The Propensity to Refer® data model is a customer segmentation tool that predicts each customer’s likelihood to refer at the point of purchase.
How does it work?
Each customer is segmented into one of two groups: those with a High Propensity to Refer and those with a Low Propensity to Refer.
The model updates weekly to use the most relevant and up-to-date information. It adapts dynamically to changing customer behaviour.
These groups are shown different experiences optimised for conversion: High Propensity to Refer customers are shown referral offers, while Low Propensity to Refer customers are shown alternative actions based on business goals.
Example drivers used to predict customer behaviour
| Driver | Impact on Prediction |
|---|---|
| Currency | Very high |
| Number of past orders | High |
| Marketing opt-in status | High |
| Operating system | Medium |
| Revenue from most recent order | Medium |
| Number of past shares | Low |
Alternative actions are based on 3 business goals:
- Show a discount on the next order to increase repeat revenue
- Show a newsletter sign-up to grow the marketing database
- Present incentives tailored to each segment to optimise referrals and increase revenue
Some helpful terminology:
- High Propensity to Refer (High PTR): Customers most likely to refer. Usually shown a referral offer.
- Low Propensity to Refer (Low PTR): Customers least likely to refer. Usually shown an alternative option (e.g., IFA, NPS).
- Control: Customers who qualify as Low PTR but are shown a referral offer. Used for experimental comparison:
- Measures effectiveness of alternate actions and revenue trade-offs.
- Improves future predictive model accuracy by observing reaction to referral offer.
How do we calculate the additional value of the Propensity to Refer®?
We compare the performance of the Low PTR group receiving an alternative action with the Control group receiving a referral offer.
How are your customers being segmented?
The following example shows an aggregated view of the proportion of customers by propensity group. Proportions may vary at the experiment level.