ATAR – Why you should focus on this for Customer Acquisition

Usually I am the kind of guy who thinks that as far as Business based Models go

These

Make far more sense than this

 And the fact that most of you are still looking at the Victoria’s Secret picture (both men and women) should be enough to prove my point.

Now if you may be so kind, so as to tear your eyes off the picture on top, I want to talk to you about ATAR.

As a Model for Customer Acquisition and Revenue Projection, ATAR is very simple to understand. Theoretically is makes sense, its easy to describe, fairly easy to follow and makes financial projections really easy for fictitious business plans.

 

In short its too simple to work… or is it?

Most B-Schools I know of, don’t really teach this model for customer acquisition and revenue projection. Well the problem may lie with the fact that ATAR is just common sense. Then again if they taught a course on Common Sense it would probably make MBAs far better equipped to deal with the world.

ATAR, as per me, for aspiring and real entrepreneurs should be considered a way of looking at ‘critical’ issues related to Customer Acquisition. I know of a few successful guys who use this ‘way of looking at stuff’ to make things work for them.

 

What is ATAR?

ATAR stands for Awareness, Trial, Availability and Retrial. Essentially the four stages of converting a customer.

This is what it looks like.

The idea behind this model is simple and this is my take on how an entrepreneur could look at it.

Universe (U) is the total (TMS) Target Market Segment for your Product/Service

Awareness (A) is the total number of people out of (U) who are or should be aware of your Product/Service

Trial (T) is the total number of people from (A) who have or should try your Product/Service

Availability (V) is the total number of people to whom our Product/Service is or may be accessible

Retrial (R) is the total number of people who have or may retry the Product/Service

 

How Does it Work?

For those who know how ATAR works, you might as well go to the next section.

Now for projections one can make educated guesses regarding the total market size for a year which is (U)

Lets take (U) = 400 People

As an entrepreneur you target that for the year 2012, you will make atleast 30% of these aware of your product

[So (A) = 30% of (U)] & (A) = 12o People

You plan to have atleast 50% of these people try your product

[So (T) = 50% of (A)] & (T) = 60 People

You now plan that 30% of these people will have your product readily available

[(V) = 30% of (T)] & (V)  = 18 People

You finally feel that out of these, atleast 50% will retry your product

[(R) = 50% of (V)] & (R) = 9 People

Lets say that the price of this Product is Rs. 100

So you plan to achieve (R)X100 = Rs. 900 for the year of 2012 (Considering that all product trials were at 100% discount/promotion)

What it also means is that the Total Market Potential (U) is 400 X 100 = Rs. 40,000

So your startup has been able to achieve (A%) X (T%) X (V%) X (R%) = 30% X 50% X 30% X 50% = 2.25% of the Total Market Potential in 2012

Please Note – In actual projections a number of issues come into play, but one may treat this as a BASIC model for revenue projection.

 

Thanks for the Maths – Not Interested

The brief and simple example was to just warm you up for what my real (non-mathematical) point was.

When you create an ATAR for your startup, don’t look at it for revenue projections but as a tool for Customer Acquisition.

And most importantly ask yourself and your team

What steps are we taking to move from (A) to (T) to (V) to (R) so that we MAXIMIZE the conversion?

 

So how can an Entrepreneur use ATAR?

Lets say you are running a Cafe.

Then the ATAR model should make you ask the below questions for every stage.

Now these questions could form the basis behind you Customer Acquisition or Sales & Marketing efforts.

(U) – How many people, specific to your TMS, exist?

1. How many households exist in the localities around your cafe?

2. How many schools, colleges, offices etc exist?

3. What is the general age of people living in various localities?

4. What are the kind of jobs, incomes, businesses etc these people are involved in?

5. How many newspapers are delivered in the localities around?

6. How many cable connections are there in the localities around?

The above questions will give you and your team a fair idea about the number of people who exist in your TMS universe

(A) – How many people are aware of the cafe and its offerings?

1. How many people talk or engage with you on Social Media?

2. How many people have called your cafe up for enquiries?

3. How many people have your marketing efforts been directed at?

4. How many people have been met by you or contacted through cold calling?

5. How many people have been sent newspaper pamphlets about your cafe?

The above questions will give you a good idea about awareness

Similarly for 

(T) – How many people came to our cafe due to promotions and discounts?

1. How many people came on special promotional days and nights?

2. What is the change in new traffic on cafe festivals or theme nights?

(V) – To how many people is our Cafe easily available and convenient?

1. How many households are at walking distance?

2. How many schools, offices, institutions, businesses etc are at walking distance?

3. How many buses, autos, cars etc ply near or on the road of the cafe?

4. How many F&B businesses are based around the cafe for spill-over effect?

(R) – How many people have come back to the Cafe?

1. How many people have utilized offers on loyalty cards?

2. How many credit or debit cards have been used multiple times?

3. How many people does the Cafe staff recognize as regulars?

4. How many businesses have credit agreements with us?

The above questions are simple questions an entrepreneur can ask himself and his team while trying to determine Customer Acquisition or Sales and Marketing success of this cafe.

 

Furthermore….

Because he now knows that (U) X (A)% X (T)% X (A)% X (R)% = Total customer acquisition.

So now he can get PROACTIVE and in a sense, he can get empowered by these numbers.

 

How?

Because now he knows which part of the ATAR model he needs to improve at in order to increase customer acquisition.

If he sees that for his cafe, the below is the state of affairs

100 X 20% X 50% X 50% X 10% = 5

(U) X (A)% X (T)% X (A)% X (R)% = Total customer acquisition

Then he needs to really look at why his Awareness and Retrial numbers are so low!

Digging deeper he might find that he isn’t sending out enough paper pamphlets or that his banners are put up at the wrong places, his social media efforts are not really that good or maybe his cafe location hides it from incoming traffic. He now needs to remedy the above to get his Awareness (A)% up to acceptable levels.

His retrial numbers maybe low because the prices are too high, the loos are not clean enough, the staff doesn’t do a good job at recognizing people and servicing them or just simply, his coffee is really shitty.

 

The trick here is to always have this model in front of you and your team. To keep measuring these numbers. Keep communicating these numbers to your team and keep finding solutions to them.

Like they say – “A big part of the problem is usually the lack of realization of it” – Startup Yapper.