Introducing the Local Marketing Stack

Over the past several months, I’ve drafted the Local Marketing Stack infographic, which I hope will help small business owners as a roadmap for making marketing decisions.

Although the graphic is intended to help small business owners figure out their path, it can be equally useful for media agencies serving those business owners.

Where Do Your Products Fit in This Graphic?

If you ask small business owners what marketing techniques work best, it’s almost always word-of-mouth referrals, followed by social media, SEO, and email in some order.

And if you look at where small business owners plan to increase their budgets, it’s social media, websites, SEO, and email, in some order. Intuitively, many of them understand these are foundational long-term investments.

So why do so many media companies – especially legacy media companies, but also purely digital ones – continue to focus their sales efforts on high-cost products that aren’t what the customer is asking for?

I’m not naïve. I understand that in some cases these companies are protecting their legacy, high-margin businesses. And in other cases they’ve raised huge sums of money from venture capital firms on the promise of a ground-breaking new technology.

But at the end of the day, every local business (and every business, for that matter) is looking for the cheapest possible acquisition of revenue.

Adjust Your Concept of the Competition.

Whether you’re a new or legacy media company, your competition is no longer just the companies in your market, it’s the companies in every digital market.

Late-stack products (TV, radio, native apps, for example) tend to be among the most expensive acquisition methods, in that none of them can really be purchased on an incremental basis, nor are they particularly efficient on a per-customer cost basis.

If your sales pitch leads with high-cost, late-stack offerings, you’re going to continue to be undersold by cheaper and more effective competitive products earlier in the stack.

Don’t Force Late-Stack Products onto Early-Stack Business Owners.

Just because a small business has a big enough budget to afford your product does not make that business a good customer of your product.

And if you’re only selling products and services that fall towards the end of the stack, your universe of customers who are truly ready for those products and services is small.

Identify the stack components that you sell and trace a critical path back to the bottom left of the graphic.  If your packages don’t include options for each preceding component on that path, they should.

  • Why sell a business owner a TV ad if he doesn’t have call-tracking in place to know that his leads actually came from the ad?
  • Why sell native advertising to a business owner when the page his customers land on after clicking that advertising is unoptimized for their mobile device?
  • Why sell a business owner on an Adwords package when her customers can’t even book an appointment online?
  • Why sell a business owner any advertising at all until he has a robust system in place for capturing and managing customer data?

Many LSA member companies offer robust product bundles that address a wide range of marketing components.  Too often, these bundles are sold based on margin, ease of deployment, or ease of fulfillment, instead of addressing customer needs sequentially along the lines of this graphic.

I see this non-sequential practice as detrimental to the long-term health of your company.  Even if you sell individual components or bundles successfully, the effectiveness of those products may be unnecessarily limited by earlier-stack gaps.

Selling late-stack products to small businesses with unmet early-stack needs leads to low conversion rates for your salespeople and high churn rates.

If they churn there’s very little chance of winning them back in the future. Whereas had you solved their early-stack needs, there would be ample opportunity to increase your margin and customer lifetime value later.

I don’t think it’s a coincidence that the two worst-performing stocks in SurePath’s local index last month were Groupon and Yelp.  These are companies that sell almost exclusively late-stack products with very little support for customers at earlier stages. Yelp’s SeatMe reservation program, positioned squarely in the middle of the stack and fundamental to the operational success of their customers, appears to be a lone bright spot for the company.

Want to Lower Churn? Sell Your Customers the Products They’re Asking For.

Even within the high-demand quartet of websites, email, social media, and SEO, there are plenty of fundamental marketing components that are relatively low-hanging fruit that will help all four of those perform better.

  • Optimizing the sign-up flow into an email newsletter or loyalty program.
  • Making their websites faster, even already-responsive ones.
  • Implementing better landing pages based on Conversion Rate Optimization best practices.
  • Optimizing photography and videography with higher-quality, more resonant images and stories, including A/B testing local listing photography.
  • Identifying non-profit community connections who would be open to working with your clients on a sponsorship or event-hosting basis.

Maybe Don’t Even Sell a Product at All

Mike Blumenthal and I have discussed that as marketing channels and opportunities have fragmented and exploded, the difficulty in tying them together has exploded as well.  And yet we see very few media companies that tie the best-of-breed point solutions critical to the Local Marketing Stack together in a meaningful way.

Meanwhile Google and Facebook are just making it easier and easier for small businesses to self-provision, and even a majority of media companies are using tools like AdWords Express and Boosted Posts to “manage” small business client ad campaigns. Your margins on these products will continue to compress, and the value you can add by placing ads using the same tools the technology giants offer your clients directly will decline.

But saving business owners time, helping them understand their customers better, and helping them leverage the lowest-cost, highest-return point solutions that are right for their stage of maturity—that’s where the real high-margin opportunity lies.

As part of this graphic I’ve laid out my assessments of the 82 best vendors along each component.  Most of them are not your competitors, and indeed would be eager to work with you as resellers and point-solution-integrators.

The transition from selling legacy media to digital media has obviously been rough for many publishers. But I predict that the sooner publishers stop selling late-stack products and start selling cross-stack integration services, the sooner their churn levels will stabilize, the more quickly they can wean themselves off the compressing margins of AdWords and Facebook ads, and the more defensible their businesses will become.

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