Customer Acquisition is (Still) King for Local Merchants

For many small businesses, the biggest challenge is acquiring new customers at an acceptable cost. And in 2011, we saw several new approaches to customer acquisition gain momentum: Facebook Ads and group deals.





According to our most recent Merchant Confidence Index survey of 2,500 local business owners across the U.S., while newspaper ads and direct mail – tried-and-true offline customer acquisition techniques – are still popular, with 25% and 24% of merchants using them, some 12% of merchants have offered a daily deal – up 33% compared to three months ago – and 24% bought targeted Facebook Ads.

Daily deals appear to be effective in driving customer acquisition tool for some small businesses.  According to the Merchant Confidence Index, 75% of merchants who have used daily deals in the past would do so again.  Of those who would use daily deals again, 61% of said they’d use them again because daily deals are “effective for customer acquisition.” While only 37% of merchants said the deals were “profitable”, it seems getting a new customer through the door makes daily deals worth trying again.

Local merchants are also acquiring new customers via Facebook Ads, the targeted paid ads offered by the world’s largest social network.  Some 38% of merchants said they’d use Facebook Ads again due to their effectiveness as a customer acquisition tool.  But for those who wouldn’t use Facebook Ads again, 66% said it’s because the ads did not work to acquire new customers – showing that customer acquisition is a top priority for small businesses.

Customer acquisition is so important to local merchants, the majority of respondents said they’d be willing to purchase qualified prospect information on a pay-per-lead basis. Over 60% of merchants in the financial services industry would pay for leads, while one-third of merchants in the automotive, construction, and home improvement industries would.  Look for this strategy to gain steam in 2012.

Marketing strategies that aren’t proven to bring in new customers are, unsurprisingly, not very popular with local merchants looking to grow their businesses. Mobile marketing, for example, has been slow to catch on with local merchants. Only 22% of merchants have tried mobile marketing, with 72% saying they’ve hesitated because they don’t have a good understanding of how to use it to reach potential customers.

With nearly a third of local merchants concerned about the high cost of marketing in the next year, it’s no wonder they prefer to use channels that deliver what they most need: new customers.

Sincerely,

The MerchantCircle Team