Inspire 2014 – AAA: Target Marketing with Predictive and Geo-spatial Analytics

#inspire14 AAA CONFIDENTIAL

Target Marketing with Predictive

and Geo-spatial Analytics

Daniel Mathieux

Director, Marketing Insights & E-Business

American Automobile Association

#inspire14 #inspire14

Agenda AAA and Geo Spatial Analysis

Types of Analysis

Retail Trade Area Enhancement

2

#inspire14 #inspire14

Types of Requests for Geo Spatial Analysis

AAA and Geo Spatial Analysis

• Investigation of specific target locations for Club stores

• Sites for AAA Car Care, Travel or Insurance Center

• Membership Sales and/or Opportunity

• Business Line Sales and/or Opportunity

• Opportunities for AAA Partner Product/Service Usage

3

#inspire14 #inspire14

Typical Items included in a AAA Geo Spatial Analysis

AAA and Geo Spatial Analysis

1. Convenience and ease of access

2. Proximity to member population

3. Member DriveTime and Distance

4. Population by time of day

5. Membership penetration and growth opportunity

6. Business line usage and opportunity for growth

7. The Executive Summary addresses findings pertinent to the project

purpose

4

#inspire14 #inspire14

1. Convenience and Ease of Access

Geo Spatial Analysis of Multiple Locations

• Define and establish the area of

study for an accurate visualization

• Locations may be existing or

potential

• Display locations with road

structures and natural boundaries

to see the impact on access

• Observe how close stores are to

one another

5

#inspire14 #inspire14

2. Proximity to Member Population

Geo Spatial Analysis of Multiple Locations

• Member data has been

geocoded

• A pinpoint map is used to

picture where members live in

relation to the stores

• Members are highly

concentrated around Store 1.

• Members are less concentrated

around Store 2.

6

#inspire14 #inspire14

3. Member DriveTime and Distance

Geo Spatial Analysis of Multiple Locations

• Grid analysis shows a high

concentration of members near

Store 1.

• Member concentration is less

around Store 2.

• Most members are within a 10

miles or a 20-minute DriveTime

(purple squiggly line).

• Store 2 is within the 20-minute

DriveTime from Store 1. Member HH -Low (Below 40.5)

Member HH -Below Average (40.5 to 135)

Member HH -Average (135 to 440)

Member HH -Above Average (440 to 1450)

Member HH -High (Above 1450)

Territory Boundary

5 Mile Radius

15 Mile Radius

20 Minute DriveTime

Area store

Study store

7

#inspire14 #inspire14

4. Population by Time of Day

Geo Spatial Analysis of Multiple Locations

• Census data (Employee count) is

added to review the Daytime

population.

• The grid map shows the area

around Store 2 is more densely

populated during the day.

• The shift in population, the

Daytime (Employee) population,

exhibits the increased opportunity

for store use. Employees -Low (Below 2)

Employees -Below Average (2 to 15.25)

Employees -Average (15.25 to 115)

Employees -Above Average (115 to 870)

Employees -High (Above 870)

5 Mile Radius

15 Mile Radius

20 Minute DriveTime

Area store

Study store

8

#inspire14 #inspire14

5. & 6. Membership and Business Line Needs

Single Purpose Centers, Sales & Opportunity Analysis

• Census and AAA data are used to forecast sales and opportunity.

• We define current AAA customers for each business line.

• Income, household count and other Census data are used to profile

customers and potential customers in the surrounding area.

• Data is imported from AAA sources, such as travel, ERS, auto buying,

insurance, vehicle repairs.

• The opportunity for sales or usage among members and non-members

is calculated.

9

#inspire14 #inspire14

AOS Branch

AAA

Member

HH

AAA

Member

Population

Experian

Consumer

HH

Experian

Consumer

Pop

Employee

(Daytime)

2013

Census

HH

2013

Census

Pop

Study Branch 1 36,050 66,624 114,129 195,152 212,814 166,841 411,446

Study Branch 2 35,185 64,898 115,338 197,605 214,097 167,454 410,965

Study Branch 3 57,420 129,886 205,752 350,386 331,357 243,425 614,358

Geo Spatial Analysis of Multiple Locations

7. Executive Summary and Reporting

• After reviewing the Study area’s 15-mile radius, the results are

totaled and provided in an Executive Summary.

• The Club has the largest opportunity for membership growth and

Daytime customers in Study Branch 3.

