Market Research Trend: Postal Codes

I think most of us have been asked at some store somewhere sometime for our postal code at point of purchase. The reason why certain retailers from Nanaimo collect postal codes is not to ask “why keep the Port Alberni store open” if we’re willing to spend our money at a Nanaimo location. Well, to be fair and correct it is not just retailers in Nanaimo who engage in this common practice. Businesses of many types in virtually all communities, even Port Alberni and, especially, branches of national chains, do the same thing. The reasons for collecting such data are many and varied and depend on the particular goals of the company. Here are 5 of the typical reasons for requesting postal codes from customers:
1. Measure Effectiveness of Advertising
Smart businesses measure the effectiveness of their advertising campaigns. Many larger businesses often conduct area-specific campaigns. In order to see if they are making a wise investment these businesses will track whether or not the campaign achieved its desired goals; the most frequent goal being increasing sales from certain areas.
2. Simple Customer Research
Effective marketing requires a great understanding of your customers. Postal codes not only tell a business from where its customers live but they can be used to cross-reference against a number of other data sources to develop a clearer picture of those customers. For example, postal codes can be tracked to various neighbourhoods within a community which can then be cross referenced against such things as real estate assessments or proximity to parks and schools. So, for example, if a particular store collects postal codes from a large number of customers in a neighbourhood with relatively high property values and close to parks and elementary schools, then a more enlightening picture of its customers is known. In this example, it is highly likely that this store’s customers are generally upper income earners who possess good education or specialized skills training and have young children. So, a simple postal code, when collected in clusters, can tell a marketer a lot of valuable information about its customers to help it serve them better.
3. Data Collection for Revenue Generation
Data is extremely valuable to a business. If data is valuable to a business then it is likely valuable to a number of businesses. Where there is value there is revenue potential. So, although not a very common practice, some businesses do collect data and sell it to market research firms who then use that information to provide their services to other businesses. Data collection and sales is an industry unto itself.
4.Direct to Consumer Marketing
Most businesses understand it is far easier and cost-effective to retain and grow sales from existing customers than to attract new customers. Collected postal codes provide businesses a direct path back to their current customers. Businesses can utilize this data by sending specific offers and promotions by direct mail to their valued customers.
5.Geographic Customer Cluster Analysis
Ever wonder why a variety of “chain” businesses have set up shop in Port Alberni over the past few years? It really isn’t just because we’re such great people. In fact, every smart business does extensive market research in an effort to prove viability of a new proposition. A very large and important piece is to justify there is a large enough customer base to support the business. This is critically important for larger corporate or franchised businesses that cost very significant amounts of money to construct their outlets, recruit and train their staff and promote themselves. A recognized reliable method of conducting such market research is to collect postal code information from customers in existing locations. If enough postal codes from a particular geographic location are collected a business can make a case that there is clearly a market demand in that particular area. The thought process is simply this: If there are this many people coming from “Springfield” to shop or eat at this location, then there are X times as many more people that would shop or eat with us if we actually had a location there. Business decisions are made using data collection, rational thought and logic that are all used to “connect the dots” to prove a legitimate Return on Investment. After all, business is about expanding your markets and growing your sales to places where demand is prevalent.
So, there you have the facts, folks, about why a retailer is asking you for your postal code. By providing that information, or even just the V9Y prefix you are helping these businesses in many ways. In fact, if you do happen to find yourself shopping in another community and are asked for your postal code feel free to give it to them proudly with the knowledge that you may quite possibly be encouraging the location of a new business with new jobs in your community!
Speaking of new businesses in Port Alberni I want to make special mention of two in particular: The Harbour Barber and J.E. McClelland Contracting. While you’re visiting the expanded and improved Farmer’s Market on Saturdays in the Harbour Quay you may want to clean up the “ol’ cabbage” on the top of your head. Chris Blackstone has branched out from the Blackstone Barber Shop on lower Johnston to open up The Harbour Barber Shop during Saturdays at Harbour Quay. With record-low interest rates and the home renovation tax credit incentive program there’s no better time to start that home improvement project. If you’re thinking of a home renovation that may include better use and accessibility of your space, improved energy efficiency or that dream bathroom I can personally recommend John (J.E.) McClelland Contracting. John has a lifetime of experience in contracting, business and people management. His priority is doing things right and ensuring his clients are satisfied. I can attest to him surpassing all expectations. So, if you need a genuinely “good guy” who can do the work, give John a call.