When Scottish hotelier Charles Forte was asked about the secret of success of his hotels, he is reputed to have said, “Location, location and location.” . This credo also seems to apply to almost all companies who do some form of brick and mortar distribution. Be it a retailer who wants to improve its productivity or companies who want to optimize the spend on distribution and associated trade marketing.

Companies have historically focused on removing inefficiencies from supply chains by optimizing inventory and logistics. Store location which falls at the intersection of operations research and marketing has only recently received some focus. The major challenge in being good at locating new stores or evaluating the future potential of existing stores, is integrating the customer segmentation strategy with the distribution data.

We recently helped a client to evaluate the retail distribution strategy and came across this problem. We solved this problem by creating a market potential index, by identifying the concentration of client’s most profitable customer segments, for every county within client’s footprint. We could then map the number of points of sale (POS) per each county to evaluate whether the client stores are in ‘desirable’ locations.

We found that 24% of client’s retail investments were made in locations that were less than desirable, and realignment of POS to desirable locations would save the company millions of dollars a year, even by conservative estimates

Despite all of the money spent on customer satisfaction and CRM systems, many companies are no closer than they were 20 years ago in understanding the specific drivers of customer dissatisfaction.

Poorly conceived self-help automated customer care strategies, without a proper understanding of the root causes of customer calls, have further exacerbated the problem and consumers have started protesting- sometimes in unique ways:

The gethuman project is a consumer movement to improve the quality of phone support in the US. The most popular part of the gethuman website is the gethuman database of secret phone numbers and codes to get to a human when calling a company for customer service.

Very few call centers have properly designed tools in place to identify the root cause of customer calls, at a level which is actionable. Without understanding the root cause of customer calls and quantifying their impact, any self-help strategy project is starting off on the wrong foot. At Diamond, we have been very successful in designing and implementing a statistically valid call monitoring module to many of our projects. It ihelps to dentify and quantify the various major buckets of root causes of customer calls and forms the starting point of further analysis to seek actionable solutions (see example)

We have been using this data collection technique in problems which need us to get to the bottom of a certain customer reaction (churn, downgrade, buy). Sometimes, listening to a customer call can provide the insight which a lot of smart graphs can miss.