User Reviews

I’m going way out on a limb here, and surely many of you may disagree with me, but I feel pretty strongly about this, as a serious consumer and as a serious business person running a startup that connects consumers with local merchants.

Greg Sterling posted an interesting piece on his blog today titled “Opportunity: Online Reputation Management.” I can’t debate the logic here and the basic point that it makes, but I think that the reality of user reviews and how they may or may not influence consumerism is much deeper than indicated. I also think that the user-review value proposition for small, local merchants is not a strong one.

Citysquares.com offers users with the ability to write reviews for local merchants. An interesting example of this is for a new coffee house in Central Square Cambridge, called Andala. It’s probably the best example you’ll get in any urbanized area of the typical small business just getting off the ground. They’re not a Citysquares.com customer (yet). I’ve been there, with my wife, and Chris has been there a few times. I really enjoyed my experience there, and I posted a review. Why? For two reasons: 1, because I truly enjoyed my experience so much, I found the atmosphere, the coffee (I’m a coffee fanatic), and the pastries and so forth very good and it reminded me of my visit to Beirut Lebanon a couple years ago. My wife also really enjoyed it. That experience was, on a scale of 1 to 10, a 9. That’s how strongly I felt about Andala so I posted a review, once I returned home. The second reason is because I want their business and I genuinely want to help them succeed.

Here’s the problem. I am founder and CEO of Citysquares.com, and for better or worse, I only post reviews for local businesses when I feel strongly compelled. I think I’m a typical consumer too – discerning, choosey, but reasonable. I believe that I am like the vast majority of consumers, of all ages.

Ask your friends, ask your family – how many of them add reviews for local businesses? How many of them make a choice to shop at local merchant A vs. local merchant B because of some stranger’s review? I think you’ll find the answer, as we have found, to be not too surprising – that it plays a very insignificant role in local consumerism. But let me stipulate one very significant factors: I’m speaking about local merchants – not products! I’ll get back to that in a moment.

Here’s what I’ve concluded about reviews for local merchants: For the most part, their nice to have, their moderately helpful for a small slice of the consumer market, but by and large, most consumers don’t find reviews of local businesses really all that relevant or meaningful. However, that whole reality gets flipped over on it’s head with one simple difference, and that difference is the almighty dollar. How much cheddar do I plan on spending? That’s the critical factor here.

Whether it’s for a local shoe store, pizza pie, a bar, or for the closest Bank of America, user reviews just don’t carry much weight with the typical, and more importantly, LOCAL consumer.

Now, let’s say I was going to take Ali out for a nice dinner, perhaps within a 30 minute radius of home, somewhere we’ve never been? I plan on dropping a little more loot, having a bottle of wine, in a quiet, romantic atmosphere. Suddenly what other people have to say means more to me. Even still, for me, unless the reviews are dramatically, and powerfully positive or negative, they don’t really impact my decision that much. I can’t think of any situation that user reviews would have a really big impact on my local shopping behavior. Ultimately, I’m looking for X, and I’m looking for it here.

Additionally, part of the fun I have shopping locally is having my own experience – not basing my decision on a stranger’s opinion. Ah, now that opens up a whole new topic doesn’t it – Trust. That’s where this is going? Well, not today.

Back to products. This is interesting because here’s where user reviews take front row – here’s where they take center stage. Product reviews!

Just this weekend I had to find a new boom microphone for my digital camcorder. I didn’t want the stock Canon boom mic, I wanted something else. But I read some reviews on CNET, and sure enough, I made my buying decision.

Take my BlackBerry Pearl for example – a huge jump for me. I went from being a long time and loyal Windows Mobile user to BlackBerry. Before I spent the moolah and made the jump, I wanted to know what others had to say – many many others. I wanted a big sampling of user reviews.

Take my Creative Zen, a new refigerator, humidifier, bicycle, pair of skis, golf club – you name it. I want to know what others have to say – really badly. I bought some new golf clubs this past summer – let me tell you – I probably spent 15 hours or so reading what others had to say about a wide variety of drivers and irons. I’m not exaggerating – just ask Ali, and my brother and father.

