Recent developments in new technology have allowed the likes of major supermarkets to identify customers shopping behaviour and even forecast potential sales for new stores before they are even created. Jon Newsum-Smith, GIS Manager of Overview Mapping Limited, looks at ways that franchisors can use the information that they gather to enhance their understanding of their network’s potential, and even help explain why there may be valid reasons for varied success between franchisees.

Establishing the current state of your network

The temptation for franchisors to allocate territories that are far in excess of what, realistically, a franchisee requires is obvious. This is especially apparent when a franchise is in its early stages. However a number of well established franchisors are likely to be doing this, and they probably don’t even realise it!

Territory management is an integral part of building a franchise network, optimising the UK to gain as many viable geographically sensible territories as possible is key to the development of the network. The spectrum of consideration given to this aspect of franchising ranges from a franchisor’s finger in the air “You can have Nottingham” to sophisticated postcode driven systems that analyse the housing stock, demographic profiles and commuting habits of the resident population.

Whatever approach is taken, questions that must be considered when deciding the future allocation of areas are
 Have we identified the correct business drivers that provide the demand for our business?
 Are we creating territories of equal opportunity to give each franchisee the ability to succeed?
 Has the brand awareness or market penetration of our business changed enough to justify smaller areas?
 Will new opportunities or products vastly increase the potential market we can sell to?
 Has the acquisition of some major national accounts meant that franchisees can be given more focussed territories thanks to starting with an existing customer base?
 Competition / Legislation / Consumer Behaviour – Have any of these factors had a major influence on the opportunity for the franchise?

Identifying Gaps and Opportunities

There are so many different things that franchisors need to consider, it can be difficult to understand the true potential of the network. If data is captured with regards to customers, whether done consciously via a CRM tool or by means of a customer loyalty scheme, or indirectly via invoicing records or marketing databases then analysis can be made against this. In an ideal world this will have some form of geographical aspect to it, usually a postcode. These records can then be geo referenced to give a pictorial representation of the customer locations.

The major benefit for the franchisor in undertaking this sort of analysis is that they may end up creating a number of new territories. There are also spin-off benefits for the franchisees potentially. Once a clear picture can be established with regards the location of the existing customers, areas that are not being utilised can be exploited. All of this analysis can be gained by purely identifying the full postcodes of the historical customers. Added benefits for the franchisors include being able to see if franchisees are operating outside of their designated territories, and if so, what percentage this constitutes of their work / sales. The cross referencing of total and average spend, time as a customer and frequency of visits/sales can further enhance the analysis.

A number of established franchisors have territory networks built from postal data and demographic information using the 1991 census. The reality of the opportunity in those same territories today is that there could be up to 20% more housing stock / population. Even models built upon business numbers will have changed, and although difficult to factor this in without creating a dynamic model, refreshing the figures that underpin the territory creation must be taken into consideration. Inner city redevelopment, retail parks, business parks and the huge house building programme of the last 15 years can be dismissed entirely, which results in a false view of the opportunity within a potential goldmine of a territory.

Optimising the network buy Windows 10 Key

Despite all of the information gathering and analysis that can be undertaken, in most cases it is very difficult to fully enforce the desired changes to the network; certainly in the short term. It is clear that the more mature the network, the more difficult it is to change. In most cases however there are nearly always benefits in looking into using this analysis to make some form of change to the network.

Refreshing the drivers that are used to underpin the territory models can appear to breathe life into a stagnant vacant territory. Prospective franchisees would rather see a 20% increase in population in their potential area than the old figures.

Looking into taking small untapped areas from 3 or 4 franchisees that abut each other to create a viable territory in its own right will mean more effective use of geography and more potential revenue for the franchisor.

For the franchisee this type of analysis shows them where they are doing well and where they are not, therefore this can help them focus their marketing efforts in less successful areas. Taking this one step further it can also be used to confirm that the drivers that were used to create the areas appear to correlate with the concentration of the clients. If a clear correlation is made then even very small pockets of territories can be identified as potential customers that currently may not be serviced.

Implementation of this sort of analysis, and the subsequent reaction to the results of this is clearly fraught with difficulties but where there’s a will there’s a way, but beware, franchisees are fearful of change even if it’s for their benefit!