Local Merchants Turn to Facebook for Customer Acquisition, Email for Retention

When it comes to customer acquisition and retention, Facebook appears to be of utmost importance for local merchants, according to a survey conducted by Reply.com. Nevertheless, email remains an important tool for retaining new customers.

Reply.com’s “Pulse of Local Business Survey” found that 65.1 percent of respondents said they use Facebook to acquire new customers online, followed by 56.1 percent who said they use Google for this purpose. Meanwhile, 54.0 percent of merchants included in the survey said they use email for new customer acquisition online.

LinkedIn (45.2 percent), Yelp (34.9 percent), Twitter (27.9 percent), YP.com (27.4 percent) and online ads (23.5 percent) also got substantial responses.

On the lower end of the spectrum lie Groupon (3.7 percent), LivingSocial (4.1 percent) and Myspace (4.5 percent).

According to a survey from Constant Contact earlier this year, 53 percent of small-business owners said daily deals were effective for attracting new customers, followed by 51 percent who said the same for Internet ads, 38 percent for Web listing sites, 37 percent for social media ads and 29 percent for online coupons.

There’s clearly a gap between Constant Contact and Reply.com’s findings. If so many small-business owners think daily deals are good for getting new customers, why are so few using them? Either daily deals have lost a huge amount of appeal in the past six months or so, or the pools of respondents for these two surveys are significantly different from each other.

When it comes to retaining new customers online, 63.4 percent of respondents to Reply.com’s survey said they use email, followed by 63.0 percent who said they use Facebook. All other tools are on a lower tier, with Google (38.7 percent), LinkedIn (34.2 percent), Yelp (23.9 percent) and Twitter (22.7 percent) following behind.

Again, Groupon, LivingSocial and Myspace comprise the bottom portion of the list of tools merchants use for retaining new customers online .

Thirty-seven percent of respondents said they think their business does a good job of measuring return on ad and marketing investments, while 33 percent said the opposite.

The biggest challenge in acquiring customers online is cost, followed by the sentiment that current solutions are better suited for big companies than for local merchants, and the poor quality of leads and paying for bad traffic.

According to Reply.com, 27 percent of respondents said a more cost-effective way to acquire qualified leads and customers would help them compete against bigger companies for customers online, followed by 18 percent who said a solution that generates more qualified leads and customers, 14 percent who said a location-targeted solution, and 13 percent who said tools that are easier to use.

For this survey, Reply.com polled more than 1,300 local merchants in the U.S. during May and June.