By Bill Clark, CEO, Spindle, Inc.
It used to be that the business battle cry for merchants was acquire, acquire, acquire. Merchant technology was engineered to be primarily transaction-based, focused essentially on a singular mission: enable merchants to support the payment preferences of as many customers as possible. Acquire new customers; accept their payments. This was the basic model. The thought process seemed to be that the more ways you allow consumers to pay, the less business you end up turning away. The logical result of this industry-wide objective was the creation of a rigid mentality firmly fixed on payments.
But in today’s fluid ecosystems, having too rigid a focus on anything can be detrimental. Merchants today must be more imaginative, creative, and open-minded to the sales and service possibilities that technology provides, including the ability to transform one-time shoppers into loyal return customers. As the old adage states, a bird in the hand is worth two in the bush — especially when hunting in that bush requires costly marketing. So, the business battle cry for merchants has taken on a whole new pitch. One must continue to consistently deploy new customer acquisition tactics, retention, retention, retention has become the new charge of the day.
Why Retention? Better ROI
You’ve heard the argument before, and you can’t argue with the math. Most marketing studies confirm that hunting for new customers — in other words, targeting, advertising, interacting, and converting — costs nine-to-ten times more than simply retaining existing customers. With such a compelling ROI model as this, it’s no wonder that customer top-of-mind initiatives like loyalty clubs, punch cards, and points programs were quickly added to the merchant business toolkit. In fact, more recent and industry-specific studies show that merchants now rank retention over acquisition as their number one business priority.
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