Ok, what’s the point here? The point is this: I think user reviews are important for every form of consumerism, whether products, services, local retail, you name it. But ultimately it’s all about the mighty dollar and the impact on me or others around me. How much money I’m going to spend, and how much that decision has an impact on me or others around me. High spend? High impact? Reviews matter. Low spend, low impact, reviews don’t matter.

So if I had a formula it would be:

Total Spend $
—————— = Relevance of user reviews
Total Impact
(distance, pleasure/pain)

That looks more impressive than it really is. Cool

Amendment: Greg and I exchanged emails after he read this blog post and he reminded me of an interesting point that I forgot to address, and that is as follows: In our many many conversations with local merchants, be them in sales calls or for other reasons, local merchants are not terribly big fans of user reviews. They don’t want bad reviews written about them. Surely, they also need to understand that they have a job to do – and that’s to please every customer. Yet some customers simply can’t be pleased, and some use the Internet or a user review platform as a sort of anonymous soap box. Ultimately, user reviews will be a big part of local search and online advertising for the foreseeable future, and certainly that is true for Citysquares.com. But we respect the needs of the local merchants, and while we allow user reviews, we do need to take an editorial approach to them sometimes. Take Andala for example. The user jlobel actually used a word that we could not approve. We did not bar his review, we merely edited the word. If a local merchant believes we’re on their side, and trust us to take user reviews and that sort of content seriously, especially if they’re a paid advertiser, than everyone is happy.

Lastly, on Greg’s point about there being an opportunity for online reputation management for local merchant reviews, I totally agree. Whoever figures that out is one clever person!

Local Merchants and Adapting to Change

A very interesting post by John Kelsey at The Kelsey Group. Very outspoken and candid reality check for small businesses, and I happen to think he’s right on the money here. I’m reminded of a conversation I had a couple weeks ago with a gentleman in New Hampshire, who was referred to me by a mutual contact. This gentleman was shopping for a Christmas gift for his wife and was at a locally owned jewelry store in the seacoast region of NH. He went in looking for a watch and didn’t quite find what he was looking for.
<!–break–> He still purchased a watch anyway, because it was a matter of convenience. He had an idea, which he shared with me, about an inventory management and distribution system for which a business, such as this jewelry store, could access their distributors’ inventory and special order items. It was more complex than that, but that’s the gist of it. He was aware of my involvement with Citysquares and wanted my opinion on whether or not he thought there was a market for this sort of thing. I explained that while I thought there was certainly a market for it, the reality is that getting local merchants to conform to the requirements of the new technology is a tough sell. Local merchants have their own ways and methods for running their business. Surely there are some standards, like Quickbooks, or Peachtree, and some standard POS and inventory systems, but at the end of the day, they use what’s easiest and most convenient. Asking a local merchant to adapt to the pace of technology and changes around them is like asking a third world nation to adopt environmentalism – it’s a stretch. Unless you can really point out the benefits and make the proposition that they can justify a quick and measurable ROI, it’s really an uphill battle. Unless it directly affects their bottom line, they will resist change. So while I agree with John’s reality check, reality is relative. There are movements all across our country, to prevent the invasion of big box retailers and the homogenization of our communities. Ones that comes to mind is Local First and BALLE. These are not fleeting ideas run by hippies, these are serious and business minded individuals who are doing it, and doing it well (to quote LL Cool J).

Local Merchants: Do they get it?

That’s really the billion dollar question isn’t it? Local search was recently labeled by a friend of mine as “The Holy Grail of the Internet.” I think that might be stretching it a bit, but for the sake of argument, let’s call it The Promised Land. After all, so many are trying to get there, yet no one can tell you what it’s like! OK, now I’m stretching it.

