MerchantCircle: ‘Zero Customer Acquisition Cost’

The not-so-stealth small business platform-cum-CRM tool-cum website substitute, MerchantCircle, officially launched today. (Here’s the release and here’s CEO Ben Smith talking about MerchantCircle on video: “Use Google to fight back against the big guys.”)

Smith likens a business profile on MerchantCircle to MySpace, and argues it’s an effective alternative to “managing a complicated website.” MerchantCircle has pre-populated the site with standard SME database data (I believe InfoUSA) and has developed a range of viral techniques to encourage local businesses to sign-up for the service.

There are various pricing package that offer different options, including email newsletters and ads appearing on Google and Yahoo! (at $99 per month). Smith told me when I spoke with him that they had tested various customer acquisition methodologies over time and had achieved a “virtual zero-cost” strategy. This was a response to the now-perfunctory question about the capacity of sites to “pull” local businesses online without a YP-like local sales force.

Even though consumers will discover MerchantCircle’s business listings on search engines (and so will local business owners searching for themselves), the site is not intended to be a consumer destination (you can’t do category lookups for example). If it succeeds, over time it could become one by default however. Putting that aside, the idea here is to offer a rich, structured landing page that substitutes for a website and additional marketing tools, including blogging.

Many local businesses don’t want to build sites (even with the aid of templates, which often look to them to be too “generic,” as the owner of my gym recently told me). Rather a structured, professional looking landing page is all that some businesses require. So what’s the difference between a templated, “generic” website vs. a standardized landing page? The difference is the SME’s expectation. If they’re paying for the site they want something more customized. But if the landing page is free or very inexpensive the expectations are different.

Here’s MerchantCircle’s “showcase” of businesses that have adopted the site and related testimonials. Smith said that they were having considerable success in non-Silicon Valley secondary markets, which suggests that they’re doing something right. For example, here’s a listing/site for one of the featured businesses, Blonde Bear Bed and Breakfast, which is located in Alaska. In this case, the B&B’s own site is number one on Google, but MerchantCircle’s page is the third listing.

SEO-friendly design is part of MerchantCircle’s strategy, both to drive traffic and to acquire merchants. Local businesses are using search engines to see where they show up online (a variation on the behavior of looking up one’s YP ad in the print book). And finding the MerchantCircle listing will drive some number of customer sign-ups, especially given that the most expensive option is essentially $100 per month – not much of a risk. The basic listing is about $30 per month, the cost of a local phone line.

What’s different about MerchantCircle is the composite dimension of the offering – web presence + search marketing + CRM tools (newsletter, blog). Another interesting aspect of the offering is the “request a deal” feature. Consumers can essentially ask for a deal/discount, which makes it like a coupon. Businesses can be ethical or unethical about this (pretend retail or regular price is the deal), but this feature also aids in “tracking” where leads came from.

I believe that getting small businesses’ attention is the hardest part of the sale. Getting that attention and the marginal support that’s offered by an in-person sales rep. is the value that the local sales force brings. But I also believe that once the culture changes to the point where everyone must have an online presence – and we’re only about three years away from this – merchants will be more actively seeking out options.

With each new small business offering, some friction seems to go away. And local businesses are by the day becoming more interested and more sophisticated about the Internet. That doesn’t change the fragmented nature of the market and the patchwork of strategies required to bring more of these merchants online.

As someone who is having a small business website built, I can tell you it’s a complicated and far too painful process. To the extent that MerchantCircle has found a simple way to bring local merchants online – it says it has 5,000 already – and to cost-effectively market them through search the company will find eager adopters.

MerchantCircle and others represent a challenge to yellow pages in several ways, but most immediately in terms of price. Yellow pages are selling print and Internet and search marketing. And while those products may be quite effective, especially in reaching a more and more fragmented consumer market, they can’t compete on price with an offering like this.

Yellow pages may argue that the local businesses that would adopt a MerchantCircle aren’t going to put pressure on them because they would represent a “bold listing” at best. However if content falls out of the print book, in favor of a MerchantCircle, that will accelerate consumer abandonment of the print directory. And usage is where the yellow pages is most vulnerable right now. We’ll see.

_________

Here’s more from

SiliconBeat and Peter Krasilovsky’s LocalOnliner. I’m corrected that the db provider is Amacai rather than InfoUSA.

About these ads

50 Responses to “MerchantCircle: ‘Zero Customer Acquisition Cost’”

  1. Gib Olander Says:

    Check that data again. It’s not InfoUSA. Merchant Circle is doing a nice job of creating valuable content which allows the big traffic SE’s to serve relevant results from their main search box.

