Retail and restaurant franchisors know how challenging and complex expanding into new markets and choosing the most profitable locations can be.
For any franchise business, location strategy is critical as the placement of stores significantly influences the success of a franchise.
After all, the number one reason a franchise fails or a site performs poorly is because of its location – which ultimately is the direct result of poor site selection.
So, how do you open homerun locations and avoid opening expensive misses?
Many people will say the tired, old axiom of “location, location, location” is still the fundamental truth of site selection. And while they’re right intellectually, the most important factor in determining a good location is usually missing from the equation when analyzing retail sites: the individual consumer.
In today’s highly competitive real estate and retail environment, franchisors that open locations without taking the customer into account are at a distinct disadvantage – especially because powerful strategic tools can be combined with enormous amounts of customer data to forecast sales results for any address in the U.S. and whether the consumers in that area are likely to become customers.
Of course, I’m speaking about customer analytics.
Customer analytics gives franchisors the ability to “predict the future” of potential locations by predicting the future behavior of customers.
Through customer analytics, franchisors obtain actionable information that will help them open successful new stores and develop meaningful relationships with existing and potential customers.
The process begins by creating a “best customer” profile – or in other words, a highly-detailed picture of your most valuable customers that goes far beyond basic demographic data such as name, age and marital status.
Once franchisors have their “best customer” profile, they have the ability to search trade areas all across the U.S. to find other consumers that match this profile.
And when they find trade areas with large concentrations of consumers who have the same characteristics as their best customers, they’ve discovered fertile ground for new locations.
From there, franchisors can examine specific sites in order to identify the one nearest to the greatest number of potential customers.
The Bottom Line
Today site selection is not about merely finding locations with the right real estate characteristics. It’s about finding customers with the right characteristics.
Learn how to open new locations with confidence using customer analytics.