#SFSNYC: Local Commerce Shifts Toward Retention

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SW_20130115_NY_5182As deals firms lick their wounds, leaders from the local commerce space agreed during a morning panel discussion at the Street Fight Summit in New York, the ecosystem has shifted its focus from acquisition to retention. Logan LaHive, CEO of loyalty-program platform Belly, argued that the first two key drivers of local commerce — the number of new customers and the amount they spend — are no longer more important than loyalty.

“Retention is certainly one area that hasn’t been given an injection of innovation for very long,” LaHive said.

Loyalty services like Belly exploded in 2012, but lead-generation plays like Signpost are also adapting, using deeper targeting techniques to reach potential high-value consumers. Stuart Wall, CEO of Signpost, said that closing the loop — and linking acquisition with retention — is key to driving value in the current market.

The panelists also discussed the growing importance of local discovery as consumers turn to the web earlier in their decision-making process. As Constant Contact’s SinglePlatform chief Wiley Cerilli pointed out during the panel discussion, 49% of searches for local businesses occur without a local firm in mind. The directory, as it were, is becoming a commodity. It’s discovery that’s fueling differentiation in the space.


Cerilli imagined the transition in terms of a wider shift on the web, saying the Internet used to be a directory, much like a phone book, that users would search for the exact business they needed. Now, users don’t know which business to look for but rely on the Internet to help them find companies offering the products and services they desire.

Even as local commerce firms adapt, the memory of the daily deal craze — and the aggressive sales tactics used by many — remains fresh in the minds of local merchants. Both LaHive and Cerilli agreed that disillusionment among small businesses has slowed growth and so remains a major hurdle for the space.

“If you can find effective ways to reach the decision-maker, that’s half the battle,” said LaHive. “It’s a lot of groundwork. But if customers aren’t happy with the product, you can’t sustain it.”

 Photo credit: Shana Wittenwyler