Catchment Area
Analysis
The customer catchment area is the geographical area from which a particular location draws its customer or prospects. It represents the sphere of influence of the store, sometimes called “customer gravity”, in which it is able to attracts its visitors.
Why should you care about Catchment Area Analysis?
The definition of a catchment area is the essential part of geo-oriented, location-based marketing and sales. Without defining the real customer catchment area for your store or network, you cannot conduct any of the following.
Seeing from where and what kind of customers are coming to your store
Determining the marketing potential and share of your store and comparing it throughout your network
Finding out who your competitors are in the area and the potential cannibalization of your own network
Choosing the most profitable business location for opening your next store; complementing your current network well without cannibalization
Optimizing your current branch network for maximum performance
Effectively planning your print marketing collaterals distribution
4 Ways To Define a Catchment Area
In practice, catchment area definition is based on one, or a combination of, the following models:
- A real customer catchment area is the most accurate model based on combining external data and existing business data from the purchase transaction database or customer loyalty program.
Less accurate models based only on external data:
- A circle with the given perimeter drawn on a map around the location. While the area is defined, this way might be natural for bees or birds, it is not typical for humans.
- The distance to the location in units of length estimated by acceptable walking and/or driving distance. It doesn’t consider the elevation, type of terrain, constrains on the path, or places that people prefer to bypass.
- The travel time to the location either by walking, driving, or commuting. This model is highly dependable on the correctness of the initial hypothesis of the average acceptable time to reach the target.
The results of each type of definition correlates, still they differ in accuracy and important local exceptions can be found. CleverAnalytics is using the model closest to real life based on real business data. If the needed data is not available, the combination of models is used.
Customer Catchment Area in CleverMaps
Customer Catchment Area is an indispensable part of various reports within CleverMaps. We believe that each business and its use case are different, which is why reports featuring the catchment area can be filtered by:
- Number of customers and their purchases
- Revenue and its share of total
- Frequency of purchases
The default settings are based on market knowledge yet the system is flexible to meet conditions of each business case.
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