How Can Hyperlocal Companies Crack the Local Sales Code?

TechCrunch reported Sunday that Plum District, the daily deals site for moms, recently laid off many of their regional sales managers, pivoting away from local sales to instead focus on delivering more scalable national deals. The site is just the latest to find that building a national sales force to woo small business marketing dollars is no easy task. In fact, the difficulty remains a barrier to profitability for all kinds of SMB-focused businesses — from Angie’s List to Groupon to Patch.

But even while it may seem to make sense for these companies to change their focus to national retail, that road isn’t an easy one either. Young companies like Plum District haven’t developed enough traction in enough cities to compete with traditional media channels that have entrenched national brand and consumer relationships. Even Patch, with 800+ local sites across 22 states can’t cover a national rollout.

The larger question is how do future local startups gain national traction with SMBs in light of the difficulty building sales forces? Ironically, the local merchant must be solicited. They are too busy running their business to understand new technologies, and won’t go out of their way to spend money on marketing. The gulf between a new local marketing product offered by a San Francisco company and a retailer in Nashville is huge. Compounding the problem is the fact that most local products I’m seeing are launching first as mobile apps, and are instantly handicapped with trying to differentiate themselves from hundreds of other similar apps.

So who reaches the SMBs now? Traditional media have established B2B ties and are figuring out ways to extend their relationship with supplemental social media marketing services. Groupon’s Andrew Mason has proposed that Groupon can be the OS for local commerce. I think startups will need to develop partnerships with media, and companies like Groupon who are building this B2B bridge, to access their SMB channels. Companies like Turner are already thinking this way by launching Mediacamp to nurture startups with synergies to Turner’s media properties. Scott Karp of Publish2 posits that self service is the winning alternative to the sales forces and has positioned his company’s new product Breaking Promos as a self service ad platform for local media.

“Local is huge, it’s the holy grail of the Internet”, says Facebook COO Sheryl Sandberg (h/t Scott Karp) but the gateway to SMBs today is still obscure, and will remain fragmented until some entity offers business owners a no-brainer solution to local marketing. It remains to be seen what that solution will be, but I’m not expecting it anytime soon.

Patrick Kitano is founding Principal of Brand into Media, a strategy group for social brand management solutions, and administrator of the Breaking News Network, a national hyperlocal network devoted to community service. He is the author of Media Transparent, and contributor to Social Media Today, Daily Deal Media, and The Customer Collective. He is reachable via Twitter @pkitano and email [email protected].