How does Customer Penetration Analysis Help Leaflet Distribution?

Sometimes demographic analysis results are inconclusive and do not give us clear demographic types to target with leaflet distribution. This article discusses new analysis techniques we have created to make best use of client data.

The reason for this is normally due to the nature of the services provided by our client.  If, for example, when the services provided by the client are generic they will tend to be used by a wide cross section of the population.   Good examples of this type of client would be a takeaway restaurant, dentists, etc.  This means that running a demographic analysis will provide results that tend to mirror that of the local population.  As a result, the analysis will not identify any particular demographic types that ‘stand out from the crowd’ which means that we can’t use the information to target specific areas for leaflet distribution.

Having found these issues when running a demographic analyses for a few clients we decided to look for a way to make best use of the analysis information provided by our clients.  This meant that we created an entirely new technique which we call ‘Penetration Analysis’.

With penetration analysis, we use the postcodes of the client’s customers to determine what percentage of  the total number of residences in each postcode they have as customers.  This allows is to identify the areas where our client has the greatest percentage of customers vs the number of houses in the area.

For example if a client has 20 customers in a postcode and that postcode has 25 houses then their penetration would be 80%.  It is, however, possible for the penetration to be greater than 100%.  This can happen when a client holds a postcode for every individual customer (a dentist would be a good example of this).  In these cases where there are 4 people in the household and all four are customers then there would be four postcodes.  We may then have 45 customers in a postcode with 25 residences, making the customer penetration 180%.  In these circumstances we need to find out the average number of people in each household.  In the previous example, if we have an average household of 2.2 people, the customer penetration would be 45/(25*2.2) = 82%.  The first calculation would apply to clients who hold one postcode per costumer – takeaway restaurants would be an example of this since their customers will be the households, not the individuals who live there.

Once we have calculated the relevant customer penetration values we will plot them on a map which will then show where the areas of highest penetration are – i.e. where the majority of their customers live and what percentage of the local market they have.  This information allows us to identify the most appropriate areas to distribute their leaflets – those being the ones that are not in the areas with the highest penetration of clients.  This is on the basis that there is little point in targeting areas where they already have a lot of customers.

By targeting areas where the client does not already have a high customer penetration rate then we are not wasting their money by distributing leaflets to areas where we know they will not get a good return.

A contrary strategy can also be applied here if our client wanted to target their existing customers with a special offer, for example.  In these circumstances, we would focus our leaflet distribution in those areas with the highest customer penetration rates.