Why are Businesses Afraid of Direct Customer Relationships?

Today, countless merchants use third-party marketplace platforms to manage their customer data and relationships. These third-party marketplace platforms handle the logistics of end-to-end ordering and often incorporate built-in marketing strategies. However, through this process, merchants lose oversight of their customer data and the direct relationship with their customers. This can cause a variety of issues, including a loss of control over customer loyalty and experience, an inability to grow brand awareness, and a decrease in retained revenue.

For many merchants, this reliance on third parties has a lot to do with a reluctance on their part to own their customers. For these businesses, the fear of owning their customers has to do with many of the following factors:

1. They are Worried About Handling Their Own Marketing

Reaching customers today is complex. Fueled by both the pandemic and continual improvements in technology, most consumers rely on digital channels for making their purchasing decisions. In fact, according to Google, 59% of shoppers use Google to research a purchase they plan to make either in-store or online.

For many merchants, reaching customers through online channels can feel overwhelming. From social media marketing to running Google Ad campaigns, there are countless methods for targeting customers throughout the purchasing journey.

Because this can feel outside of the realm of a business owner’s expertise, many merchants choose to use a third-party platform that will handle marketing in-app.

A prime example of this is in the restaurant industry. Marketing a restaurant online, ranking for important local search keywords, and handling digital orders can feel like too much for a small business to handle. These restaurants turn to third-party apps, such as GrubHub or UberEats, to act as their primary form of marketing.

While this does solve the problem in part, there is often a high price to pay for earning a top-ranking position on these apps. And it can be extremely limiting to a brand’s growth.

Comparatively, when a merchant can find a way to handle their marketing, they can increase their reach with a much lower dollar spend.

2. They are Concerned About the Cost Associated with Maintaining Direct Relationships

Maintaining direct relationships with customers can be hugely beneficial. However, this task comes with a cost that many merchants feel is prohibitive.

To maintain direct relationships with customers, a merchant has to have a customer management system in place. They need a way to store customer data securely, and they have to tie everything together to allow for seamless communication.

For many merchants, in the past, this has involved the use of numerous platforms, which is not only unwieldy and inefficient but can also be extremely costly. Paying for numerous subscriptions, outsourcing components of the relationship management, and even paying for in-house staff to interact with customers can all become too much for a small business to handle.

For this reason, a lot of merchants choose to use a third-party platform to own their customer relationships. This can make it less costly to manage these relationships, but it can also be extremely risky, as indirect relationships are often fraught with issues. Merchants lose insight into these relationships and lose most of their control over the customer experience.

3. They Find It Easier to Pay Commissions for Orders Rather Than Manage End-To-End Ordering on Their Own

In most cases, using a third-party platform for end-to-end ordering involves a loss of revenue paid out in commissions for each order placed. While losing out on that revenue is not ideal, many merchants simply find it easier than attempting to manage end-to-end ordering on their own.

For some merchants, this is due to a poor experience in the past. They may have attempted to own the process, only to find major hurdles in the way. Handling inventory levels, ensuring accuracy in order placement, allowing for multiple payment options at checkout, and making certain of timely delivery can be challenging.

A third-party marketplace platform often feels like the best solution to this problem. The issue is that, while it may solve the complexity of the process, it can stagnate long-term growth due to high commission costs and reputational harm.

4. They Lack the Technology to Manage Customer Data and Relationships

Managing customer data and relationships requires a complex web of channels. In our omnichannel world, customers expect to be able to reach out to a business via email, phone, chat, or even through social media channels. And when they reach out, they expect that business to have connectivity between all these channels. Additionally, if a customer chooses to interact with a business both online and in-person, they want that experience to be seamless.

For small businesses, acquiring the right technology to manage this data and facilitate a seamless relationship can be difficult. Often, there are no technology experts on staff or a dedicated IT team to handle technology integration. The result is that a third-party platform makes the best sense.

However, in the process of turning over all this information, a large amount of control and insight is lost. Additionally, these third-party solutions often don’t create the seamless experience that both the customer and merchant desire.

5. They Don’t Have Experience with Social Media or Influencer Marketing

Social media is a driving influencer in the decision-making process of many buyers. Whether it’s determining what food to eat for dinner or where to order flowers from, consumers today rely on social media channels to help them make purchasing decisions.

Regardless of what your brand is selling, investing in social media marketing is key. In fact, in 2020, social media ad spending totaled around $132 billion, and spending on social media marketing is expected to hit the $200 billion mark by 2024.

Benefits of social media marketing include:

Increased exposure
An uptick in online traffic
Additional lead generation
Direct communication between brands and consumers

Hand-in-hand with social media marketing is influencer marketing. In 2020, on Instagram alone, the total number of brand-sponsored influencer posts exceeded six million. This has turned Instagram influencer marketing into a $2 billion business. The overarching global influencer market has more than doubled in value since 2019, reaching nearly a $14 billion value.

While it’s no mystery that investing in social media and influencer marketing is critical, many merchants don’t have any experience with social media or influencer marketing or knowledge of how to make it work for their brand. This can prevent them from keeping up with their competitors, leaving them reliant on third-party customer bases for their marketing strategies.

6. They Haven’t Tried a Platform That Can Solve All of These Problems

In many cases, a merchant is afraid of owning their customers because they have never used a platform that can solve all of the above-listed problems without the need for commissions or loss of direct customer relationships. The only solutions that have existed have been cost-prohibitive or wrought with drawbacks.

With Ally, our platform helps solve all of these problems and more while making it simple for merchants to transition from third-party solutions to direct ownership of customer data and relationships.

When using Ally, you own 100% of your customer data, which allows you to market, promote, advertise, and interact as much as you wish. You can even export data from Ally to other platforms for campaigns, newsletters, email marketing, and more.

Additionally, our full suite of tools allows you to:

Find customers
Take orders
Connect with delivery drivers
Manage payments
Launch white-labeled iOS and Android mobile applications
Build an ecommerce website
And more!

If the fear of owning your customers has held you back, we invite you to try out Ally today. Joining is simple, and our team will be happy to assist you as you make the transition to taking back ownership of your customers.