#SFSNYC: ReachLocal, ShopKeep, and Swipely on Whether or Not Vertical Approaches to Local Inevitably Become Horizontal

Left to right: Angus Davis, CEO, Swipely; Jason Richelson, co-founder and CSO, ShopKeep; Sharon Rowlands, CEO, ReachLocal; Noah Elkin, managing editor, Street Fight
Left to right: Angus Davis, CEO, Swipely; Jason Richelson, co-founder and CSO, ShopKeep; Sharon Rowlands, CEO, ReachLocal; Noah Elkin, managing editor, Street Fight

Small businesses have a lot of options when it comes to choosing tools that keep things running smoothly. In fact, they have a lot of options even when partnering with a single vendor because companies within the connected local economy are transforming into one-stop shops of sorts for marketing, advertising, point-of-sale (POS), and countless other solutions critical to the daily operations of SMBs.

Tackling this topic in a Street Fight Summit panel were Sharon Rowlands, CEO of ReachLocal; Jason Richelson, co-founder of ShopKeep; and Angus Davis, CEO of SwipelyAll three discussed the challenges and opportunities of providing services within a fragmenting market to small businesses juggling online and offline marketing needs.

Unlike Swipely and ShopKeep, newer companies still focused on the payments and POS solutions products they respectively began with, ReachLocal has evolved from specializing in search to offering a variety of local marketing services. “The most important thing a local business needs to do is to get customers, and search is still one of the most effective ways to do that,” Rowlands said. Search’s position as a fundamental marketing tactic has informed ReachLocal’s horizontal growth; all three panelists frequently referred the importance of remembering their companies’ foundations. 

Davis and Richelson were more hesitant in discussing horizontal approaches — Swipely and ShopKeep are very much focused on the brick-and-mortar world of dining and retail. Richelson’s perspective is influenced not only by his experiences founding and growing his company but also by being a local business owner himself (he owns two wine shops, a grocery store, and a coffee shop, and, yes, he uses ShopKeep). Though “going horizontal is sexy,” Richelson said, a vertical focus is important for customer retention.

Both companies offer software solutions, making the ability to offer insights and analytics key to their business models. “We’re singularly focused on being the general manager of the cloud for restaurants,” Davis said. “We’re disrupting something big that’s already there.”

All three panelists stressed the importance of educating their customers and enabling them to understand the importance of the technology they’re being offered. “There’s a lot of education involved,” Richelson said. “Small businesses are getting disrupted by younger people who know how to use technology.” Davis agreed, adding that one of the main challenges Swipely faces is targeting SMB owners who “don’t have a lot of money, technology sophistication, or time.”

Ultimately, a combination of client demand and strategic opportunity drives expansion, the panelists said. “But you have to nail the niche first,” Davis noted.

  1. Kirky
    October 20, 2015

    Sharon pushing search as the number one priority make sense, as ReachLocal’s other products don’t seem to last long…… Bizzy, DealOn, ReachCast, Total Video Now, Club Local, and so on and so on. Is ReachLocal realizing the foundation it was built on? More importantly is it too late for ReachLocal?

    Interesting that Sharon Rowlands would broach the subject of “educating clients” when ReachLocal’s foundation and success came from a pair of Yellow Page Salesmen who hit the street hard and taught the OG ReachLocal kids how to really sell while avoiding the tricky questions. Those salesmen who were able to tip toe around (or just lie) about the markup, or bidding on the company name, how PPC helps SEO, and all the other tough questions are what made ReachLocal such a big player. Well those salesmen and the fact that when it first started out the business owners had no idea about search engines and there was no competition.

    If ReachLocal really wants to remember it’s foundation it needs to go back to what it is better at than any other company…… Music Video’s https://www.youtube.com/watch?v=RiQezZooyCU Gangnam style is by far the best thing ReachLocal has ever done!

    1. ReachLocal
      October 21, 2015

      Kirky, so glad to see you share how much fun we have at ReachLocal. We definitely enjoy our work and put even more energy into serving our clients well!

      1. October 23, 2015

        Do you put a lot of energy into educating the clients on where the budgets Reachlocal are given go ? We have seen clients accounts that have spent £10,000 a month only get £4000 worth of adwords. It would be interesting to hear if ReachLocal are still telling clients its adwords spend like so many we here from in the UK.

        What are the US clients be told ?

        1. ReachLocal
          October 29, 2015

          PPC Claim, Our goal is to provide exceptional value and service for our clients. We’re not a reseller of Google Adwords, so our clients’ marketing budgets pay for more than just clicks on ads – it also includes access to our technology as well as an experienced marketing team to drive results. Additionally, ReachLocal distributes ads across a variety of search engines, and we were recently named one of Yahoo’s first multi-vertical Preferred Partners,. You can learn more about our business model here: bit.ly/1Ew4ohJ.

          1. October 30, 2015

            We have over 100 companies in the UK that have complained that ReachLocal told them all the money you take from them goes on Google adwords only. We investigated their claims and established that your platform provided no extra visits other than what it shows as Google spend. In other words the 100 campaigns we saw showed no more visits other than Google. We have also seen a class action in the US against your company http://www.casetree.com/website-firms/jeremy-marsh-vs-reachlocal-inc.html. Would you like to comment on that ?

          2. O Town Knows Whats Up
            November 5, 2015

            Really? You are not a reseller of Google AdWords? Reselling AdWords (and Bing/Yahoo) makes up such a big portion of your bottom line that the lack of rebates (due to poor performance?) impacts your bottom line in such a way that you tout: “absent the impact of lower publisher rebate and FX, our LTV is roughly in line with our 2013 levels” here: http://seekingalpha.com/article/3641406-reachlocals-rloc-ceo-sharon-rowlands-on-q3-2015-results-earnings-call-transcript

            Then you go on to say: “Moving to expenses, cost of revenue for the quarter was $53.7 million or 56.3% of revenue compared to 54.5% of revenue, primarily due to changes in product and publisher mix, including adjustments to drive product performance, partially offset by an increase in publisher rebates which were 1.3% of revenue this quarter.”

            So more than HALF your revenue is spent on buying advertising which is then resold. And you want to say you are not a Reseller?

            While you may have been able to tell customers that in the past it’s clear by your performance (drop in every single metric) that once a market matures and business owners see the results, or lack thereof,that you provide your business is not sustainable.

            Ohhh by the way Sharon Rowlands disappointment with the Reachlocal ($RLOC) valuation is laughable. Your company is bleeding cash and the efforts to stop that are wayyyyyy too little too late. Although since I believe you bought a lot of shares yourself i understand your disappointment. Have you ever thought about cutting the exorbitant salaries and commissions being paid out to managers and Senior IMC’s who aren’t actually bringing in any new business? You do realize that Sales people are compensated at a high rate because they actually sell right? Paying 10%+ commissions to account managers who haven’t grown their book in years is a bit silly. I know I know if you did that there would be a revolt, so what you should have done is slowly decrease it. They won’t leave because they don’t want to start over and have to actually sell/work. a 1% drop every couple months won’t be enough for them to leave. Plus even if they leave most of the clients you are paying high commissions on have been around long enough they won’t want to make a change just because the salesperson left.

            Let me know if you need further help getting back to the black.

  2. March 3, 2016

    Every dollar counts says Sharon. Unbelievable every dollar Reachlocal get they keep half of it!!!!

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