Ninety-percent of startups will fail, and the statistics seem even grimmer within the competitive world of hyperlocal. Whether or not a hyperlocal vendor manages to gain traction often has less to do with product quality or marketing strategy than it does the startup’s ability to sell to local merchants efficiently, cheaply, and at scale.
For an increasing number of vendors, that means implementing self-service sales models. Although this is just one of many sales models that hyperlocals are currently using with success, it’s a model that’s growing in popularity. By doing away with expensive sales staffs and giving local merchants a way to buy ads or services through automated systems, vendors can keep acquisition costs low and also reduce churn, which is an issue that’s been plaguing the industry.
Here are seven examples of ways that hyperlocal vendors are currently benefiting from utilizing self-serve sales models.
1. Vendor costs stay low. “A self-serve sales model keeps the cost of advertising affordable for local advertisers. By providing an easy-to-use, self-serve tool for local businesses with an automated ad solution, we do not have to hire a staff to create the ads on their behalf. In other words, there isn’t a production cost for the advertiser and the savings are passed on to them for more advertising.” (Kevin Bowers, ZettaMobile)
2. SBOs control their own messages. “Local businesses are extremely varied in terms of their market focus and target customer. As such, it’s extremely difficult to foresee what every small, locally-focused business will be looking to do with their mobile ad—this could be everything from driving people to their website, their physical location, a phone number, or email address—and this can vary even within a given industry. Additionally, most small business owners are their own best salespeople—it’s beneficial to give them a platform on which they can exercise these talents.” (Andrew Waber, Cidewalk)
3. Churn rates become less important. “Selling to local businesses requires significant scale — you’re not going to get a lot of money and/or customers, so the only way to make it up is volume. This makes it hard to win without a volume sales strategy — and if that is heavily sales-person based, it’s hard to be profitable. The churn rate with small businesses is legendary. If you are paying sales people to sign up customers who then churn, not only is the cost of sale high, but the cost of retention is enormous.” (Scott Barnett, Bizyhood)
4. Lead times go down. “Providing a self-service tool to a local advertiser means that their message can go live immediately. If they have a special offer or a timely promotion, they can execute their ads at that relevant time.” (Kevin Bowers, ZettaMobile)
5. Acquisition costs are nearly zero. “The most obvious advantage to a self-service sales model is that it allows our sales to scale much more efficiently, since a merchant can sign themselves up for Pirq without needing the assistance of a salesperson. The cost per acquisition is essentially zero since no other resources are required with the self-serve signup process.” (Keegan Hall, Pirq)
6. Vendors are forced to focus on usability. “Taking the self-serve route forces you to focus on usability. If the product is too hard to setup, understand, or use, self-serve will fail miserably. Over time, we supplemented our model with setup coaching — a free service to customers who prefer to have someone guide them through the setup process, or to help them optimize their setup for their particular business needs.” (Bill Lange, Full Slate)
7. Merchants can buy on their own time. “Small business owners are busy people. They often run day to day operations in addition to managing their business. A self service sign up flow makes it possible for these busy individuals to explore and buy on their own time. However, we’ve also learned that small business owners like knowing there are real people behind the service they buy and they enjoy being trained. We proactively reach out to SMBs that sign up to schedule a consultation with our reward experts with the goal of getting them excited about their new service and a successful implementation.” (Sunil Saha, Perkville)
Have other ideas on sales models for hyperlocals? Tell us what’s worked for you in the comments.
Interviews have been edited for length and clarity.
Stephanie Miles is a senior editor at Street Fight.