Northern Tool + Equipment

PopStats Pinpoints “Our Guy” in “Our Neighborhoods” for Northern Tool

When Northern Tool + Equipment conducts market research, the almost 40-year-old tool company is, first and foremost, looking for “Our Guy.”

Thanks to in-depth market and consumer research over the past several years, the company is crystal clear on its ideal customers’ demographic description and lifestyle segments, according to Market Research Manager, David Drymon.

“More often than not, he lives in either an exurb such as the periphery of a major metro or a rural setting. He’s very much a do-it-yourselfer. He owns a trailer for hauling hay, a boat, or equipment. He owns his own home. He’s employed in one of the construction trades or is a farmer. He earns a fairly moderate income. He’s predominantly white. He has a high school or associate degree level education. He owns two or more vehicles.”

David just described residents in two STI: LandScape neighborhood segments: Living with Nature and Working with Nature. And, in fact, these are the c ompany’s two primary consumer segments.

“LandScape has significantly helped us target our ideal customers beyond just the demographic data, such as income, occupations, and age,” he explained. “This is helpful, because, while the demographic data helps us narrow our search locations, we’re finding that consumers can share demographic data, yet have very different lifestyles. We’re looking for the people who boat, fish, and hunt versus playing chess and buying bottles of wine.”

Looking for the Right Demographics with PopStats

Northern Tool began using LandScape and STI: PopStats in 2013 after partnering with Tango Analytics, a market research consultancy and software firm, to create real estate research engine and a sales forecasting model. Both data products came with the relationship — and David is happy they did. “LandScape is an invaluable tool that adds color commentary to our trade area research and describes the lifestyle attributes of our customers in vivid detail,” he explained.

“And PopStats is great because it’s more accurate than the U.S. Census in projecting population changes. It was eye opening to realize that we are now getting as true a picture for the population as possible of the areas we’re researching — especially this far out from the Census. I haven’t heard any other demographic data provider making a similar claim. This confirms that we’re working with the best demographic data in the business. This gives us a high degree of confidence in our research.

Confidence in its site research was exactly what Northern Tool was looking for after several decades of selecting sites based on availability, price, and gut instinct. The company began as a catalog operation in 1980, and shortly thereafter opened a brick and mortar store. Since then, it’s opened multiple stores in 18 states at the rate of four a year, primarily in the central and southeastern U.S. states. At the end of 2017, the company will open its 100th store.

Its original site selection method worked well until 2012. Then it opened several stores that performed poorly. The founder decided it was time for advanced market research to overcome the expensive mistakes.

After several iterations of a more scientific trade area research process, the company found a satisfactory approach with the help of the research engine and model created by Tango Analytics. David explained that the company’s research program is now honed to a new level of precision.

Looking in the Right Neighborhoods with LandScape

The company’s newfound level of in-depth research has lead it to expand outside of its two leading LandScape segments into six more neighborhood segments: Doublewides, Stately Suburbs, Marmalade and Money, Regents, Sublime Suburbia, and Nest Builders.

“These are new for us,” noted David. “But we’re looking for similar demographics within certain trade areas or within a certain radius from our current stores because we’ve found that sometimes even people who don’t own trucks can become our customers.”

Northern Tools’ neighborhood segmentation expansion is propelled by the acknowledgement of its three customer types:

1. Homeowners with land — e.g., small farms and weekend warriors
2. Independent residential contractors — e.g., plumbers, drywall professionals, roofers, welders, and handymen
3. Small businesses with a physical presence — e.g., electrical contractors

“Typically residential consumers comprise 50 to 60 percent of our sales. But it varies widely by store,” explained David. “This reality has encouraged us to find ‘our guy’ in other neighborhood segments.”

When discussing the company’s success with its new, more scientific market research approach, David says, “Success for us is having a higher comfort level in our research, not just for my department, but also among our senior management.”

In particular, LandScape data helps senior managers better understand the lifestyles and purchasing behavior of the company’s consumers because the neighborhood segment descriptions of consumers’ lifestyles add clarity beyond the demographic data.

“Behavioral attributes like hunting, boating, and farming make more sense to them than just our customers’ income, ages, and education levels, for example,” noted David. “They can create a mental image that confirms we’re in the right neighborhoods.”

However, success also includes the fact that all of the new stores Northern Tool has opened in the past few years since upgrading its marketing research with PopStats and LandScape, “have performed exceptionally well,” said David. “We’re now more efficient and effective than ever in finding ‘our guy’ in ‘our neighborhoods.’”