Customer data can tell you a great deal about who buys from you, what they buy and how much they spend. Add location, and another set of questions becomes possible.
Where do your customers come from? How far do they travel? Which areas contain your strongest customer base? Are there places with plenty of potential customers but relatively low penetration? And do customers around different locations behave differently? These geographic patterns can be particularly valuable for businesses operating multiple sites, territories or franchise areas.
Here are five location metrics that can help build a clearer picture of your customers and the markets you serve.
1. Customer distribution
The simplest place to start is understanding where your customers are.
Mapping customer locations can reveal concentrations that aren’t obvious from a database or spreadsheet. Some areas may contain large numbers of customers, while others that appear similar generate relatively little business.
That distribution becomes more useful when compared with other information such as demographic and consumer data. As this can help businesses understand the characteristics of areas where customers are concentrated. Existing locations and territories can show how well the current network serves them. Competitor data can provide further context about the choices available within the market.
The aim isn’t simply to create a map covered in customer dots. It’s to understand the geographic patterns behind the customer base.
2. Catchment size and reach
How far are customers prepared to travel to reach you? The answer can vary considerably between locations. A destination store may draw customers from a wide area, while a convenience-led business could rely heavily on people living or working nearby.
Analysing customer origins can help define the real catchment around individual locations rather than relying solely on an arbitrary radius. Comparing catchments across an estate can be particularly revealing. Why does one location draw customers from further away? Does another have a much tighter catchment? Are neighbouring sites competing for some of the same customers?
Accessibility, competitors, surrounding amenities and the nature of the location itself may all help explain those differences.
3. Customer penetration
Large customer numbers don’t necessarily mean that a business is performing strongly in an area.
Imagine one market contains 1,000 customers and another contains 600. The first appears stronger until you discover that it contains 50,000 potential customers while the second contains only 5,000.
Customer penetration puts existing customer numbers into the context of the potential market. Comparing penetration between areas can reveal where a business already has a particularly strong presence and where there may be more opportunity to investigate. An area with the right customer characteristics but relatively low penetration, for example, could warrant closer attention.
This is often much more informative than customer density alone.
4. Customer value by location
Geography can also reveal differences in customer behaviour. By combining customer or transaction data with location, businesses can compare measures such as average spend, purchase frequency or customer value across different areas.
That can lead to some interesting questions. Do higher-value customers cluster in particular locations? Are customers around one site buying more frequently than those elsewhere? Are there geographic patterns among particular product categories or customer groups?
Location doesn’t necessarily explain those differences, but it can show you where they exist. Demographics, affluence, accessibility, competition and other local characteristics can then be used to investigate what may be contributing to the pattern.
5. Customer potential
Existing customers tell you where your business is succeeding today. They can also help you investigate where more potential customers might be found.
By identifying characteristics associated with existing customer groups and comparing them with demographic and consumer data elsewhere, businesses can identify areas containing similar audiences.
This doesn’t mean assuming that everybody who shares a particular characteristic will behave in the same way. Nor does it mean that an area containing the right customer profile is automatically a good market.
Competition, accessibility, existing brand presence and local movement patterns all affect the opportunity. But combining customer insight with wider location data can help narrow the search and identify areas worth investigating more closely.
From customer data to customer intelligence
None of these metrics needs to be considered in isolation. Customer distribution might reveal where customers are concentrated. Catchment analysis can show how far they travel. Penetration puts customer numbers into the context of market potential. Customer value adds another measure of performance, while demographic and consumer data can help identify areas containing similar audiences.
Bring those layers together and customer data becomes much more useful for making decisions.
Periscope® combines first-party customer data with demographic, consumer, competitor and other location data, helping businesses understand their customers geographically, compare markets and identify potential opportunities. Book a Periscope® demo.
