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Small Biz Hip to Retention, Slow with Loyalty Programs

Posted on 4.06.2014

It's hard to argue with the fact that it costs more money to acquire a new customer than to retain one. New research, however, indicates that for the first time, small business owners (SBOs) are investing more time and resources in existing customers rather than new ones.

This finding from Manta's and BIA/Kelsey’s joint report titled "Achieving Big Customer Loyalty in a Small Business World," is a departure from just two years ago, when small business owners prioritized customer acquisition over customer retention at a 7-1 ratio.

Small business owners are now "hip" to retention likely because the numbers back up their efforts. Sixty-one percent of small business owners surveyed report more than half of their annual revenue comes from repeat customers rather than new customers and that a repeat customer spends 67 percent more than a new customer.


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Despite the new focus on retention, SBOs still aren't investing in loyalty programs, which have the potential to complement their acquisition and retention efforts. The study found that 34 percent of SBOs have a loyalty program while the majority (66 percent) do not. Important to note is that the majority of existing loyalty programs, however, are offline.

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