4 Common Mistakes Franchisees Make With their Geographical Analytics
Geographical analytics are at the core of many decisions that you'll make about your business. Whether you're trying to decide where you want to open a new franchise or who you want to advertise to, analytics will tell you where your customers are and what they're interested in. Nevertheless, there are some mistakes that franchisees can make when they're looking at their analytics. Data is only one part of a thorough analysis; you also need to be able to derive actionable, insightful information from that data as well.
1. Making False Assumptions Regarding Purchasing Habits
It's not enough to know where your consumers live -- you also need to know where they make their purchases. Franchisees may note that there is interest in their product within a certain area, but that product may simply be where their consumers live, not where they generally buy. This is extremely common in suburban areas, where a new franchisee might assume that there's a lot of interest inside of a suburban neighborhood. Later on, they may discover that a significant amount of purchasing for those households actually occurs in the city, where they spend the majority of their day. This is where driving time, commutes, and other important factors will need to be identified.
2. Assuming That Interest is Equal to Commitment
Luxury products, in particular, tend to have issues regarding the difference between interest and commitment. Your product may have a lot of interest in a certain area, but that doesn't mean that they will actually commit to a purchase. This is where audience demographics come into play. If your geographic area has both the interest and the income, it's more likely that your franchise will be successful. But if your geographic area has interest with low income, the interest may be purely speculative at best. Geographic information should always be primed towards the demographic that is most ideal for your product.
3. Failing to Collect Enough Information to Make a Determination
There's a reason why scientists tend to work with exceptionally large sample sizes. The more data you have, the more accurate it will be. If you poll 10 people, a single person having an off day will skew your data. If you poll 100 people, that's far less of a problem. Having the right software solution and the ability to quickly acquire demographic information and other key data points is essential to getting actionable insights from your data instead of just interesting information. While you can consider smaller data sets, you should rarely make any actual assumptions based on them.
4. Not Keeping Their Data Updated
Geographic territories change suddenly all the time. There may be new developments going up or local economic situations that a franchisee simply isn't aware of. Data has to be fresh if it's to be useful, especially when it comes to marking out territories and finding new areas of expansion. Otherwise a franchisee may find a seemingly perfect location only to discover that it has been virtually emptied in the past couple of years by the oil price crash. Data for marketing should be monitored on at least a quarterly basis to also account for such changes.
Franchisees need to make sure that they are working with the right data sets and that they are drawing the correct conclusions before they take action regarding drawing or developing their territories. Nevertheless, when used properly, geographic data will empower a franchisee to make the right choices about their company's future. Through properly compiled and analyzed geographic data, franchisees can appropriately find, target, and fine tune their customer base.
Here's another article that you might like: How Geo-analytics can Improve Your Business
Mike is the Co-Founder and CEO at Fract. With over 20 years of retail and business location analytics experience behind his belt, Mike counsels business owners and helps them get the most out of their business and sales data. He is also a passionate art lover and enjoys a glass (or two) of good wine with friends and family on the weekends.