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?
- All provide a consumer facing service, online.
- All need to build brand awareness.
- All need the participation of local merchants.
- 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.