In an earlier post, we outlined the best techniques for defining site catchment areas. If you want to properly assess the value of a site, you must define catchments correctly. Too many retailers use bad techniques like census data or geographic features to measure the two critical indicators for franchise success: buyer density and gross buying power. 

Which one should you use?

Mapping Territories

Catchment area mapping will help you predict inbound customer traffic. Of course, there are more complex techniques available like gravity models, personal safety modeling and others, but accurate catchments will put you far ahead of most competitors. 

But what if inbound customers are irrelevant? Many retail industries are outbound.

Think door-to-door sales (vacuum cleaner, anyone?), services providers, B2B sales or similar models. How much of a difference will catchment area mapping make? 

A lot. With the major caveat that an accurate outbound sales catchment area will look much, much different than an inbound sales catchment area. 

Why? 

Because inbound sales catchment areas are meant to predict buyer psychology. Remember the Big Mac example? If I’m hungry for a Big Mac, I’m going to look for the closest McDonalds. ‘Close’ here being the one I can get to most quickly. So inbound sales catchment areas heavily weight travel time considerations. 

Not so for outbound sales. Outbound sales don’t really care how far away a customer lives, because the company will bring the sale to their front door. 

An outbound sales ‘site’ will therefore draw a catchment much differently. Remember that all of this talk about catchment areas feeds our larger concern about the value of a franchise location. And so for an outbound sales franchise location, how do we assess the relative value of two sites? 

The two primary indicators don’t change: buyer density and gross buying power. 

But the shape of the catchment depends on how many customers you want to service. Do you see the difference? Inbound catchments look at how many customers will visit your site. Outbound catchments look at how many customers your site wants to visit. 

The more customers (with higher gross buying power) you assign a site, the higher its value. 

And this, in plain language, is called ‘territory management’.

Take a look at this example of an outbound sales territory map. Notice that each shape is perfectly congruent - you don’t want to miss any potential buyers! - and the shapes don’t look at all like the spiderweb travel time isochrones inbound sales sites use. These territories are assigned to franchisees, with each franchisee paying more or less depending on the population count and gross buying power. 

What type of franchise are you interested in? Inbound or outbound? 

Interested in learning more about the franchise process? See these related articles: 

• Predicting the future
• Buyer density and gross earning power
• Why define catchment areas
• Picking a site

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