Sometimes, openness and opportunism lead to success for startups. But more often than not, it’s as much about the opportunities a company declines than than those it pursues, that determines whether company succeeds or fails. That’s particularly true in a local marketing industry where timing and distribution can be as important as the product itself.
At the Local Search Association conference in Los Angeles Tuesday, executives from UHaul, ReachLocal and the newly-acquired LocalVox talked about the importance of saying no in a technology landscape where a culture of innovation tends to reward change over consistency.
“The wisdom [among] startups is to do one thing and do it well; but in the [small business technology] market I don’t think that’s the case,” said Trevor Sumner, president at LocalVox, a content marketing firm that was acquired by the Berry Company late last year. The needs of the small business — namely, convenience — force vendors to continue to expand their offerings, integrating new products and new capabilities into their core product.
While startups may be forced to expand into new areas quicker than in other industries, there still needs to be a clear strategy defining the edge of their business, said Sumner. LocalVox, for instance, declines to add pay-per-click advertising, a hugely popular product among small business owners, opting instead to build its product around a more focused, but still broad content marketing strategy.
In 2010, UHaul, the eighty year old moving van rental company, faced a similar decision. During a panel Tuesday, Elnora Cunningham, the company’s director of locals search, said the firm made a strategic decision to stop buying display ads in yellow pages books, a tactic that remained an effective source of leads for the company at the time. Instead, it poured all of its revenues in digital, forcing the company to address the somewhat fragmented data systems that would become critical to its success online.
“Making that decision, we had to get smart really fast. But there’s a lot of finesse and detail in digital marketing, and even with the strong brand of UHaul it still took time,” said Cunningham. “The first couple of years there were a lot of mistakes made and it was as much a matter of staying out of our own way.”
Part of what caused some of the problems in the shift to digital was a sprawling vendor network, says Cunningham. She said the company did not properly vet its partners, opting for an more aggressive approach to testing and integrating new products.
“One of the big failures was that there were certain vendors that were not vetted at the level required,” she said. “If you’re a brand or even a small business, you have to ask ‘Are we ready for this vendor and is the vendor ready for me?’ — a lot of the times vendors were just not ready for UHaul.”
In many ways, a catch-all approach to customer acquisition can create similar problems. Sharon Rowlands, the turnaround expert who took the help at ReachLocal last year, said that a change in the company’s sales model a few years ago meant to reignite growth unintentionally created a cycle of churn at the company.
The change, which occurred before Rowlands joined the firm, shifted its sales model from a consultancy approach to a “hunter, gatherer” model where certain individuals were responsible for client acquisition and others were responsible for retention.
“The local marketing is a relationship sell, so its very tough to pass a relationship on between to two people without something getting broken. Because [the salespeople] were not responsible for a business on an ongoing basis, they just want to close whatever business they can.”
A big part of the problem was that the salespeople were never saying no to prospects, says Rowlands. By realigning incentives to encourage retention, Rowlands says the sales team now is encouraged to find the right clients — not just any business that will sign up.
Steven Jacobs is Street Fight’s deputy editor.