Surely it’s no secret amongst those ‘in the know’ that local search is a hot space. There’s been a lot of press about it over the past year or so (and certainly earlier). I can think of at least three major magazines that Yelp has been written up in over the past year or so, off the top of my head. This week they were in Red Herring. They’ve been very well funded. So have folks like Judy’s Book, and Insider Pages. As I understand it, the latter two are having some troubles. I don’t really understand any of them, but that’s not relevant right now.

Citysearch and Yellow Pages are the two biggest players in the directory advertising space. I can’t say I know their financials and I’m not going to tell you that they’re not performing well, but if memory serves me right and if my homework has been done well, Citysearch barely squeaked out a profit in ’05 for the first time, and even then, that’s after several years of huge losses. Yellow Pages is in a similar situation I believe, although not nearly as dramatic. But folks, please, correct me if I’m wrong! I want to be wrong about this.

So here’s the thing, what does Citysearch, Yelp, Judy’s Book, Insider Pages, Yellow Pages, Google Local, Yahoo! Local and lil’ old Citysquares have in common?

  1. All provide a consumer facing service, online.
  2. All need to build brand awareness.
  3. All need the participation of local merchants.
  4. All need to generate revenue from these local merchants.

So what about the local merchants? Everyone is so busy talking the talk, but no one seems to really be walking the walk. I mean, isn’t the real value proposition for any of these companies to provide relevant, local, accurate information for consumers seeking local goods and services? At the end of the day, isn’t that the objective? I’m sure everyone of these companies will claim, like us, to be doing just that. I beg to differ.

Who’s really providing value for the local merchant? Our customers, at Citysquares.com, expect a return on their investment. Remember that everyone? ROI? As a business owner, we’re focused on ROI. But so are our customers.

Before we launched our site in October of ’05 (sounds like a decade ago, but it was really just last year), we did our homework. We spoke to local merchants. (Don’t be impressed though, please.)

“What is it that you’d like out of this Ms. Merchant?”

“Well Ben, I’m glad to asked. I’d like an easy way to upload pictures of my store. I’d like to display my hours, a description of my business, my contact information. Oh, ya know what else Ben? I have a website. I’d like people to have the option of seeing more about us on our website. We don’t want you to supplant our website, just bring more traffic to it. But really Ben, the one thing I want, after all that stuff, is I want you to bring people in my door.”

“Well that’s a tall order Ms. Merchant, but if you give us a test drive, I can promise you that we’re going to do everything in our power to make you want to renew with us in 1 year.”

That’s where we are today. Renewals. And the question has come up: “So Ben, what have you done for me lately?”And we have statistics for them. We have facts and figures. Can we actually prove how much money we put back into their drawer? No, we can’t. [We are able to track a lot of things for them, but how many nickels and cents we put in their drawer isn’t one of them. (added 2006-12-16 @ 07:24) ]

We talk to local merchants all day long. If they didn’t believe in Citysquares and didn’t believe in our mission, our philosophy, I don’t think we’d be here doing this. If consumers weren’t using us, we definitely wouldn’t be here. As the super passionate founder of this wee lil’ bootstrapping startup, I’ve often wondered if I’m just a pie-eyed fool with his head to the clouds. Then I get a voice mail from a local customer who says, and I quote:

“This is Lisa with [Company] calling. And I’m calling to see if I can do some more advertising with you guys! I’m actually getting more referrals from Citysquares than I am from my Google ads. So, I wanted to talk to you about doing a little more…”

And folks, that ain’t no hype. That’s a happy customer. That’s a customer who bought in when we had less than 400 unique visitors per month, and now is investing more in Citysquares because it’s out-performing her Google AdWords campaign. Hey, not too shabby if I may say so myself. And we’re not even VC backed! That’s a customer that validates everything we’re doing. She validated every sleepless hour over the past month that the three of us have had.

With 300 customers in 14 months, we’re doing OK. We could be doing better. It’s hard work selling to local merchants. If we can get them to give us 5 minutes, we’ve almost always got a sale. But therein lies the quandary! Ah! The whole “how to sell to local merchants” question. Yes, I’m familiar with that debate. We have our ideas, we have our plans. We don’t profess to have the magic wand, but you just wait dear friends.

