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Do you know where your sales come from?

Companies with physical storefronts do. They know how much product they sell at each of their locations. And they can judge the relative success of each location by comparing it to past performance and to all other locations.

For example, Starbucks knows that the storefront at 29th and Park Avenue in Manhattan serves 75,000 customers per day at an average order value of $4.50 per order, for a total daily haul of $337,500.

But what about companies that sell by phone? Or online?

One might think that it doesn’t matter as much for these companies with a more global strategy and reach. Unlike local stores, online stores don’t have to rely on physical locations to drive sales. And so where people are coming from matters less.

Here’s why that’s wrong:

Being able to determine where your sales are coming from is critical for a number of reasons.

First and foremost, it is critical for marketing purposes. Even in a digital-first world, location matters in marketing. Companies can spend their entire advertising budget in one state, or one city, if they want to. Location is a targeting feature in almost any kind of online advertising one can imagine.

When we know where our customers are coming from, we can better determine the return on our advertising campaigns in progress. We can also optimize our marketing budgets so that we can capitalize on those regions we’re most likely to succeed.

Second, it matters for logistical purposes. Let’s say you manage an online storefront that ships physical goods. In order to optimize your shipping processes, you need to know where most of your customers are located. Back when Netflix was selling DVDs by mail, the number one reason for their success was how well they were able to predict and model their logistical operations, placing fulfillment centers right where they were most needed.

And lastly, where your customers are located can affect how you communicate with them. If your customers are mostly on the west coast, would it make sense to keep call center hours in the early morning in the east? If your customers are big city dwellers, does it make sense to include imagery of wide open spaces on your product pages and promotional materials?

The more you know about your customers, the better off you’ll be. And that includes where they live.