On Path to IPO, Yodle Buys Lighthouse 360 to 'Close the Loop' | Street Fight

On Path to IPO, Yodle Buys Lighthouse 360 to ‘Close the Loop’

On Path to IPO, Yodle Buys Lighthouse 360 to ‘Close the Loop’

Yodle_business_logo Yodle, a marketing platform for small businesses, has announced the acquisition of LightHouse 360, a customer relationship management (CRM) tool for dentists, in a move to tie its customer acquisition efforts into the broader operational infrastructure of small businesses. The move ties into a key element in Yodle’s strategy, which is to “close the loop” between small businesses’ marketing programs and tracking at point-of-sale. Terms of the deal were not disclosed.

Yodle’s chief executive, Court Cunningham, also told Street Fight in an interview that his New York-based company, which is profitable and generating over $130 million in revenue annually, is “strongly considering” an IPO.

Based in Atlanta, Lighthouse 360 has spent the past eight years solving a basic problem for dentists: four out of ten patients do not show up for their appointments. The company has built out an extensive automated alert system that pings customers with customized reminders about upcoming appointments. But its core technology — which is what Yodle wants — is really all about the ability to integrate into the fragmented software systems used by small companies to run daily operations.

“The problem is that all of these business have different operational systems — various point of sale (POS) systems, access management systems et cetera,” said Cunningham. “What [the team at LightHouse 360] has done is to figure out a method and process for easily integrating with these platforms. Once you integrate with these systems, a whole world of opportunities opens up.”

Dentistry is one of about thirty verticals which Cunningham says could benefit from Lighthouse 360’s technology. Over the next 12 to 18 months, the company plans to roll out a relationship management product in each vertical, tailoring the tech to each type of business.

Gaining access to small businesses’ POS or CRM systems has proven one of the key hurdles in building a closed-loop marketing system, which has long been the holy grail of local digital. Without a direct tie into these systems, tracking customers from point of impression to point of purchase and then throughout retention requires either speculative analysis or consumer buy-in through a coupon or deal program.

Traditionally, a small business’ core operating systems — its POS, customer acquisition, loyalty and relationship management programs — largely functioned as closed systems, driving value independently of one another. A marketer might compare results in a customer acquisition campaign to the revenue generated during that period, but the observations always lacked causality. Each system simply spoke a different language.

That’s why the technology developed by companies like Lighthouse 360, Demandforce (which was acquired by Intuit for $423 million), and Fivestars (which recently raised $14 million) is so prized. It allows different systems to talk to the other and, in doing so, enables developers to begin the process of creating a single, coherent customer relationship management platform that can be automated and scaled.

“This is Constant Contact’s challenge, it’s Groupon’s challenge, it’s Google’s challenge — it’s really everyone’s challenge in local,” said Cunningham. “There hasn’t been an evolution in the industry yet. These underlying operating systems are highly fragmented and that’s why no one has really [been able to really innovate]. If there was a simple API out there you could plug into, like Google or Facebook, you would see much more innovation around local.”

Cunningham, who ran automation for Doubleclick before it was acquired by Google in 2007, compares the challenge in local to the problem of getting broadband into households in the late 1990s: “It’s the equivalent of that last mile hookup. How do you tie the marketing into this disparate, disorganized mosh pit of technology that’s out there?”

But if you can solve the problem, the revenue opportunity is massive. The fact that in this approach lead generation, loyalty, and CRM services function best as a package means that those markets will converge. Cunningham says the company, which already generates over $130 million in revenue annually, plans to move into loyalty and even display advertising down the road.

If Cunningham is right, the hyperlocal space is set to see a big wave of consolidation. The sea of single point solutions, which have emerged over the past few years, will wither without access to those ancillary services. And as larger, subscription-based marketing platforms like Yodle add features to its platform without raising the price, the markets for each of those products will quickly disappear.

Steven Jacobs is deputy editor at Street Fight.