Local is the new frontier, and millions of local business owners are at the crux of being overwhelmed with new applications, services and business models.
BIA/Kelsey estimates online local advertising spend in the US to top $23 billion this year – increasing to $36.7 billion by 2014.
Groupon is the fastest-growing company in the history of the Internet; Google is trying to build out or buy their local sales efforts; OpenTable has a $2+ billion market cap, and PR machine Foursquare has 7 million users and growing.
Of course, with all this attention on the local space, comes a new generation of start-up products and services that cater to it. However, building a product solely from a consumer’s perspective is fundamentally different from creating one that adds value to local businesses, although it really shouldn’t be.
Every company wants in, but few know where to start and how to execute properly so that everyone (the local business included) wins.
When I joined the founders of SeamlessWeb in 2000 to help launch the business, we found ourselves in a similar position as many other start-ups or companies entering the local space, unable to sign up local businesses at the rate we were hoping. Restaurants wanted nothing to do with yet another “exciting” web-based company. After many unsuccessful attempts, I decided it was best to spend some time within these restaurants to get a better sense of what a “day in the life” of a local business owner truly was like.
This was an eye-opening experience to say the least, and it was a catalyst in changing our local sales efforts to be a nationwide local sales machine.
Fast forward 11 years, a successful exit of SeamlessWeb to Aramark, as well as the creation of SinglePlatform, and I’ve turned into a sounding board for a number of companies entering the space. I’m often asked for hints, tips, and tricks on how to achieve success in the local space, and my immediate response is always, “Understand your audience first!” Accordingly, I’ll be writing a series of posts about the local space, starting with this list of things to consider before approaching and/or working with local businesses.
What you should know before working with and/or approaching local businesses:
● “Running” a local business is the right term. There are thousands of variables that go into running a successful local business. The majority of owners are heavily involved with day-to-day operations, spending long days dealing with a wide range of issues like: are my employees going to show up to work? Is the milk still fresh? Has that faulty equipment been fixed? What is my competition doing? Their time is precious, and
they don’t want to add another task to their daily list.
“When I started my restaurant, I didn’t realise my day would soon be consumed with putting out fires as opposed to concentrating on making sure my food and service were great.” – Michael Chernow (Owner, The Meatball Shop)
Sales Tip: Start the meeting by thanking them for their time. It’s a small gesture to show you appreciate that they are busy and are taking the time to meet with you.
● EVERYONE is selling them something. Owners have dozens of people coming into their business on a weekly basis, selling everything from plastic bags, energy services and print advertising, to a new iPhone app or review site for them to be “featured on.” For many of these items and services, prices are not made public and are constantly changing. As a result, owners find themselves negotiating on almost every transaction.
“Just imagine how you would like it if numerous people walked into your office trying to sell you something in the middle of your day, everyday. It’s exhausting.” – Shiva Natarajan (Owner, Chola)
Sales Tip: Set a time to meet with them instead of just walking into their business without an appointment. They will appreciate that you didn’t just barge into their business.
● They Buy Their Marketing Like They Buy Their Chicken. Local businesses typically run on smaller margins, which makes them particularly price-sensitive when it comes to marketing or advertising. One of the most surprising facts I discovered was that most local businesses don’t have set marketing budgets. When they are determining whether to buy these services, they often are buying from a knee-jerk reaction in hopes for a quick fix.
“For a new service to make my priority list for the day, it either needs to make an impact quickly, or I’ll almost need to be forced into it by my customers.” – Josh Boyd (Owner, Blind Barber)
Sales Tip: “Marketing” and “advertising” are usually buzz words to stay away from because owners equate them with spending money.
● The Marketing Landscape Has Been Blurred. It used to be relatively simple for local businesses to manage their marketing. Yellow Pages, direct mail, and traditional print advertising were the obvious go-tos. These days, local businesses are just beginning to find out just how complex and fragmented their digital presence is becoming. From iPhone apps, social media platforms, search engine marketing “agencies,” local review sites, “best of city” guides, to online ordering and email management systems, even the savviest owners have a difficult time figuring out which services add any quantifiable value. Most local businesses are falling behind, and some are giving up altogether.
Product Tip: Owners don’t care about the “cool features.” Owners want pay-per- performance programs where they can draw direct lines to their cash registers.
● A Local Business’ “Web Presence” Was Often a Present. Assuming a local business has a website, it’s a large possibility the site was created on Geocities by a friend’s nephew, or on a bulky Flash-based site for a modest price of $10-20K. Unfortunately, both site types are rarely updated, if ever. The friend’s nephew has moved away, and the folks at the Flash creative shop want to charge hundreds, if not thousands, of dollars for updates. To add insult to injury, that “professional” site isn’t optimised for the 40% of Americans with smartphones. This site explains the woes of a typical restaurant website.
Product Tip: If you are trying to build something into a local business’ website, think again. Every site is built a different way, and the people who built the site are hard to get in touch with.
● Owners Are sceptical… And For Good Reason. Local business owners are constantly pitched new ideas and are all too often deceived by companies promising huge results but then have little return. Experiences like these tend to perpetuate small business owners’ scepticism toward trying out the “next hot thing”. Add to that internal concerns like high turnover rates and employee theft, and you can now understand the environment of distrust.
“I have paid dozens of people for marketing programs where I never saw a single penny back, or even heard back from them again after I handed over a check.” – Anthony Malone (Owner, Swift Lounge)
Hiring Tip: Owners don’t need another aggressive salesperson selling to them. Hire people that truly want to help local businesses, and the owners will see that and be more willing to take a risk with your product.
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