Wednesday, May 16, 2012

New Free App Helps Business Owners Predict Sales Depending On Weather Forecasts

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An unusually mild winter in the U.S. made the economy look better than it was, as consumers purchased goods and businesses hired workers earlier than they normally would because of the warm weather. While this effect shows up in macro indicators such as retail sales and the jobs report, small businesses can have trouble gauging how temperatures and rain or snow directly affect their bottom lines.

Weather Underground, a site that compiles local data collected by 24,000 weather geeks with sensors on their roofs, this week released a free tool for businesses to use to look for patterns in their sales related to the weather. Anyone can punch in a location and time period to download a spreadsheet with detailed weather data. The file also has a place to enter daily sales (which comes prepopulated with fake sales numbers) and charts that show the sales numbers in relation to temperatures, precipitation, and dew point (a measure of humidity). The spreadsheet calculates the correlation between sales and those three weather metrics to show which have a meaningful relationship.

Weather Underground’s main business since it started in 1995 has been targeting ads on its site for brands that want to reach consumers during certain weather conditions. Companies can, for example, offer getaway deals to Hawaii during nasty winter storms, or hawk lawn furniture and garden supplies on the first sunny weekend of spring.

Showing companies how weather affects their business will boost awareness of the site’s advertising options, says Toby Skinner, Weather Underground’s vice president for marketing. “We want people in the business community to understand the value of weather data as part of marketing strategy as well as logistical planning,” he says.

Weather Underground’s site, which cheekily shares the name of the violent antiwar group from the 1960s and ’70s, gets more than 10 million page views a day, Skinner says. Other websites can use its API to tailor ads to the weather as well.

Clients have used sophisticated weather analysis to target ads and adjust their business to meteorological conditions. For example, Sears, recognizing that car batteries more than five years old tend to die after three consecutive nights of subzero temperatures, bought battery ads that would show up the day after the third freeze, Skinner says. The Cheesecake Factory looked at how restaurant traffic was affected by weather and reduced staffing on shifts that were expected to have fewer diners.

The new data tool is only a taste of the kind of number crunching deep-pocketed businesses routinely do with weather data. Skinner says it will help Main Street companies understand how weather affects their businesses too. “It’s not rocket science,” Skinner says. “We could delve a lot deeper into the analysis if we wanted to.”

[Via - BusinessWeek.Com]

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