Microburbs with Luke Metcalfe |Data Stories|

Marketing is becoming increasingly personalised. But what do you do when you have too many customers to know personally? We sat down with Microburbs founder, Luke Metcalfe, to find out.

WB: Where does the data come from and what was the original reason for building Microburbs? 

Luke: It was out of personal pain. My wife and I were looking for a property and I saw there was so much information available about properties that weren’t in the ad or even obvious during inspections. You can see how well the property can be presented on a sunny Saturday morning, but not what the neighbours are like, how good the schools are, whether units are going to be built next door and so much more. 

Being a data geek I knew this data was generally available or derivable online. Australian governments at all levels are actually quite good at releasing data. I used it for our property search and then thought this kind of info should be made available to everyone.

Also I felt that there was nowhere that liveability was summarised accurately. If you want a quiet place to live, we have a score for that - for every property in Australia. The same is true if you want to live somewhere happening or good for raising a family. I found buyers tended to know only about suburbs and if property guides had anything to say about a buyer’s target area, it was on a suburb level. But while you’re actually at home, the suburb is not that important - it’s your neighbours and the street. Are you going to overshadowed by a tower block? Are you going to get along with the neighbours? Can you feel safe at home? 

So Microburbs mostly focuses on the hyper-local, down to streets, blocks and houses. 

WB: What value do you think Microburbs can bring to businesses?

Luke: As the site grew, I started to get more and more requests from businesses that needed help making business decisions often with a mix of their data and public data. Often they wanted to know which customers to target. We have 70,000 data points on every hyper-local area - or Microburb - and more on individual households. 

In blending Microburbs with customer data I found there were powerful systematic patterns in acquisition and buying habits. Things like household composition and education typically outperformed classics like gender and income in predicting outcomes. So given customer lists, I build models to predict acquisition and retention. Scrutinising these I find the core drivers of action among your customers. Often there are really powerful insights out of this - I’ve seen for example that people with degrees are 3 times more likely to buy a product than those without. Out of this I build lists of customers to target who are much more likely to respond to particular offers.I can then apply these models to the whole of Australia and work out a potential customer lifetime value per household. These can be used to evaluate potential areas for expansion in a way that’s systematic, objective and rigorous. 

WB: How does your solution differ from other segmentation competitors like Experian and Roy Morgan? 

Luke: There are numerous segmentation providers out there. One thing is that they’re very expensive - out of reach of most businesses. The other is that they’re not targeted to individual businesses. They’ve boiled in all about the assumptions your business before even looking at it. My models are usually built using the client’s customer data - the machine learning works with your data in whatever form it comes and is focused specifically on driving outcomes for your business. 

WB: What industries or types of company could benefit most from this tool and why? 

Luke: Any business with more customers than you can know personally or fit on a screen. Or businesses with over 10 locations but don’t have intimate knowledge of all of Australia. 

WB: Where do you see Microburbs going in the future? 

Luke: It’s increasingly an intelligence platform for business, providing more context for decision-making, blending clients’ data with public data. 

WB: Any advice for data enthusiasts on how to go about doing something similar eg scraping data, manipulation, presentation etc? 

Luke: Check out data.gov.au - there’s a huge amount of public data there.

WB: What fascinating insights have you found so far by combing through this data? 

Luke: There are many. But one big thing is that suburbs and postcodes are basically meaningless concepts. From an insights perspective, they’re just arbitrary and often strangely shaped blobs with a similar distance from the CBD. What suburb you live in doesn’t predict your behaviour or even the price of real estate, unless the border between suburbs happens to go along a “side of the tracks”. Natural dividers.

Another big thing is your top 20% of customers (that typically do 80% of the sales) are systematically identifiable. To a large degree, I can tell you whether a customer on their first purchase is going to end up being one of the top customers.

Thanks for reading and thanks to Luke from Microburbs for his time and expertise. For more information about Microburbs, check out their website.

If you haven’t already, feel free to sign-up to our monthly newsletter for more insightful data stories.

Or, get in touch for a discussion about your data strategy.