Hidden Influences of Location-Based Profiling
In the late 1980s, our work to design franchise territories and evaluate sites revealed hidden influences of location. While analyzing customer demographics, psychographics, marketing programs and purchase behavior yielded insight, something important seemed to be missing. Certainly everyone knows that location matters. Still, the geospatial relationships between the locations of customers, stores, competitors and advertising, as well as simply how people move around has a dramatic impact on results.
Discovering the Hidden Influences of Location
An early project that led us to appreciate the hidden influences of location involved development of a 10-year plan for a nationwide franchisor of several thousand units. The objective was to create for each of the next 10 years a plan of expansion of franchisee territories. Initial efforts to profile customers were less than revealing. We were looking for demographic factors that drove the business, today and through the next 10 years.
An idea developed around the premise that as a customer lived further from a store, the more alternatives they had from which to choose. And, that the farther they were from the store and the closer they were to those alternatives, the more important was their choice to become a customer.
Hidden Influences of Customer Location and Competitive Choices
With this idea in mind, customers within two miles of the stores were eliminated from the profiling sample. A weighting of customers was established based upon the distance from the store and their proximity to competitors. This process revealed strong correlations with demographic factors which could now be used to design territories. The demographics and weighting process were used to evaluate sites.
Hidden Influences of How Customers Get There
Another project required the creation of a model that accurately predicted retail sales potential. A substantial investment was required for each franchise location and accurate predictions were essential. A group of stores were selected for modeling; a second group was established to then test the model.
Initial efforts to model based upon simply customer locations were not revealing. Considering drive times yielded better results, but still not good enough. In the end, introducing the likely route taken by customers and the competitive choices along the route supported the development of an accurate predictive sales model.
Hidden Influences of the Location of Advertising
Even in the Internet Age, the location of advertising around brick-and-mortar stores has great influence. For one client, it is the location of billboards. For another, the critical placement of sign spinners drives store traffic. One of the most unexpected findings was the impact of the location of the referral network on the success of their franchisees.
A Valuable Approach for All Franchise Organizations, Large and Small
It has been found that discovering the Hidden Influences of Location brings benefit and value to most organizations. Over the last 25 years, continuous improvement of the methods, big data technology and mapping analytics make this approach affordable for all franchise organizations.
Daniel G. Olasin, President and CEO
GbBIS Company Headquarters:
10 First Street
Wellsboro, PA 16901
18005 Skypark Circle, Suite 54 J
Irvine, CA 92614