    Having content about a merchant is critical, without it a query can do no better then serve up an SIC code / Yellow Page heading list of businesses. With content a person can begin to make a buying decision.

    As the old adage goes content is king and Merchant Circle is doing an excellent job of aggregrating it.

  2. Greg Sterling Says:

    Thanks

  3. Ben Smith Says:

    With the official launch of MerchantCircle, we’re seeing a phenomenal adoption of the service – we blew right past 5,000 merchants – and they’re inviting local colleagues to join them in their MerchantCircle business networks. We created the service with frequent and direct feedback from our members — on the great advice of our advisor Mary Lou Song who helped shape the community at eBay — and it was their insights that helped us to arrive at the unique combination you point out: “web presence + search marketing + CRM tools (newsletter, blog)”. It’s really important to local businesses to get a web presence that’s effective, professional and doesn’t take a lot of time away from their businesses. We’re seeing local businesses across the country sign up for the service, personalize a listing in moments and quickly become more visible to both their existing customers and to new customers who are looking for local businesses via the Internet, and that’s really rewarding for us. Take a look at Majestic Art Gallery in Ludington, MI and Cambric Ltd, a women’s clothing boutique in Los Altos, CA.

    With even more feedback from our members, we’re excited to continue to refine the service, add more capabilities and help local businesses tap into the power of the Local Internet — local customers who are looking for their unique products and services. So, send your feedback our way. We’re listening.

  4. The Future of Real Estate Marketing Says:

    MerchantCircle Launches Social Networking for Business

  5. JB Says:

    If it is not InfoUS, what company provided business data?

  6. David W. Says:

    Merchantcircle phone spammed my company today, with a recorded message saying that we had gotten a negative review, and we could fix that if…

    A visit to their site shows that you can only get rid of your listing is to sign up. I did, and the option to delete the listing is no nowhere to be seen. Any bets on whether that’s a pay only option?

    So basically, merchantcircle signed me up without my consent, spammed my business with a prerecorded phone call, and tried to blackmail us into buying a higher service level lest we receive bad reviews.

    Absolutely disgusting.

  7. Greg Sterling Says:

    Wow. If that’s accurate that’s very unfortunate.

  8. At Smtith Says:

    SCAM -MerchantCircle.com – using the PHONE to call, Merchantcircle is a scam and I plan to call the PA Attorney General to report this phone scam. Called to say someone left a BAD review of my business I have like two clients this is a scam to get me to contact them. I saved the message to send PA Attorney General also am considering contacting my attorney.
    I think someone should spam the crap out of their business, fry thier servers. One could only hope….

  9. Ben Says:

    Hi Greg:

    I noticed the comments today – this same content is available with some links on our blog at the URL above.

    MerchantCircle is focused on delivering services to enable local businesses to find more clients. As part of this service, we provide a web page for each merchant as well as tools that merchants can use to get the word out about their business (blogs, coupons, newsletters). The free MerchantCircle service is (as the name indicates) free and is being used by over 50,000 merchants currently.

    Merchants can receive ratings and/or reviews on their MerchantCircle listing. In the past, some merchants have raised concerns about not finding out their listing was available and more importantly that a consumer had posted information on that listing. We have been experimenting with many different methods of informing merchants when their listing changes. For example, when a listing is claimed, we notify the merchant via multiple methods to confirm identity. Some of these methods involve pro-actively contacting merchants who may not visit the site regularly or are unaware of the listing. These efforts have been made to try and manage a merchant concern.

    As you can imagine, this required some investment and some effort. In fact, for a while the entire team of 9 personally contacted local merchants. Anyone who was worked with lots of users can probably guess that this approach does not work when rapid growth occurs. Some of the experiments seem to be having unintended consequences and had some execution issues. We are working to address those issues while continuing to deliver value to merchants.

    In addition to our efforts to keep you informed, our system allows users to invite local merchants to join their network, or MerchantCircle. The growth in merchants has resulted in a large number of invites on the system over the past few weeks as merchants figure out that adding to their network will increase the ability of local customers to find their listing. We have received some concerns about this and are working to improve the situation.

    Merchants have complete control over their information on MerchantCircle. If anyone would like their listing to be removed from MerchantCircle please email remove@merchantcircle.com and include your business name and phone # and we will remove your listing from the site and your contact information from our system within the day.

    If you would like to use MerchantCircle to help grow your business, we look forward to working with you to continue to improve our ability to bring you local customers.

