Businesses are urged to locate physically closer to their target markets as distance significantly impacts on the sales of the company, an official of a global workspace provider Regus said.
In a research note, Regus Philippines country manager Lars Wittig said that physical proximity to customers is one of the most important sales drivers for of companies.
Wittig cited a recent global business survey conducted by Regus that showed that more than 80 percent of respondents from 100 countries including the Philippines believe customer retention rates could be increased by greater physical proximity to customers.
Also, 34 percent of the respondents noted that proximity to customers is key, as this helps solve customer problems and improves customer satisfaction levels.
“The role of physical proximity in customer retention is even more crucial when you consider that acquiring new business can be five times more expensive than retaining a customer,” Wittig said.
“So a 2 percent increase in customer retention can equate to a 10 percent cost reduction when it comes to servicing the business,” Wittig explained.
The country manager emphasized that businesses should know the demographics of their customers to help them identify a location suitable for their businesses.
Wittig also cited another result of the survey, which showed that businesses that trade internationally displayed better performances.
“More than half of the businesses who were exporting their products or services who responded to the survey reported that they were generating increased revenues, compared with less than half of companies who focused on their domestic markets,” Wittig said.
He added that international businesses also report a comparable increase in profits compared with their purely domestic counterparts.
Apart from the importance of location to the target market of a business, Wittig also said that accessibility of the employees to their place of work is another vital point business owners should consider.
“With Manila’s adverse traffic conditions, choosing a location that’s easily accessible would ease the time lost in the commute to and from work and boost productivity,” Wittig explained.
Wittig said the location of a business also plays a pivotal part in different aspects of a business such as operations and talent acquisition.
“The right business environment helps to boost productivity, creativity, and can drive growth. Additionally, working from the right location helps place businesses in a modern and lively setting, and can increase the potential to network with other professionals,” Wittig concluded.