Leveraging Location… Delivering Results

By Barb Pellow, InfoTrends

An estimated 70% of all business data contains a geographic component, be it an address, a parcel number, or a proximity to another location. The ability to visualize spatial data and understand relationships between specific locations is called location intelligence, and it helps organizations make more strategic business decisions. By leveraging location-based data, companies can identify business growth opportunities such as choosing profitable locations for expansion, streamlining delivery routes, and improving information sharing throughout their organizations.

Priszm LP: More Effective Targeting through Location Intelligence

A few weeks ago, I had the opportunity to interview Aaron Leibtag, Director of Financial Planning & Analysis for Priszm Income Fund. Priszm LP is Canada’s largest independent restaurant operator and one of the world’s largest Kentucky Fried Chicken (KFC) franchisees. The firm owns and operates more than 400 KFC, Taco Bell, and Pizza Hut restaurants in seven provinces across Canada. Priszm has a 20-year history of distributing customer coupons, typically conducting about 10 different programs and distributing more than 30 million flyers per year. In 2008, Priszm achieved an impressive redemption rate of 5.7%, but the company believed that understanding the demographics and location of its customers would enable more effective targeting.

“In 2009, we wanted to drive more sales with an even lower direct mail budget,” Leibtag states. “We partnered with Pitney Bowes Business Insights (PBBI) to improve redemption rates through customer-centric targeting.” The company began considering all of the variables that factor into a direct mail campaign, including the number of flyers per store, where to drop the flyers, price points, flyer format, timing of drop, and the type of coupon offer.

In the first phase of the project, Priszm worked with PBBI on a KFC Flyer optimization analysis. Each trade zone was analyzed to enable a greater understanding of the neighborhoods around each store. The trade zones were classified into market segments or “clusters” that correlated with individuals’ preferences or behaviors.

Neighborhoods were scored based on the propensity of the residents to spend at a KFC restaurant, accounting for proximity to the restaurant, competition in the trade zone, and coupon redemption at each store. Individuals that fell within the “Mobile Blues” or “Urban Verve” profiles fit the demographic and psychographic characteristics of the desired target market. Rather than blanketing a broad area with direct mail, Priszm could actually target specific neighborhoods. According to Leibtag, “Our marketing efforts have become highly customized, taking into account restaurant drive time, sales history, and consumer behavior. Priszm has identified new neighborhoods to target and has stopped flyer distribution to others.”

Figure 1: KFC Flyer Optimization Analysis



The Bottom Line

“Location intelligence is key,” Leibtag concludes. “We are using data to take a customer-centric approach to the market. The ROI is compelling—our redemption rate has increased and the sales per flyer has doubled.” Location intelligence has helped KFC find customers with big appetites for special offers!