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LSA17: Local Sales – Can the Patient be Saved?

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At LSA17 this morning in San Diego, Charlie Laughlin led a panel of industry vets unpacking the future of local sales: Brendan King, CEO Vendasta; Jon Martinsen, CEO FCR Media / SIINDA Chairman of the Board; and, Sharon Rowlands, CEO Reachlocal. Here is a recap from the session:

Charlie opens with the question, “why does the patient need saving?” There are many things putting pressure on the sales organization:

  • Churn
  • Cost of sales
  • Competition
  • Margin pressure
  • Product complexity
  • SMB confusion
  • Talent scarcity

The group of vets digs into these factors and more, delving into the future of local sales and digital transformation.

The panelists react to five assertions proposed by Laughlin, building off lessons each of them have learned from the local media space.

1. Large local sales organizations are unsustainable as currently constituted

  • Rowlands: At Reachlocal, Rowlands’ team has struggled with this over the past three years. With 500 reps in US and 1000 around the world, they’ve worked through many strategies. Organization at Reachlocal now is at 180, and they have finally reached an impressive LTV:CAC. With certain organizations, face-to-face can be effective, but today, their model is vastly different.
  • King: Observing Vendasta’s 1700 partners, King notes that while some are changing, many are not.  He says that Amara’s Law sums up the problem:  “We tend to overestimate the effects of technology in the short term, but underestimate it in the long term.” The change today is the access to information. A different marketing stack is needed.
  • Laughlin: What is that stack?
  • King: Do they know about you? Paid and traditional advertising. Can they find you?  Listings and SEO management. Do they trust you? Reputation management. Do they like you?  Social media and reviews. Can you sell / convert them?  In-store tools, ecommerce and content. Can you keep them?  CRM, marketing automation and loyalty. Many organizations are not providing that stack. It’s hard to sell if you don’t have the right product.
  • Rowlands: Not enough of us in the room are implementing what we preach to our customers. We need to be best in class if we assert we can do it for them.
  • Martinsen: The big players used to be able to reach all the SMBs in the market. We can no longer afford to reach everyone. We have to look at segmentation and more efficient ways of finding new customers.
  • Rowlands:  A number of factors go into cost of sales, and these factors like retention need to be managed more judiciously.

2. Customer service/support is now a more important function than sales

  • Rowlands: Reachlocal has been focusing on retention. You have to invest in client care, success and satisfaction. It was one of the most important things that got ReachLocal back on track.
  • King: This is math—unit economics. You have to match the service level to the value of the customer. You have to upsell to grow revenue.  Sales is about finding pain and solving problems for the SMB.
  • Rowlands: Bonused quarterly, based on customer satisfaction scores and retention.
  • Martinsen: In the past, we were not as good at treating customers. There is a more intensive effort required today. Information is constantly published to the internet—we  need to respond to emails, reviews and online comments. Targets at FCR Media are performance based, not financial.
  • Laughlin: Asked for show of hands on how many have reduced sales and increased customer service. A surprising low number of hands in the crowd.

3. Technology and data must be used more effectively for sales channels to achieve the required efficiency

  • Laughlin: How are you using the tools to do with 10 people what 100 used to achieve?
  • Rowlands: You have to put salespeople in front of the right prospects. Her salespeople close one in three prospects. There is a huge opportunity to segment, market and prioritize and create a selling roadmap with data. You can take prospects through a successful journey. Salespeople can’t just go in and out; they have to know where the client is. Going in with effective data ensures a successful sales approach.
  • King:  It’s all about big data. There are many research tools and a ton of information to be gathered. If you give them the option, salespeople will do research, organize data or anything else rather than sell.  You have to automate the research and educate your salespeople with the push a of button. After that, you have to educate the customers by showing them information specifically about them, show them their pain.  As they interact with that content, your algorithms need to  mine intent. Inbound requires the creation of content that SMBs want, though it’s often seen as spam.  Educating the customer and salesperson with data about them and mining intent as they engage is far superior to inbound alone.
  • Martinsen: Data is key to properly doing segmentation. The data is also key to getting the SMB to engage prior to the sales visit.

4. The skill set required to sell effectively  in today’s environment bears no resemblance to the past

  • Laughlin:  How many salespeople do you have today compared to years ago?
  • Martinsen: We have 20% of what we used to have. This change is definitely driven from from digital transformation. You still need hungry sales people, but they need to possess a different skill set. It’s hard today for the 60-year old closer.
  • Rowlands: Five, six, even seven years ago, the market in digital was not competitive. There was lots of low hanging fruit. Today, that market is very competitive. You need a skilled and solution-focused approach, which requires talent. It’s a hard job. You need to be a sophisticated seller
  • King: Pre-Google, you could sell, but the landscape is much harder now. There are still very good salespeople today, however, that can create relationships and close more deals.

5. Self-service sales hasn’t worked because the tools haven’t been good enough – and that is about to change

  • King: As the tools change, more people will use self-service. This will not happen soon, but there will be a transition to BIY. The lack of tools is why 85% of all marketing services are sold through local providers—SMBs want shoulders to hug and a throat to choke.
  • Rowlands: Agrees with King. There is a more innovative way to generate data about targets, and through that, we can build a picture of what is happening to the client. We can use that three to four months down the road.
  • Martinsen: FCR Media is achieving 10-15% login rates, and Martinsen can’t see a rapid change in this area. Facebook is fashionable, and that may drive higher than expected engagement rates, but he sees that, over time, SMBs will go back to doing their job and seek others to take over.

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