About: Southern California bicycle and bike accessory retailer
Goal: Efficient expansion, marketing, promotions and product management
Objective: Increase sales, optimize marketing strategies, target best customers
Insights: Customer segmentation and market analysis, geographic research and comparisons
Action: Expanded flagship store, opened second location, launched highly targeted marketing campaigns
Decisions: Product mix and pricing, promotional events, opening of new sales avenues
Measurement:15% increase in sales every year, 90% increase in average ticket, 132% increase in targeted customer transactions.
Bike Shop Uses Tranzlogic to Grow
Southern California bike retailer Newbury Park Bicycle Shop (NPBS) has enjoyed a stellar reputation since 1967, based on strong customer referrals and positive community outreach programs. However, over time, the market in their immediate area had become saturated, and they faced stiff competition from several newer local bike shops.
The business owners decided it was time to grow. NPBS consulted with Tranzlogic to find the insights that would help them achieve their growth goals across a range of business decisions. In the three years following, they increased same store sales by at least 15% each year, expanded to a new location twice the size of their original location, and planned to open two more new stores.
Validating Target Customer Segments
In order to grow their business, NPBS needed a clearer understanding of who their best customers are. After 50 years of being in business, they intuitively had a basic knowledge of their customers, but they didn’t know if those assumptions were correct or how best to reach them.
The first step was to discover which customers were spending the most money at the highest frequency. Using Tranzlogic’s online portal, NPBS was able to easily uncover key demographic, economic, and psychographic attributes that made their best customer segments unique. For example, whether customers were married or had children, what their discretionary income levels were, and specific lifestyle and activity preferences outside of an interest in bikes.
The next step was to understand NPBS’ market. They learned how far customers were willing to travel and what all of the households looked like in their local market. They were able to compare and contrast their customers to the market averages and find out how well they were penetrating and which customers really seemed to like them.
Once they identified their ideal customers and they understood their market, Tranzlogic provided them with contact information for all of those target households in their market – including new and existing customers. Understanding what these customers were like and what motivated them, NPBS was now well equipped to reach out directly to their target customers through various methods including telephone, email, social media, and direct mail. Whether they wanted to notify them of an upcoming promotional event or just drive general awareness, they were ready for action.
“We just celebrated our 50th anniversary. Since we began using Tranzlogic a couple of years ago, we have doubled our retail space, increased our Internet traffic and enjoyed a 15% increase in sales, year over year. Now we are using it to evaluate where to open two new locations.”
Strategizing Smarter Marketing, Promotions, and Product Mix
The thorough, detailed customer profiles NPBS obtained through Tranzlogic yielded a wide range of business insights. Armed with substantial data on their customer bases, NPBS was also confident enough to launch several new, highly targeted marketing strategies.
The granular data received from their customer profiles also told them that community events had the potential to deliver massive returns. However, they wanted to make sure they pulled each event off without a hitch. Tranzlogic analytics allowed the management team to identify the types of events that would be most beneficial, including in-store events and community programs. The data also gave insight into which times of year would be most productive, as well as the best ways to promote the events to each customer segment.
In addition to promotional events, Tranzlogic’s marketing team worked closely with NPBS to create and manage highly targeted direct marketing campaigns with unique offers specifically designed to attract more of their best customers from underserved, adjacent geographies. These campaigns yielded the following adjusted year over year returns:
- 166% increase in sales,
- 90% increase in average ticket, and
- 132% increase in the transactions derived from the target customers.
NPBS complemented their marketing efforts with keen product and price management strategies. With the newly gained clarity about their customers and their market, NPBS was able to make data-driven decisions on merchandise that would appeal to each customer segment. Product management became streamlined, allowing them to maintain an optimal mix of high-end items versus bargain bikes, accessories, and other products available in their inventory.
Expanding on a Solid Foundation
After experiencing such steady growth, it wasn’t long before NPBS needed to move to a bigger location. NPBS leveraged their newly gained customer and market insights to optimize expansion plans. The first was a planned move to a larger facility in the same area of Newbury Park. This move would double their square footage and allow them to further optimize the product mix that they had been refining, therefore increasing their selling ability. NPBS used Tranzlogic data to validate its intuition about the location and felt confident pulling the trigger on a long-term lease. In the first year of opening, the new location is eclipsing its forecasts and is generating nearly double the sales of the previous location.
With one successful location expansion complete, it was time to consider a second store. NPBS consulted with Tranzlogic to perform analysis on adjacent locations to identify the best site for their next new location. First, Tranzlogic used NPBS customer data to conduct a fit analysis to determine how well the newly proposed geography matched that of NPBS’ flagship location. Next, Tranzlogic performed multivariate gravitational analysis to identify the optimal commercial site based on expected sales. Even though taking the leap with a new location was daunting, NPBS gained the confidence needed based on their ability to quantify the decision with Tranzlogic’s data and analysis.
Tranzlogic Now an Integral Part of NPBS Business Decisions
Since teaming up with Tranzlogic, NPBS has succeeded in surpassing their original growth goals. Tranzlogic’s powerful data and actionable insights are integrated into the core of the NPBS business model, allowing the retailer to make sound decisions at every step of their growth journey. In an effort to continue to explore further growth, NPBS is again working with Tranzlogic to identify a site for a third location expansion.