  10. Henry Bowman Says:

    Ben Smith is a mealy-mouthed fraudster, pure and simple.

    On March 28, 2006, MerchantCircle used a robot (with no recourse to a human) to call my phone and deliver an ad, in violation of both the Telephone Consumer Protection Act of 1991 and the federal Do-Not-Call list.

    Then, on September 16 and 26, a “member merchant” outside my area, whom I never heard of, and who is certainly no customer of mine sent me two e-mails urging me to join MerchantCircle (or MerchantCircle “borrowed” his registration information and sent them to me “on his behalf”). On September 16, I responded by entering a negative review on his MerchantCircle listing and denouncing him as a spammer (I ignored the message of the 26th).

    Then on the 27th, I received the following message on my voice mail from 866-849-3243:

    http://wordengardens.com/scam/merchantcirclespam.mov

    Like the other people, I found that nobody had entered any ratings for me at all. Refusing to “activate my account” just to see if I had any ratings, I instead entered two positive testimonials for neighboring businesses that I use, businesses who also had not “activated their accounts,” and I saw that when ratings were actually present, they appeared whether or not the “owner” had activated his account. Since my own listing was devoid of ratings, that means that MerchantCircle flat out lied to me.

    I made the above recording available online in response to a blogger who had the temerity to suggest, “But were the automated calls even placed?” Yes, they were placed. No, this isn’t an “organized smear campaign.” And yes, MerchantCircle are frauds and spammers, and I’ll be damned if I ever deal with them. I hope they die a nasty, smelly, public death in the marketplace.

  11. NewHorizon Says:

    Fast-forward 3 months … things must me slowing down at MerchantCircle.com … we got a prerecorded phone call saying we were googled and we received a positive rating.

    Of course, there were no ratings.

    I’m not against networking businesses, and I’m aware that MerchantCircle will remove listings upon request. Nonetheless, unsolicited pre-recorded phone calls containing false/mis-leading information isn’t the way to grow a business nor build a positive reputation.

  12. AhmedF Says:

    Not usually one to toot my own horn, but I posted about their tactics recently: http://www.techsoapbox.com/merchantcircle-we-love-the-scum/

  13. L Rubin Says:

    MerchantCircle – an unethical kind of viral effect

    After receiving an email from the Governors office inquiring to my email that I had supposedly sent them, I did some checking and here’s what I found. MerchantCircle had sent an email to the Governor of Connecticut fraudulently using my name as the signatory which boasted about the MerchantCircle service and asking them to sign up. Yes, they in-fact, took my personal email after I was jerk phone spamed, high jacked my email address and sent emails out making it appear they were from me with the intent of endorsing their service.

    After days of aggravation over the issue (it’s my reputation not theirs) I officially reported the fraud to the State of Connecticut and to MerchantCircle, the State has promised to look into the fraudulent practice of Merchant Circle. MerchantCircle honored my request to cease and desist notice and removed my account. No apology, no answer on their practice – just hiding from phone and email inquires.

    Their practice is certainly viral but not a mystery anymore –Ben Smith and Wayne Yamamoto are common internet spammers and scamsters of the worst kind that give legitimate companies a bad name.

    For an in-depth unbiased look at MerchanCircle fraud tactics look at the post here:
    battellemedia.com/archives/002632.php

    L. Rubin

  14. Tim in LA Says:

    What a load of bull those two blowhards, Yamamoto and Smith, are spewing about “zero customer acquisition costs” and name dropping legit companies.

    Merchantcircle.com uses deceptive advertising and unethical marketing practices. Below is an excerpt from the letter I just sent to the Silicon Valley BBB:

    “My business was just phone-spammed today by a company representing merchantcircle.com — the prerecorded voice message said “a customer has left negative feedback about your business” and to “visit merchantcircle.com to view this feedback.” There is no feedback on my business; it’s a bait-and-switch scam, baiting business owners with non-existent negative feedback and switching to a sales pitch for their services.”

    Other hallmarks of a shady company such as no phone number posted and having to hunt for an email address (questions@merchantcircle.com) would indicate to me that this is a company to avoid ANY dealings with.

  15. What’s Up with Merchant Circle? « Screenwerk Says:

    [...] Up with Merchant Circle? This older post, “Merchant Circle: Zero Customer Acquisition Cost,” has been commented on many times. I received another post this evening, which was critical [...]

  16. Andrew Says:

    You can call one of their employees, Kevin Leu, at 858 361 4407.

