Primer: Geospatial Analysis
What is it? A way to determine where your customers live or work by correlating their street addresses with their physical location. It's done by adding data from mapping software or the Global Positioning System to the customer information you already have, such as purchasing history, creditworthiness and income. By combining demographic and geographic information, marketers can, for example, draw a line around a particular region and ask the database for the names and income ranges of customers who live within that area. Existing databases can track street addresses and ZIP codes, but can't usually tell, say, whether East Main Street and West Main Street are next to each other or miles apart.
Where's the benefit? By knowing a customer's physical location, you can gain tremendous insight into that person's needs, says Fred Limp, director of the Center for Advanced Spatial Technologies (CAST) at the University of Arkansas. If, for example, a customer at 123 Main St. just bought a riding mower, a neighbor at 321 Elm might, too. A normal database query would tell you the two addresses are in the same ZIP code, but not that they are around the corner from each other in a development with unusually large lawns.
How would I use it? The most-cited example, according to Limp, is to help select retail locations by analyzing neighborhood demographics surrounding each potential spot. Without searchable location data, you'd have to rely on ZIP codes to identify the area to be examined. "But then, once you put in the data, you can also ask: How many customers make more than $100,000 and live within two miles of the store?" Limp says. Making those kinds of connections can also help a wholesaler identify where it's losing sales because there aren't enough distributors, or allow an insurance company to set rates according to the disaster risk for a particular house, not just a neighborhood, says Henry Morris, group vice president for applications and information access at IDC.
Where do I get this information? Most detailed electronic maps are created by federal, state or local governments to maintain roads, bridges and other infrastructure, but they're available free to the public. The problem is, you have to piece it together. For a price, service bureaus will do the work for you, using interoperability standards created by the Open GIS Consortium, which represents vendors of geospatial-analysis products.
What's the downside? Not all entities want to give up their information. Utilities, for example, build detailed maps that include customer locations, pipes and underground lines. They share some information to help keep backhoes from digging in the wrong places, but are reluctant to share details such as the locations of vulnerable central switching stations or other critical elements, according to Bob Samborski, executive director of the Geospatial Information & Technology Association. Issues like this limit the detail and effectiveness of geographic data. Various government agencies are negotiating with private-sector companies, Samborski says, but no wide-ranging agreement has been reached.