At TPG, we believe that data tells stories that humans often miss. After years of working with revenue leaders on TAM analyses, account prioritization, territory mapping and intent signal integrations, we knew we had to find a scientific approach to getting in front of the right accounts. We came upon Propensity Modeling as our answer to uncover the hidden patterns that predict customer behavior with remarkable accuracy.
Propensity modeling isn't just about collecting data; it's making sure your GTM team is answering the right questions. Which accounts are most likely to buy? Where should sales teams focus their limited time? How can we predict expansion opportunities before they're obvious?
Below is a real-world example of research on coffee shops, and how different variables impacted the average spend of each customer who walked through the doors.
Imagine this: researchers design a behavioral economics experiment set inside a coffee shop. The scenario — simplified here for clarity — draws inspiration from real-world models and serves to illustrate a powerful concept: the subtle forces that shape human decisions. Researchers tracked thousands of customer visits over a year, capturing 27 different variables to identify what did or didn’t correlate with larger purchases.
The researchers tracked variables such as:
At the end of the research, the coffee shop had effectively built a propensity model to predict how much a customer would spend.
The obvious candidates: window seats & comfy chairs. Customers sat by the window spent a massive 37% more than others, while comfy chairs increased spend by 22%. Not surprising that people prefer comfier chairs by the window, but the magnitude of the combined 59% spend increase is massive.
The intangibles: bright lights & friendly smiles. Having brighter natural lighting inside (+18%) and staff having friendly smiles (12%) adds up to another 30% increase in spending. Without the data to prove so, these are easily dismissable as having no impact on how much somebody spends in a coffee shop.
The unexpected twists: music volume, temperature and group size. All factors you’d assume would have an effect on the average order size… don’t.
We see the purpose of the propensity model as more than just delivering insights, we use the research to help our clients drive action and accelerate growth.
At TPG, propensity modeling isn't just an academic exercise—it's a competitive advantage. By understanding the subtle patterns that drive business outcomes, we help our portfolio companies allocate resources more effectively, engage prospects more meaningfully, and drive more growth.
As our coffee shop owner would be foolish to ignore the power of window seats, businesses today can't afford to ignore the predictive power of propensity modeling. In a world of limited resources and unlimited opportunity, knowing where to focus makes all the difference.
In a world of limited resources and unlimited opportunity, knowing where to focus makes all the difference.
