Network optimisation, simply put, refers to the analytical process of developing a 'blueprint' for the optimal footprint of outlet locations for an organisation. Lightstone has a unique, proven methodology for determining the optimal network capacity and profitable network alignment for businesses, with particular success in the automotive and retail sectors.
Building a network optimisation model seeks to address the following questions, typically posed by organisations looking to proliferate their footprint within a market:
- What is the extent of the 'actual market catchment' per outlet?
- What is the impact of cannabilisation on the growing network - The Loss-Gain Matrix?
- What is the sales potential per 'actual market catchment' net of inflows and outflows?
- Will the network deliver the potential required to meet sales targets?
- Which network points should be rationalised and how?
- Where does new potential exist and can it sustain a new outlet?
- What will the network potential be in the next five years?
"Lightstone provides us with valuable insight into many 'grey' areas of our business,
and has truly assisted us in understanding our customers purchasing behaviour
and the overall effectiveness of our dealers within their primary marketing areas."
- Warren Olsen Honda Divisional Manager: Automobiles
Network Optimisation Process
Network optimisation modelling is a complex process, requiring analysis of a diverse range of input data to ensure meaningful results for the organisation. Lightstone's proprietary analysis model provides the framework and proprietary client data is integrated to address client and industry specific elements.
Network optimisation typically involves the following elements:
- Integrating client's customer data into the Lightstone SWAN model
- Profiling client's customers by product
- Defining network points and 'Outlet Areas of Responsibility' (OAR's)
- Determining actual market catchments based on actual customer behaviour
- Estimating the potential of actual market catchments
- Calculating benchmark market share per OAR net of inflows and outflows
- Analysing customer purchase and service behaviour
- Comparing actual market catchment with existing OAR's
- Mapping the ideal network onto the existing network footprint
- Recommending measures for optimising the outlet network
Contact us for more information and pricing of Network Optimisation.