Now there’s the consumer side of things, right? That’s not so hard. Just demonstrate to the user that we have information for them, specifically the information they’re looking for at that moment. User generated content (like reviews) is just a value-add. It’s a bonus. Like the volume control on my steering wheel. Do I need it? No. Is it nice? Yes. Sometimes I don’t even use it. (Full disclosure: I do not have a volume control on my car steering wheel. Truth be told, I don’t have a car. My wife does though. It’s a Volkswagen Golf and it too does not have volume control on the steering wheel. But I’ve rented cars that do. Now you know.)

Here’s what it boils down to:

Merchants only get it, if we get it. Merchants know exactly what they want. They may not be using an Oracle order fulfillment systems, they may even be keeping their books in a leather bound ledger that’s 12 years old and covered in rubber bands and post-it notes. But if they have a ledger that’s 12 years old, I can guarantee you that this merchant knows more about his business than you know about yours. He’ll look up at you over his reading glasses and tell you you’re wasting your time, and that if you can’t bring him business, he doesn’t care what color your website is. He doesn’t care how many page views you have. He doesn’t care how many people read your newsletter. He’s concerned with one thing – feet in the door, young man.

The young, Internet savvy, Gen-X merchant running her clothing boutique around the corner is no different. She may disarm you with all her sweet smile and warm demeanor, but she knows more about her business than you do about yours. You have to assume that. She understands the Internet and she knows it has it’s place. She may even have a MySpace profile. Wow! She even has a website that she updates herself! Double wow! And beyond all that, she also has a Best of Citysearch plaque on her wall, from 1998. She’s got you pegged before you even open your mouth.

Does she get it? Yes. She’s waiting for you to get it.

I want to be clear about one thing – I’m not Lee Iaccoca. In fact, I’ve never even met the guy. I don’t have the answers. I don’t have the “sell to local merchants” magic wand. I do, however, understand small business. I grew up around them, in my family, and in the communities I’ve lived in. I ran one prior to Citysquares.

Local merchants are having a hard enough time making payroll, never mind getting more unique visitors to their website, or getting more people to post reviews on some web 2.0 website with a pink and bubbly brand. Local merchants are getting their asses beaten all across the nation by Wal-Mart. (I’ll stop myself right there)

I just had a conversation last night with a sports card shop in town. He was going to pay $50.00 per month for web hosting, for a 3 page website, and someone was going to charge him a lot of benjamins for a PayPal store. I had a good chat with the chap. I explained to him that the very same place he purchased his domain name for $8.00 (GoDaddy) can host his website for around $5.00 per month. (This was breaking news.) I went on to explain how they even provide a tool for him to build his own website. (He needed fresh air.) I also explained that for very little money he could use Yahoo! to build a customized storefront, with credit card services, online product galleries, and more. (The phone went dead.) But really, I’m not making this up (I promise I won’t make things up in this blog site). He was lifted to new heights of enlightenment! Then he signed up with Citysquares. He’s now a customer.

Is this the way to sell to local merchants? I mean, come on, from a practical business minded perspective, is this the way to sell? What’s the CPA? Well, that depends on who we’re trying to be, and who we’re trying to beat. I’ll let the future determine that. Feet on the street? Dial for dollars? Direct Mail? “If you build it, they will come?” Sales channels and partnerships? Look at the Google-Intuit deal. It’s brilliant. I don’t see it as the best idea to surface in this crazy space, but it’s a brilliant idea. I question why some people consider it to be such a big deal, but certainly it’s a good sales channel, and a back door one at that. I’m envious.

I don’t have the answers. But I do have one answer: Local merchants do get it.

If I haven’t done a good job of making this argument, please let me know. I’d like to type more, but I’m afraid I’ve already bored you, and it’s 8pm and I haven’t had lunch yet.