Territory Optimization: A Game-Changer for Growing Franchises

Territory Optimization: A Game-Changer for Growing Franchises

Today’s franchisors face two big challenges: identifying the best territories for expansion and then developing those territories to the fullest. Through territory optimization, franchisors can create a plan that results in maximum revenue, minimum cannibalization and happier franchisees.

The First Step: Understanding Your Customer Base

In the past, many franchises used crude analytical tools and even guesswork to determine the best territories to develop and where to place stores within them. Today, you can tap massive databases to determine the territories with the best growth potential. By developing a remarkably in-depth profile of the people who shop or dine at a store or restaurant, you can understand exactly who your customers are. From there, you can search anywhere in the U.S. for people who share their unique characteristics. When you find large concentrations of likely customers, you’ve discovered a prime territory for expansion.

How Territory Optimization Yields Multiple Benefits for Franchises

In essence, territory optimization is an accelerated plan for growth, helping you understand where to locate stores without overselling or underselling a market. Through territory optimization, you can:

Pinpoint the territories that offer the greatest potential. When you’re lucky enough to have a franchise with broad appeal, virtually all of the U.S. is wide open to you. However, you want to begin your journey in areas with the highest likelihood of success and expand from there.

Make decisions backed by hard, objective data. When it comes to market areas and site locations, everyone has an opinion. With real data on your side, you can answer key questions with absolute certainty. Where are the largest concentrations of likely customers? Which sites will allow you to attract these customers? How many total stores will a territory support before you reach maximum market penetration? How much revenue is each store likely to earn?

Avoid underselling a territory. Before you sell a territory, you want to be sure you completely understand its worth. The last thing you want to do is sell what you think is a low potential territory and then realize it’s capable of sustaining many more stores.

Reduce cannibalization between franchises. The quickest way to an unhappy franchisee base is to oversell a territory. If the stores are too close together, one will take business from another. If they’re too far apart, then you’re leaving profits on the table. By developing a territory layout with clear boundaries, franchisees know exactly where their areas of opportunity lie.

Prevent franchisees from making costly mistakes. Often, franchisees lack the experience necessary to accurately judge a particular market or site location. Through the underlying analysis that supports territory optimization exercises, you can direct them to better sites that work within the overall company strategy and ensure a steady stream of customers for their stores.

Improve the ROI of your marketing program. When you know exactly who your customers are, there’s no need to blanket the entire area with your marketing message. You and your franchisees can develop highly targeted programs using a mix of online and offline mediums to capture the attention of your audience and make them loyal consumers of your brand.

Tailor your product mix to the surrounding customer base. Since you’ll know the specific attributes of your customers – from their age and income to their lifestyles and brand choices – stores within a territory can make subtle changes to their products, services and décor to cater directly to customer tastes.

As you can see, territory optimization analysis can completely change the way you view the growth and expansion of your retail or restaurant concept. The more you use it, the more valuable it can be: data insights from one territory can be deployed as you enter the next territory, furthering your success.

Want to learn more? Find out how Buxton’s Territory Optimization can help you thrive in a highly competitive marketplace.