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Use location data to help cut customer acquisition costs
Bradley Walker

Bradley Walker

Nobody will wave a magic wand and make your customer acquisition cost disappear – but location technology could very well saw it in half.

There's an old joke that drives home the three commonly accepted rules of investing in real estate: location, location, and location. In modern marketing, the same rules apply.

Where is your audience? Where will they be when your message finds them? Where will you be when they decide to convert to customers? In the past, these questions were answered by humans making their best predictions based on what they knew about their customers and where the ads would appear. In our digital age, reliable and accurate location data replaces guesswork, and can answer these questions faster and more precisely than ever.

The cost of a customer

Revisiting business accounting 101, there is a basic equation that demands to be balanced within any enterprise. How much do you, the business owner, spend to get your message in front of the audience, and how much do you earn from the conversion of that audience into active customers. The more you spend on the former, the more you have to earn back from the latter – otherwise your prospects are limited.

Location has always contributed to keeping that equation balanced. Naturally, businesses buy advertising space near their brick-and-mortar stores. Or, businesses buy advertising where they can reliably assume their consumers are concentrated, like an athletic apparel company buying ad space in a sports arena.

In the future, targeting the right audiences will become easier, faster, and most importantly a lot cheaper.

Using precise location in customer acquisition

Reducing CAC can have a significant effect on businesses and it's far from a complicated process. Direct-to-Consumer (DTC) brands like Warby Parker, Dollar Shave Club and Casper have generated hundreds of millions of dollars by knowing where their consumers are online, and reaching out to them on social media platforms.

Effectively targeting potential customers online has become a competitive, saturated market, but digital targeting is only just getting started.

Not only can business owners find their customers in the real world, websites can report where visits are coming from and credit card purchases reveal where goods are being bought and shipped. Social media platforms sell advertising both by interest and location proximity, and they can track how well those ads perform - not to mention various social and loyalty apps that directly trace consumer location.

Improved location data means actionable insights. A business planning to open a new store doesn't need to make a guess at where they should open a location when they can see where their customers are concentrated during business hours. And when they gain the ability to calculate foot traffic and sales before and after a campaign launch, it isn't difficult to measure success.

Using location data, companies can reduce inefficiencies in ad spending and focus their budgets on campaigns and placements which provide a higher rate of conversion. By incorporating smart tools like advertising data systems, the cost of acquiring and retaining customers reduces dramatically, allowing companies to focus on providing better services and expanding their marketshare.