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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Channel Marketing

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Lead Generation

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Voice Broadcasting

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Clustering

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Database Management

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Sales Demo

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Price Optimization

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Price Optimization

Smile and Dial

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Hybrid Sales Model

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Webhooks

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Spiff

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Personalization in Sales

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Sales Intelligence

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B2B Data Solutions

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LinkedIn Sales Navigator

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Digital Strategy

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Content Rights Management

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Account-Based Everything

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Demand

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Programmatic Display Campaign

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Warm Calling

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Lightning Components

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Sales Script

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Statement of Work

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Return on Marketing Investment

Return on Marketing Investment (ROMI) measures the revenue generated by a marketing campaign relative to the cost of that campaign.

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User Experience

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Lead Management

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Sales Operations Key Performance Indicators

Sales Operations KPIs are measurable metrics that track the efficiency and effectiveness of a sales team's operational processes.

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Key Accounts

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Key Accounts

B2B Data Enrichment

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Browser Compatibility

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Product-Market Fit

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Product-Market Fit

Load Balancing

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Load Balancing

Business Continuity

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Consultative Sales

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User Interface

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User Interface

Data-Driven Marketing

Data-driven marketing uses customer data to inform marketing decisions, optimize campaigns, and deliver personalized experiences to consumers.

Data-Driven Marketing

Dialer

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Dialer

Operational CRM

An Operational CRM is a system that automates and improves customer-facing business processes like sales, marketing, and customer service.

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Sender Policy Framework

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Sender Policy Framework

Bulk Application Programming Interface

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Bulk Application Programming Interface

Gated Content

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System of Record

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Process Automation

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Process Automation

Closed Lost

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Conversion Path

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Buying Cycle

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Sales Strategy

A sales strategy is a comprehensive plan that outlines how a business will sell its products or services to achieve its revenue goals.

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Sales Pitch

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Sales Pitch

Kanban

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Kanban

Prospecting

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Prospecting

Data Visualization

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B2B2C

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Sales Engagement

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Stress Testing

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Average Selling Price

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Mid-Market

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Representational State Transfer Application Programming Interface

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Content Curation

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Content Curation

End of Quarter

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Loyalty Programs

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Headless CMS

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Headless CMS

Programmatic Advertising

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Programmatic Advertising

Sales Pipeline Management

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Point of Contact

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Point of Contact

Closed Question

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Closed Question

Marketing Attribution Model

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Marketing Attribution Model

Value Statement

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Value Statement

Lead Enrichment

Lead enrichment adds third-party data to your raw lead lists, creating fuller prospect profiles for more effective and personalized outreach.

Lead Enrichment

CRM Integration

CRM integration connects your CRM software with other tools, creating a unified system for all your customer data and business processes.

CRM Integration

Microservices

Microservices is an architecture where apps are built as a collection of small, independent services that communicate with each other over APIs.

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Copyright Compliance

Copyright compliance is adhering to laws that protect creative works. It involves legally using content by obtaining permission or licenses.

Copyright Compliance

Application Performance Management

Application Performance Management (APM) monitors and manages an application's performance, availability, and the experience of its end-users.

Application Performance Management

Marketing Attribution

Marketing attribution is the process of identifying which touchpoints contribute to a conversion and assigning value to each of them.

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Subject Matter Expert

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Page Views

Page views count the total number of times a page on your website is loaded. This metric is a key indicator of your site's overall traffic.

Page Views

Integration Testing

Integration testing is a software testing phase where individual modules are combined and tested together to verify their interaction.

Integration Testing

White Label

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White Label

Cybersecurity

Cybersecurity is the practice of protecting computer systems, networks, and data from digital attacks, theft, and unauthorized access.

Cybersecurity

Business to customer

Learn about business to customer, including maximizing B2C sales strategies, B2C vs. B2B: unveiling differences, & core principles of B2C success.

Business to customer

X-Sell

X-Sell, or cross-selling, is a sales strategy of selling additional, related products or services to an existing customer base.

X-Sell

Data Warehousing

Data warehousing is the process of storing and managing large sets of data from various sources for business intelligence and reporting purposes.

Data Warehousing

Sales Prospecting Software

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

Sales Prospecting Software

Call Disposition

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Call Disposition

Account Management

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Account Management

Canary Releases

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Canary Releases

CPQ software

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CPQ software

Business Intelligence In Marketing

Learn about business intelligence in marketing, including the role of data in marketing BI, key components of marketing BI, & marketing BI vs. market research.

Business Intelligence In Marketing

Commission

A commission is a service charge paid to an agent for a transaction. It's typically a percentage of the sale, rewarding performance directly.

Commission

Business Process Management

Learn about business process management, including benefits of implementing BPM, steps to effective BPM, common BPM mistakes to avoid, & BPM tools and software.

Business Process Management

Accessibility Testing

Accessibility testing is a software testing method that verifies an application is usable by people with disabilities, like vision or hearing loss.

Accessibility Testing

Sales Director

A Sales Director leads a sales team, develops strategies, and is responsible for meeting a company's revenue targets.

Sales Director