One of the biggest challenges facing franchisors today is the staggering amount of competition.
Even though some large franchise groups are in periods of stagnation or even decline, there are small franchise groups that are coming of age and looking to play in the same space.
And in the current retail environment, customer analytics is what’s separating the ones who are growing from the ones who aren’t.
By using a strategy we call G.R.O.W., which is centered around using the actionable information gleaned from customer data and analytics, it’s possible to identify not only the locations that are performing well, but also pinpoint the variables that are driving that success. Those variables can include anything from the customer base around a location to the co-tenants, merchandise mix, or marketing messages.
Here’s how the G.R.O.W. strategy works.
Utilizing the G.R.O.W. grid, position each store location into one of four quadrants based on its actual and potential performance, then you would implement specific growth tactics and strategies at each store depending on where it falls on the grid.
The G.R.O.W. Strategy
- G Means Grow
The store locations that fall into the Growth quadrant are the best performing locations and have large, loyal customer bases. You’ll want to closely analyze these store locations to isolate the exact variables that are driving success so you can replicate these factors in new and existing stores, where possible.
- R Means Reposition
The stores that fall into this quadrant are those locations that seem to have all the same characteristics as the stores in the Growth quadrant, but still aren’t performing as well – meaning that despite having the key success factors, something is standing in the way of optimal performance. To identify what those obstacles are, carefully analyze and compare each of your Reposition and Growth stores. Is there a different merchandise mix? Are you spending more on marketing at one store versus another? Your analysis should uncover the obstacles to growth and subsequently the strategies and tactics you should use on these locations moving forward. These are the stores where investments of time and money would likely have a high ROI.
- O Means Optimize
The Optimize locations have few characteristics in common with the Growth locations. Maybe this is due to poor location visibility or maybe it’s because the customer base in the store’s trade area doesn’t match your best customer profile. Regardless of the reason, these stores are just not performing well – and no matter how many resources you throw at these stores, they are still not likely not perform well because they don’t share the same characteristics as your Growth stores. You have to accept the fact that the options for these stores are limited. Either you close or relocate the store, accept the weaker revenue numbers, or analyze the surrounding customer base and change the merchandise mix to be more appealing to them. But, whatever you do, don’t spend much of your time or money attempting to turn the Optimize stores around.
- W Means Why/What
To put it simply, the Why/What stores are anomalies. These are stores that on the surface should not be performing well as they don’t share the same characteristics as your growth stores, but continue to deliver strong numbers. The key step to take for Why/What stores is to identify the factors that are driving their success – even though, in all likelihood, the factors won’t be things that can be replicated at other stores. In these instances, it’s best to let these stores be and just keep an eye on competition.
The Bottom Line
The assessment of existing store performance can identify which stores are not meeting their potential, making it possible to immediately reprioritize resources such as management, remodeling funds, and marketing from the stores with no upside to the ones that are underperforming.
Interested in learning more about how customer analytics can help your franchise grow? Let us know.