An Interview with Bill Stinneford
The success of any retail business hinges on understanding its customers and making strategic decisions based on their needs. In this interview, Bill Stinneford, EVP of Sales at Buxton, discusses the role of a customer-centric location strategy in achieving this goal. He provides valuable insights into how businesses can align their location strategies with customer data to drive growth and satisfaction.
Why is it important for brands to put customers at the center of their location strategy?
Bill Stinneford: It's important for brands to put customers at the center of their location strategy, because ultimately, if you have locations that don't have enough of the right kind of potential customers in the area in close proximity, you're not going to be successful.
And just using demographics is not going to tell you that whole story. You need to go deeper to understand who buys from you today – psychographics, foot traffic, drive times, etc. Once you have these insights into your best customers, you can find more who look like them – where they live, where they work, where they shop, etc. Knowing where there are high concentrations of people that look like your best customer is a great place to center your locations.
What is a customer-centric location optimization strategy?
Bill Stinneford: Leveraging customer data to optimize your location strategy is important because it allows you to not only understand who you are attracting but also how far they are willing to travel to your location, which helps you determine your penetration. And does that penetration decay the further away a customer is from the location?
Penetration is important when you think about adding new locations into the market, as is understanding cannibalization. If you're looking at things in a two-dimensional way, you might see that 20% of your customers for a new location overlap with another trade area. However, that 20% may only represent 4% of the dollars because they're so far away.
That's why customers need to be at the center of your strategy. Customer centricity allows you to truly understand penetration and then use that to optimize an entire market and know how close you can get without hurting the existing locations.
How do customer persona insights play a role in developing a customer-centric location optimization strategy?
Bill Stinneford: Customer personas are really innovative in how they help clients with their location strategy. And here's why – when you understand who buys from your brand or utilizes your service versus who doesn't, you can take the people that don't buy your products or utilize your services off the table. Now, you can really focus on the customers that matter to your brand.
But within your customer base, there are all different types of personas. Because people are different, and they react to different messaging. They behave in different ways. They buy in different ways. So if I can understand the dominant persona in the trade area of each of my locations, I can set up my marketing, my operations, and even my merchandising to be very specific and personalized to that dominant persona. I'm not trying to reach soccer moms with kids when my dominant persona is a bunch of young singles or vice versa. Being personalized to that degree really allows you to maximize return on investment and save a lot of time and money.
Can you explain the concept of performance benchmarking in the context of location optimization?
Bill Stinneford: Performance benchmarking is very important when you're talking about optimizing your locations. For example, you can have two locations that do the same volume, but one is doing about as well as it should be doing. That’s because it might not be in the right location due to poor customer penetration, too much competition, or unfavorable market conditions, making the trade area less than ideal. The other location is, again, doing the same volume, but it should be doing significantly better because there's tons of customer potential and a lack of competition. The decisions that you make for these two locations and how to optimize them are different.
The first might need to be relocated or closed, but the second one might need better operations, maybe some more marketing. But if I'm looking at them just based on the volume that they're doing, I'm not going to truly understand what the potential is, and that leads to big time misses and expensive mistakes.
If brands are not doing a portfolio audit, then how are they currently auditing the performance of their existing locations? Why do their current methods fall short?
Bill Stinneford: When you don't have a portfolio audit based on customer data, you may end up with your CEO coming in and saying, “Why do we have these low performing locations?” Typically, when that happens, you get people pointing fingers at each other, right?
Whoever picked the site blames the operators. The operators blame whoever picks the site, and then everyone gets around to blaming marketing. It always seems to be marketing's fault. But in reality, sometimes it is the operations that need correction, or it does need more marketing, and then sometimes it does need to be relocated. When you don't have data-driven flashlight of a portfolio audit, then what you're left with is opinion. When you're left with opinion or gut instinct, the loudest voice in the in the room usually wins, and the loudest voice is not always the right voice.
The most expensive decisions, when based on opinion, can lead to the biggest mistakes. For example, you could remodel a location that doesn't have any customer potential anymore. You might close a location that should be doing better, and you just didn't realize it. Instead, you listened to somebody in the room who thought it needed to be relocated based on nothing more than their own opinion. That's how expensive mistakes happen, and that’s why brands need a data-backed portfolio audit to improve performance.
What are some common challenges brands face when optimizing their brick-and-mortar locations and how do they overcome them?
Bill Stinneford: The main challenge that retail, restaurant, and other industries face when trying to improve the performance of existing locations is just first and foremost understanding how those locations should really be doing. In other words, is there customer potential there or not?
That is not something that you can determine just based on how much volume each location is producing. You have to know what it should be doing. If you're not leveraging customer potential, if you're not factoring in competition, if you're not considering other data elements like foot traffic or using predictive analytical capabilities, then you're gonna make mistakes because all you're left with is opinion. Again, you're not going off facts.
How am I doing compared to how I should be doing. If you don't know how you should be doing, meaning your overall potential, then you're gonna miss, and that's expensive.
Can you share a success story of how understanding customers has helped brands optimize their locations?
Bill Stinneford: Buxton works with thousands of clients currently across a variety of business types, and many have had success utilizing data analytics and customer-centric strategies to grow their business. One of my favorite success stories is Red Wing Shoes. They've been a client for over a decade, and they utilize Buxton's customer-centric solutions to not just open great locations but to optimize them as well.
Red Wing has opened up hundreds of locations, and to use their words, they have not missed once. They also use customer-centric strategies to improve the performance of their existing locations by understanding which locations are not performing well and should be doing better, as well as those that don’t have the potential to be do any better.
Also, trade areas have changed over time, and Red Wing has the data and knows how to relocate and consolidate out of those poor performing locations, and they have developed strategies to improve the performance of the ones that do have more potential. These strategies help them isolate the stores that are not performing well but have potential, so they know where to focus their time and money.
Being able to add great new sites that perform well and not miss, as well as improve the performance of existing locations, allows Red Wing to grow the value of their company.
Conclusion:
By focusing on a customer-centric approach, businesses can navigate the complexities of the modern retail environment with confidence. Bill Stinneford's insights underscore the importance of leveraging data to understand and meet customer needs. As the retail landscape continues to evolve, those who prioritize their customers will be best positioned for long-term success.
Ready to optimize your locations with a customer-centric strategy? Request a demo from Buxton and discover how our solutions can drive your business forward.