  17. Search: MerchantCircle provides a circle jerk for local businesses » TechAddress Says:

    [...] MerchantCircle CEO Ben Smith promised to stop the autodialing — but it’s continued.contacted Smith about the practice in September 2006. Smith claimed “that he’s on it.” According to the comments businesses are still leaving on blog posts about MerchantCircle, the practice continues to this day. [...]

  18. John Says:

    Merchant Circle has not stopped autodialing as of October, 3 2007. We just got the same spam call from them. It is interesting that the advertising posts by merchantcircle in reply to this post refer to the 50,00 small business users that take advantage of their services.

    How much would you like to bet that 98% of those are people that received spam calls and signed up so that they could take care of a customer service issue that did not exist. That is not gaining customers, that is just fraud.

  19. DAVE Says:

    Merchant Circle has not stopped autodialing as of 01/10/08

    we got a prerecorded phone call saying we were googled and we received a positive rating.

    To bad we couldn’t do like a class action law suit

  20. linda Says:

    merchantcircle.com is a scam. They call with auto voice messages that your business has a review on their site. No positive or negative info to be found, from them, about your business. Trying to contact the “company” via web site is not possible (they must have sensed negative responses) and anyone who hides that deep has to be crooked. Total scam and please delete them from your business listing.

  21. Greg Sterling Says:

    I heard from someone else yesterday that this sort of thing was still going on. I was under the impression that their tactics had changed.

  22. MycityMerchants Says:

    I feel you guys. I am launching MyCityMerchants to compete with merchant circle.

  23. Momentum Blog » The Importance of Web Analytics Says:

    [...] fast forward to 2008. Investors in consumer facing businesses are looking for those with extremely low customer acquisition costs. Businesses that can’t keep these costs low while showing traction [...]

  24. James Pritzker Says:

    Really, even today, Merchant Circle has not addressed the spam issue. We are talking almost 2 years later.

    What can you do about it? Call the BBB and report it on the Rip Off Report dot com. More and more people are reading and posting on this site to flag frauds such as Merchant Circle.

  25. Gerry Rioux Says:

    MerchantCircle crawled out from under a rock again today, this time* to inform me that a consumer had checked with MerchantCircle to verify that we exist or are an actual place of business (something along that line), and that we needed to go to MerchantCircle.com and respond. This makes no sense. Why would a consumer go to MerchantCircle and ask about us? If a potential customer works on-line and they have our name, then they have seen our web site. Once there they would have found the link to the Better Business Bureau where they could have obtained a reliability report on us.

    *Previous spam was to tell us we reeived a complaint. Ha! This is a small business. We know our customers all too well to fall for this.

  26. Laura Says:

    Exactly what Gerry Rioux said above — I received the same robo-call about someone wanting to know if we’re a real business — like they couldn’t do a google search or yellow pages search that would give them a physical address. Plus they could easily find our website. Stupid, stupid stupid. It was the first I’ve ever heard of MerchantCircle and I was suspicious right away. Thanks for providing this forum, it helped me confirm my suspicions. MerchantCircle is a ripoff and a fraud, and they ignore the Do Not Call registry. Shame on them!

  27. Sara Says:

    Received the same call this evening at my business. I had never heard of MerchantCircle and hope to never again. Sketchy to say the least.

  28. Sara Says:

    Forgot to add that you must register to contact them through e-mail. Although, they are available to chat with for one hour twice a week!!!

  29. Mike Says:

    Thanks for the blog – It’s nice to know that everyone is sharing annoyance.

    I just got phone-spammed by them, and my anti-spam-alert-back-of-neck hairs raised up! Sure enough. Why don’t they get a real job?

    We’re also in CT – I am sure our AG is doing everything he can to not bother himself with stuff like this. …

  30. cashrush.net Says:

    well i set up a nifty little page with them and they put me fourth on the list in the finacial services section , and we do offer these FINANCIAL services we are CASH GIFTERS saving the world one gift at a time!! well today i tried to log into my site and it appears to not be there? any body know wazzzuup???

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    Analytics service providers such as Fractal Analytics, have delivered their clients CRM Analytics and Customer Analytics services to help them increase their customer base and hence increase their marketing ROI.

  32. Air Quality Guy Says:

    Same BS business, just changed tactics. These guys have a long history of scamming. Why would anyone do business with them if they just spent 5 minutes doing a little homework? They just phone spammed us yesterday with the robot telling us someone is trying to verify we are a legitimate business too. Nothing but trouble. Stay away.