10

#inspire14 #inspire14

• A pinpoint map gives a close look

at the road layers, natural

boundaries (water, park)

or club territory boundary.

• The grid map visualizes

the population groups.

• The display method

depends on the data and

features to be shown.

Displaying The Details

Geo Spatial Analysis of AAA Locations

11

#inspire14 #inspire14

• Ohio is served by multiple

AAA clubs.

• The club headquartered in

central Ohio has 31 stores.

• The store service areas

overlap at 15-mile radius,

20-minute Drive Time.

• Overlap occurs even at 5

miles and crosses club

territory lines.

Enhancing Store Analysis with Retail Trade Area

15 Mile Radius

Club Territory

Ohio State Boundary

store Office

12

#inspire14 #inspire14

Project Objectives

Retail Trade Area Project

• Define the realistic market area for each store.

• Provide the ability to measure store performance, profitability,

products and services used, penetration of members served.

• Identify individuals and households by trade area for marketing and

reporting.

• Identify members underserved by the club network of 31 stores.

13

#inspire14 #inspire14

Project Requirements

Retail Trade Area Project

• Use the industry method that best meets club needs.

• Associate each member with only one Trade Area.

• Maintain member-to-trade area relationship automatically and

promptly.

• Identify trade area population segments and delineate the customer

mix by segment.

14

#inspire14 #inspire14

Industry Methods

Retail Trade Area Project

• Deterministic – The boundary is the time or distance most customers

travel to the store used. Trade areas are likely to overlap.

• Proximal - Assign area closest to a store. This may exclude some

customers.

• Probabilistic – Travel distance or time is combined in a model with

store attractiveness, availability of competitors, rural or urban

setting, population density, traffic volume and patterns.

15

#inspire14 #inspire14

AAA Methodology

Retail Trade Area Project

• The proximal method is the basis for AAA Retail Trade Areas.

• Member address data was used to identify the closest AAA store.

• Each household and member is assigned to the closest (Home) store.

• Transaction data was used to identify members with store activity.

• Trade area boundary is the average distance traveled by members to

their Home Store, the closest store, plus two standard deviations.

16

#inspire14 #inspire14

Customer Mix by Member Segment

75.2

23.5 1.3

Home

Foreign

Out of Territory

• Home = Home Store members

• Foreign = Club Members from another Home Store, commuting or traveling

• Out-of-Territory = Members from another club

17

#inspire14 #inspire14

A Trade Area tool is developed in the club marketing database

Retail Trade Area Project

• The Retail Trade Area boundary for each store is recalculated automatically as

more members use their Home Store.

• The 2-year look-back for transactions is automated and reflected in the Retail

Trade Area tool.

• Changes in the data are reflected immediately, i.e. new members, members

with a change of address, new non-members in the trade area are automatically

associated with the corresponding store.

18

#inspire14 #inspire14

Trade Areas Displayed in a PinPoint Map

• A pinpoint map shows

member households in

each store trade area.

• Trade areas with similar

household counts are

the same color.

• Size differences reflect

the difference in

average customer

driving distance.

19

#inspire14 #inspire14

Map Shows Members Out-of-Network

• Member households

outside the store

network are shown in

bright pink.

• For these members,

travel to their Home

Store exceeds the

distance current

customers travel.

20

#inspire14 #inspire14

New Capabilities Useful for Store Management

Benefits for Club Operations

• Measure store performance and profitability

• Set realistic goals by store

• Monitor the trade area population size and demographics for

changes indicating a need to relocate or add a store

• Improve access and options for members out of the store network

• Predict sales and activity for new or relocated stores

21

#inspire14 #inspire14

Abilities to enhance service and communication

Benefits for Marketing

• Identify business line opportunities by store

• Customize service delivery to trade area

• Develop marketing tactics to meet

the store business objectives

• Use consumer and member data to

personalize communication relevant

to the market segments.

22

MemberCustomers

MemberNoStoreTrans

PastMembers

NonMembers

Population Segments

#inspire14 #inspire14

Summary and Conclusions

• Visualization tools show detail that is especially useful for site

evaluation.

• AAA uses geo spatial analysis to evaluate and select sites for full

and specialty service based on physical and projected opportunity

analysis.

• Retail Trade Area delivers enhanced capabilities for store evaluation

and customized marketing.

Daniel Mathieux dmathieux@national.aaa.com 407-444-8528

23

#inspire14

THANK YOU!