares variations of a single user-facing element, such as an email subject line or a webpage layout. It's primarily used in marketing to optimize user engagement and conversion rates, making it well-suited for testing specific changes in customer-facing campaigns.

Implementation Strategies

This is how you can set up a Champion/Challenger test.

  1. Define the "champion" model—your current, best-performing strategy.
  2. Develop one or more "challenger" models with alternative logic.
  3. Route a small, random portion of live traffic to the challengers, with the majority going to the champion.
  4. Measure the performance of all models against predefined key performance indicators (KPIs).
  5. Promote the winning model to become the new champion and repeat the cycle.

Case Studies and Examples

The Champion/Challenger model is applied across industries to validate and improve core business processes. Real-world applications demonstrate how companies use this method to drive better outcomes. Here are a few common examples:

  • Lending: Testing a new credit approval model to lower default rates.
  • Marketing: Comparing different promotional offers to maximize customer lifetime value.
  • E-commerce: Evaluating a new product recommendation engine to increase conversion.
  • Insurance: Refining a fraud detection algorithm to reduce false positives.

Frequently Asked Questions about Champion/Challenger Test

How much traffic should be allocated to a challenger model?

Start by routing a small portion of traffic, often 5-10%, to the challenger. This minimizes potential negative impact while still collecting sufficient data. The allocation can be increased as confidence in the challenger model grows, ensuring a controlled rollout and risk mitigation.

Isn't this just another name for A/B testing?

While similar, Champion/Challenger tests focus on optimizing complex, back-end operational logic like risk models. A/B testing, in contrast, is typically used for front-end, user-facing elements like ad copy or button colors to improve engagement or conversion rates.

How do you manage the risk of a poorly performing challenger?

Risk is managed by allocating only a small fraction of live traffic to challengers. Continuous monitoring of key performance indicators is crucial. If a challenger underperforms significantly, it can be quickly disabled to limit any negative business impact, preserving operational integrity.

Other terms

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Sales Playbook

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Data Warehousing

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Smarketing

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Lead Management

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Email Deliverability

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Application Programming Interface

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Quality Assurance

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Customer Retention Cost

Customer Retention Cost (CRC) is the total amount a company spends to keep an existing customer over a certain period of time.

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Regression Testing

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Cross-Selling

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Predictive Lead Scoring

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Sales Manager

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Lead Enrichment Tools

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Digital Strategy

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Email Verification

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Infrastructure as a Service

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Revenue Operations (RevOps)

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Behavioral Analytics

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Sales Process

A sales process is a structured set of steps that a sales team follows to move a prospect from an initial lead to a closed customer.

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Sales Objections

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MOFU

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AI Sales Script Generator

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ETL

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Call for Proposal

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Account-Based Advertising

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Sales Forecast Accuracy

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Sales Forecast Accuracy

B2B Marketing Channels

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API

An API (Application Programming Interface) is a software intermediary that allows two applications to talk to each other and exchange information.

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Employee Engagement

Employee engagement is the emotional commitment an employee has to their organization, motivating them to contribute to the company's success.

Employee Engagement

Buying Cycle

The buying cycle is the journey a customer takes from first realizing they have a need to making the final purchase decision.

Buying Cycle

Hybrid Sales Model

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XML

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XML

Sales Sequence

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Territory Management

Territory management is the process of segmenting customers into groups by geography or other factors to optimize sales efforts and resources.

Territory Management

Sales Lead

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Dialer

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Expansion Revenue

Expansion revenue is the extra money a business makes from its current customers via upgrades, new products, or additional services.

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Value Statement

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Sales Engineer

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Sales Engineer

Sales Kickoff

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Sales Kickoff

Order Management

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Order Management

Sales Conversion Rate

Sales conversion rate is the percentage of prospects who take a desired action, like making a purchase, turning them into customers.

Sales Conversion Rate

Sales Enablement

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Sales Enablement

Omnichannel Sales

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After-Sales Service

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After-Sales Service

Latency

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Deal-Flow

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Lead Enrichment Software

Lead enrichment software adds crucial data to your leads, like contact info and firmographics, to help you better understand and engage them.

Lead Enrichment Software

Reverse Logistics

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Edge Locations

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Sales Prospecting Software

Sales prospecting software automates the process of finding, contacting, and tracking potential customers to help sales teams build their pipeline.

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Challenger Sales

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Outside Sales

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Product-Led Growth

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Outbound Lead Generation

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Touches

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Text message marketing

Text message marketing is a strategy where businesses send promotional messages, offers, and updates to customers via SMS or MMS.

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Cybersecurity

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Cybersecurity

Account Management

Account management is the post-sales practice of building and nurturing long-term relationships with a company's most valuable clients.

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Batch Processing

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Logo Retention

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Bounce Rate

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Applicant Tracking System

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Phishing Attacks

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Regression Analysis

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Freemium Models

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Ad-hoc Reporting

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Contact Discovery

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Compounded Annual Growth Rate

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Stakeholder

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Ballpark

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Omnichannel Marketing

Omnichannel marketing creates a seamless, unified customer experience by integrating a company's various communication and sales channels.

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Google Analytics

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Dynamic Territories

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Sales Cycle

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Marketing Funnel

The marketing funnel is a model illustrating the path potential customers take, from initial awareness to making a purchase.

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End of Day

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End of Day

High Availability

High availability (HA) describes a system's capacity to function continuously with minimal downtime, ensuring consistent operational performance.

High Availability

Sales Engagement

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Brand Loyalty

Learn about brand loyalty, including how to build brand loyalty, benefits of brand loyalty, measuring brand loyalty, & strategies for increasing loyalty.

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Buyer Intent

Learn about buyer intent, including understanding buyer intent signals, strategies to capture buyer intent, & buyer intent vs. customer interest.

Buyer Intent

Vertical Market

A vertical market is a niche where businesses cater to a specific industry or group of customers with specialized needs, not the mass market.

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Objection

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LinkedIn Sales Navigator

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Performance Plan

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Lead Velocity Rate

Lead Velocity Rate (LVR) is the growth rate of your qualified leads, measured month-over-month. It's a key indicator of future revenue.

Lead Velocity Rate

Buyer Intent Data

Learn about buyer intent data, including sourcing and interpreting buyer intent data, & key metrics in buyer intent analysis.

Buyer Intent Data

Lead Generation Software

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Lead Generation Software

Technographics

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Technographics

Forecasting

Forecasting uses historical data to make informed predictions about future trends, helping businesses anticipate outcomes and plan accordingly.

Forecasting

Average Revenue per Account

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Average Revenue per Account

Pay-per-Click (PPC)

Pay-per-click (PPC) is an ad model where you pay a fee each time your ad is clicked. It's a method of buying targeted visits to your website.

Pay-per-Click (PPC)

Electronic Signatures

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Electronic Signatures

Cloud-based CRM

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Cloud-based CRM

Account

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Account