In Local Sales Effort, Foursquare Looks to Strike a Balance

There’s an oft-repeated phrase passed around in local media and yellow pages circles that local advertising “isn’t bought, it’s sold.” Feet on street, personal relationships, handshaking — that’s what small business owners understand and it’s what sells local advertising.

But that’s changing. The big sales model, which local media and yellow pages companies developed during their heyday, was built for a local marketing industry in which a handful of companies dominated spending in specific markets. Today, the fractional cost of digital distribution paired with flexible user-generated content creation models have lowered the barriers to entry in the local marketing space, forcing companies to find scale in breadth — not depth.

Foursquare is trying to find a new path. The embattled check-in-turned-local-discovery startup has started to build out its local sales organization, focusing on a combination of technology and customer service rather than door knocking and hand-holding. This summer, the company rolled out its self-service product, hired a director of local sales and began the challenging processes of developing a local sales effort that can reach mom-and-pop shops from New York to New Delhi without creating the kind of distended mess that (in part) put the brakes on Groupon’s rocketship expansion.

The process began late last winter when the company’s leadership brought in Steven Rosenblatt as a consultant in February of 2012 and then formally hired the former iAd-exec as chief revenue officer a few months later. Over the next year, Rosenblatt worked with a small team to develop products and campaigns for a number of national brands such as Old Navy and H&M, testing features and formats before before hiring David Greenberger, the former director of sales at Felix, to head up the company’s local efforts in late spring of this year.

“When we launched [our first] paid product a year ago, we deliberately did that with national merchants because it allowed us to start testing an ad product without hiring 100 sellers and going crazy,” Rosenblatt told me in an interview at Foursquare’s Soho offices earlier this month. “We wanted to work with national merchants who could help us learn, who had scale, who would push ourselves to build better products, ad targeting, reporting. We knew that if we could cater to them we basically could have the tools for small and medium-size businesses.”

That changed in June when the company began to test a self-service version of its Promoted Updates service — a paid-search product launched for brands a year earlier — with a handful of New York City  merchants. Working with a small inside sales team, Rosenblatt and Greenberger have started to put their local strategy in action, and in July, the company formally rolled out the product to merchants across the world.

Part of the challenge facing Foursquare is building a sales force that can adapt and adjust to  user base that’s spread across the world. With over roughly half of its user activity coming from overseas, the sort of market by market approach taken by Groupon, in which the company saturates a city with a local sales team, out of the question. Instead, Rosenblatt says the company is taking a more collaborative approach, using a small in-house sales staff to generate new leads and hold the hands of merchants that do not feel comfortable using the self-service product.

“Here’s what I think will win local: It’s going to be part technology and part people,” says Rosenblatt. “The reasons others have not succeeded [in local] is that the took one extreme: they either went all-in with the old school sales model and used zero technology and had no infrastructure, or they thought they could disrupt through technology, and did not need people. For the next five years, it’s not an either or game. It’s a both game.”

Over the past six weeks, the company has added a handful of inside salespeople, bringing the headcount of the local team to eight including Greenberger. They join a seventeen person brand-sales team that the company has already assembled at its office in New York and which, continues grow “like crazy.” And while the local team is selling over the phone in the New York market only today, Rosenbllatt stresses that its still testing strategies locally and does not rule out the possibility of a small direct sales force in a few select primary markets.

“We don’t want to hire thousands of salespeople and it’s not like we’re go to have a sales force of zero; we’re going to have a sales team and a self-service service platform, and they will compliment each other,” says Rosenblatt. “We’re not going to open up an international sales team until we learn a bit more about those markets, but we’re going to open up the spigot through the self-service platform… to capture some of those merchants who are already engaged with the platform.”

That test-learn-then-roll out approach will also include partnerships with local sales organizations. The sales team is in “conversations” with a number of companies who sell to small businesses, and Rosenblatt says it’s already working with a company overseas that will resell the self-serve product to a specific market.

However, the success of those partnerships – and the success of Foursquare sales effort as a whole — relies on the return, which its advertising products can drive for businesses. Scale is important, but Rosenblatt believes the company can still carve out a big business without the massive consumer reach of a Facebook or Twitter.

“Consumers come to Foursquare to buy and shop and buy… and because of that high intent, you don’t necessarily need to have a massive amount of users,” said Rosenblatt. “Of course the bigger you are, the bigger the opportunity. But we don’t need massive growth to be incredible successful.”

Steven Jacobs is Street Fight’s deputy editor.