  33. Sioux City Sue Says:

    Thanks guys and gals! You just saved my hide. I got one of those phone calls this morning and was going to check it out but got here first. You have made my day!

  34. John Says:

    OK, I got the robo-call today that someone wanted to’verify’ my business. I would think they could just contact me directly. In fact, in our industry that would be the normal way things happen. I’ve dealt with the phony phone directory companies and the aptly-named ‘Rip Off Report’ [it is itself an extortion racket]. There seem to be a lot of people trying to make businesses pay them money these days, some legit and some not, so I’m inclined to be careful. If you want to sell me advertising, say so, but if you call me up and play games, I’m not playing.

  35. John Says:

    Please read David W’s post above. Unfortunately the dark side of CDA section 320 is that ‘review sites’ are immune from liability for ‘third party posts.’ That is how sites like ‘Rip Off Report’ stay in business while demanding huge fees from ‘reported’ companies. In the old days we called it extortion. Google apparently LOVES review sites and gives them what I feel is unwarrented domain trust [translation: they show up in YOUR brand search]. Businesses are unjustly being harmed. We need to write our congressperson and attorney general’s office.

  36. greg Says:

    Is there any value in linking to other merchants on MC? I get periodic emails from other merchants I don’t know. Not seeing the value.

  37. Greg Sterling Says:

    There may be some SEO or referral value. The company certainly promotes the idea that there’s value but I don’t have any independent data one way or another.

  38. Greg Says:

    Well, one point worth mentioning, Google certainly hasn’t scored MC poorly. Their member listings certainly rank well. What’s rather ironic is their homepage is not geared toward promoting members, it is all self promotion.

    Based on others opinions, MC will eventually hang themselves. Until then Google will continue to offer them exposure in return for updating their own databases. I would suggest taking advantage of MC until that time even if it means dealing with some annoying sales tactics.

  39. gostrath Says:

    I have some information. Merchantcircle is hiding their information, hosting contacts and the like. I did a little research and found that they are hosting with the following firm:

    Silicon Valley Colocation, Inc.
    PO Box 390804
    Mountain View, CA 94039
    Phone 4087470724
    Phone 408400-0550
    email: abuseteam@svcolo.com
    info@svcolo.com
    support@svcolo.com

    These people knew nothing of the trouble and asked that people contact them with complaints. Lets make a difference and shut down a bad company.

  40. contractors Indianapolis Says:

    I have found Merchant Circle nothing short of amazing in getting my sites listed to the top of the search engines.

  41. Top Posts of 2008 « Screenwerk Says:

    [...] MerchantCircle: ‘Zero Customer Acquisition Cost             [...]

  42. Robyn Says:

    merchant circle helps me get better ranking on the search engines I love MC – the phone calls are annoying but otherwise, hey free service good results – i cant complain

  43. jdwebdesigns Says:

    I think this is just too funny. This is the second time I have found negative things about MerchantCircle.com. The funny thing is, I have been a member of MC since December and they have done nothing but HELP my company out. I have gotten more phone calls, more emails and more leads with them in three months than I have with anyone else.

  44. Dennis V. Says:

    Businesses at MerchantCircle can and will remove any negative comments or reviews at this website. This is very unfair to the consumer who is not able to read the negative reviews that the businesses do not what consumers to read. Try writing a negative review at their website: merchantcircle.com, it will be eliminated within days by the business it was written about. Try to call their 800 number from their website: merchantcircle.com. 800-305-9203. It always says this business is temporary closed or want to charge you $34.95 to talk to them. Consumers need to stand up to these so call consumer advocate websites otherwise we the consumer will get taken and scammed into thinking these businesses have only wonderful reviews and do business with them. Stay away from MerchantCircle.

    Email I received from MerchantCircle after questioning why my review about “HEAT USA” was removed:

    Subject: [#MGO-788957]: neighbor / listing-remove=Remove listing /
    Date: 12/28/2010 2:46:11 P.M. Eastern Standard Time
    From: support@merchantcircle.com

    Merchants are allowed to manage their Reviews feature, hence, they can remove individual reviews or the entire feature if they so desire.

    The MerchantCircle Team
    800 W. El Camino Real, Suite 330
    Mountain View, CA 94040
    Follow us on Twitter: http://twitter.com/MerchantCircle

    Ticket Details
    ===================
    Ticket ID: MGO-788957
    Department: Neighbors
    Priority: Neighbor
    Status: Closed

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  47. Ecom Instruments Says:

    It is good there is a soltion for the big guys. The internet is becomming more for the big corporations than the smaller guy.

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