Benefits of Customer Profiling and Site Selection Tools for Franchisors

By: Randy Murphy
Published: October 19th, 2011

Franchising is a complex business in that as a franchisor we have to fully understand two layers of customer profiles: 1) our franchise partner profile (who partners with us to develop Mama Fu's sites); and 2) our retail customer profile (who spends money at our Mama Fu's locations). We feel strongly that we know what type of franchise partner we want to build our brand around - successful multi-unit, multi-brand restaurant operators - but until recently we didn't fully understand who our retail customer was.

Like many brands, we figured our customer had a particular income and family demographic, but beyond that, what traits did they have in common? What psychographic elements drove their behaviors? And how did distance from our store affect them? We very much needed to find quantitative answers to these important positioning questions and, not surprisingly, our current and prospective franchise partners wanted to know these answers as well!

To help us implement the customer model and site selection tool set that would allow us to 1) understand our markets better, and 2) drive specific action based on our findings, we selected the Buxton Company after a noteworthy amount of reconnaissance. Buxton is a pioneer in the use of customer data to develop successful growth and business strategies. Specifically, we enlisted Buxton for the following critical activities:

• Customer profiling - Who is my customer? By using current customer data, we develop Mosaic-based psychographic segmentation profiles that identify who Mama Fu's core customers are today, and assign values to them based on drive time proximity to our locations.
• Market/site analysis and evaluation - Where should we develop new locations? We now have the ability to analyze markets and score specific sites based on the presence of core customers, daytime populations, site characteristics, consumer expenditures and behavior, and proximity to competitive and complementary businesses. The scoring is a benchmark relative to other locations in the system that can then be correlated to actual store performance. We can also use this approach from the top down to find the best intersections in the market for a Mama Fu's location.
• Identify new customers - Which households near my locations look and behave similarly to my current core customers? From the customer profile output, we search for similar core customers near Mama Fu's locations who are not currently our customers to then drive a direct marketing campaign.
• Marketing program support - What is the best approach to efficiently market to these prospective customers? Define a highly targeted direct marketing program to the prospective core customers who have been identified, then track results and build more loyal customers over time at the lowest possible levels of cost and waste.
• Enhanced delivery zoning - What is the optimal delivery zone around each location? Mama Fu's does delivery, which is about 15 percent of our total revenue. So for both new and currently operating stores, we analyze actual drive time polygons to fine-tune specific store delivery zones to maximize our reach to areas high in core customer populations.

Mama Fu's invested in these customer and site selection capabilities because we believed them to be core to our system's ability to make the most informed decisions about marketing and store development activities. The investment is proving to be a tremendous value-add operationally for our brand and current franchise partners, as well as an important component in attracting qualified multi-unit franchise prospects who expect a sophisticated franchisor with a high level of long-term commitment.

Editor's Note: This month, Mama Fu's is starting a program (Laser Funatics) using the technology tools described above, targeting the acquisition of new, loyal customers. According to Murphy:

"Our hypothesis is that we can create a repeatable, data-driven, laser-targeted, loyal customer growth vehicle that is efficiently executable in close proximity to a single location, and with extremely high ROI. This, plus local store marketing and social media efforts, could be a very strong and inexpensive three-pronged approach that could redefine and/or eliminate the need for more costly traditional media (radio, print, TV)."

In future issues of this newsletter, Murphy will report on how it's playing out, measuring expectations against actual results.

Randy Murphy is president and CEO of Mama Fu's Asian House, based in Austin, Texas. In March 2008, as the brand's largest franchisee, he formed Murphy Adams Restaurant Group and acquired Mama Fu's from Raving Brands. Since then, he has re-engineered the brand, which currently has 13 units (9 company owned and 4 franchised) and 29 new store rights in various stages of development. Contact him at 512-949-3221 or rmurphy@mamafus.com.

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