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THE MOST SOPHISTICATED performance-based segmentation technique is Advocate-Buyer-Tryer ("ABT") Analysis. MAG developed this proprietary technique to extend the power of a Predictive Analysis (See Prediction - Finding Gold in the Data). ABT Analysis provides immediately actionable knowledge useful for boosting profits from existing customers, improving customer retention and aligning sales efforts with profit potential. |
Advocate-Buyer-Tryer Analysis does just what its name implies. It segregates customers into groups of Advocates, Buyers and Tryers.
Advocates are customers who are in the most profitable (and smallest) segment. They buy a lot and they buy often. They buy from a variety of your product or service groups. It is important to know who these customers are so that you can extend special treatment to keep them happy and loyal. This is by far the most profitable segment of your customers, so retention management is the marketing goal for this group. Good retention in this group is the shortest route to maintaining your present revenue stream.
Buyers are potential Advocates. They are like Advocates in many ways but they are "not there yet". They are at least marginally profitable customers but their loyalty is not so well established. It is likely that these customers are also buying from your competitors the same products and services that you are selling to them. The marketing goal for this group is to increase your share of what these customers spend for services and products like yours. Nurturing Buyers into becoming Advocates is the shortest route to increasing your revenues.
Tryers are the largest segment of your customers -- often 80% and sometimes as much as 95% of them. It is likely that most of these customers are not profitable. That is, you are probably spending more to acquire and keep these customers than they will generate in profits with their purchases. The marketing goal for this group is to control acquisition and communication costs to keep them in line with the low Lifetime Value (See Using Lifetime Value to Prospect , one of our published articles.) of these customers. Knowing who to contact, how often to contact them and who not to contact is the key. Being smart about managing these costs is another way to maintain and improve bottom-line profitability.
HOW DOES IT WORK?
Advocate-Buyer-Tryer ("ABT") Analysis combines the results of descriptive analysis tools with the results of predictive analysis tools. Starting with any obvious relationships revealed by a simple profiling, (See Profiling - Seeing Customers In New Ways), Advocate-Buyer-Tryer Analysis goes on to link this information with the results of RFM or RFA Performance Segmentation (See Segmentation - Finding Your Best Customers) using the statistical process used to create dynamic clusters (See Clustering - A Dynamic Difference). Finally, Advocate-Buyer-Tryer Analysis uses predictive modeling techniques (See Prediction - Finding Gold in the Data) to identify demographic and psychographic characteristics associated with Advocates, Buyers and Tryers. This allows Advocate-Buyer-Tryer Analysis to predict where you can find additional customers with high Lifetime Value (See Using Lifetime Value to Prospect) who look and act like your Advocates.
WHAT'S THE BOTTOM LINE?
If all of this seems complicated, well... it is. In fact, this technique is so unique and effective that Management Analytics Grouop has been awarded "patent pending" status on this methodology.
You can take advantage of this new and powerful data-driven marketing technique.to dig profitable customers out of segments that are not profitable as a whole. It finds new customers in market segments that are approaching saturation. It finds new opportunities for growth in marketplaces that are stable or mature. In short, it can help a company break through a plateau of flat or declining sales when nothing else seems able to do the job.
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