[A version of this post first appeared on VentureBeat, read it here.]
There has been a lot of talk lately about how the best business technology, historically only available to big corporations, has become increasingly available to small businesses. Jeremy Levine, a venture capitalist at Bessemer Venture Partners, pointed out in an interview with the WSJ that the “innovations in software UI, online distribution and application development will drive massive new software offerings for small businesses”. Let us to take a step back and understand the technology tools that can benefit the largest group of people who have been hardest hit by large enterprises and new technologies: the tens of millions of local merchants all over the world.
A few weeks ago, Angelica’s, my favorite small café a few blocks from Union Square where I would go at least twice a week for lunch switched from making the best sandwiches ever (made to order and made with love), to selling only pre-made, wrapped sandwiches. Why? The old model executed the old way took too long and limited revenue. But lost in the new way is the quality of the food and the personal experience that made Angelica’s special. The good news is that there is a new generation of technology tools that allows local businesses to get the efficiencies they need to compete without sacrificing all that makes them unique.
Purchase Intent, Discovery, and Selection
For local businesses, discoverability is key – both offline and online. If Angelica’s café were bordering Union Square, it wouldn’t have difficulty attracting the throngs of pedestrians – a big, friendly sign would probably do the trick. Most local businesses are not that easily discoverable. They need to leverage the digital equivalent of the big, friendly sign: making sure they are easy to find online. These days a need sparked in the offline world will most likely still end up being solved by an online assistant – ‘Hey Siri, where can I get a massage nearby?’ A quick search on Google Maps, Yelp, and Foursquare or specialty sites like OpenTable, TripAdvisor and Citysearch are frequently consulted to find a local business. It’s crucial for our café to be on the digital map and listed everywhere with up-to-date information, including price list and menu data. Companies like Infogroup, Yext, Constant Contact and our company, Locu, can help local businesses manage and distribute their information online.
Beyond the several third party sites, a local business’s online presence matters. Does the business appeal reputable? Website builder tools like WordPress or Squarespace have become more and more versatile and easy-to-use and have started to offer vertical-specific functionality. A great web presence will drive a lot of online visits (that may translate into offline visits) via search and can be complemented by online advertising, either directly using Google’s Adwords or Facebook Ads, or online marketing facilitators such as Yodle, ReachLocal, or ThriveHive.
Purchase intent is also increasingly triggered by social media- it probably hasn’t been too long since you’ve heard someone say “One of my friends was posting about this amazing restaurant on Facebook the other day” or “I really want to buy those pants I recently saw pinned on Pinterest” or “I just got this deal from Groupon today, this could be a great place to visit this weekend”.
Making live updates to Angelica’s web presence is not the kind of thing a busy local merchant has time to do, but it’s so important. Posting daily-changing menu online, instead of just on their menu board, with photos of specials to allows their customers to easily find and share the information. This is where technologies like Locu’s help the most: we can automate and optimize a merchant’s web presence based on the customer, time of day, and other contextual cues that help drive attention and intent to Angelica, without requiring Angelica to become a guru in the art of optimizing her web presence.
Once the decision where to buy has been made, it’s all about the transaction. Whether booking a yoga class on SpaFinder, making an appointment with a hair stylist on StyleSeat, scheduling a car repair via YourMechanic, finding a photographer on Thumbtack or making a reservation at a restaurant with OpenTable, more and more transactions are initiated and facilitated by smart technology and increasingly on mobile devices. Plenty of companies, including GrubHub, Seamless and Eat24, facilitate take-out and deliveries for restaurants.
The point-of-sale (POS) market has been undergoing a huge transformation, with many of the new solutions operating on non-proprietary tablet devices, such as Apple iPads, reducing the hardware cost and increasing usability. It’s never been easier for a local business to set up a reliable POS system and leverage its data to gain insights into its sales and identify areas to improve profitability. The newer POS systems like Square’s Register, Groupon’s Breadcrumb and Instore come with a set of intuitive analytics, and startups like CoPilot Labs can offer additional insights based on POS data (even from the old-school POS systems).
One specific example of how Angelica could benefit from all this would be to allow customers to pre-order sandwiches. It would not only reduce the waiting time but also help Angelica sell more sandwiches during the busy lunch hour.
Customer Engagement & Loyalty
Chris Luo of FiveStars points out in a recent blog post that “loyalty has often been the last marketing tool deployed, and the methods used to drive it have been rudimentary.” While there have been a number of startups including Belly, Punchcard and Cardify, that provide digital loyalty programs in all shapes and forms, I still see a lot of businesses hand out physical punch cards. Digital loyalty systems can help merchants provide customized, relevant promotions, in turn increasing engagement, and ultimately driving word-of-mouth.
Email marketing remains one of the most effective ways of engaging customers and tools like Mailchimp made it really easy for business owners to stay in touch with their clientele. An email newsletter can help build a long-lasting relationship between merchants and their customers and trigger purchase intent – how about an exclusive special to bring someone back? I’d happily give my email address to Angelica to stay in the loop.
What’s Next: Integration
It’s easy for local merchants to be overwhelmed by the seeming laundry list of technologies they should adopt to make their lives easier. In fact, there’s a wide open market in integrating the many tools and signals a merchant has access to so that they can start to get insights from multiple channels.
Wouldn’t it be nice for a local business to know at the point-of-sale where a certain customer has been and how frequently they have made a purchase? Some of the new POS solutions have taken an integrated approach, looking to offer a seamless end-to-end solution. As more and more data surfaces at each interaction point between merchant and consumers, and becomes available through powerful, but highly usable analytics tools, local merchants, like our café, will be able to gain actionable insights to increase revenues.
Marc Andreessen, famous entrepreneur turned venture capitalist, referencing the classic ‘Walmart versus local retailer’ example in an interview with TechCrunch, points out “Walmart’s advantage in logistics and in pricing and in data analytics was just so great that they could kill small retailers at will.“ But perhaps not anymore, he adds, “there is an opportunity here for a shift of the balance of power for big businesses to small businesses”. We at Locu could not agree more. The world is a much more interesting, vibrant and beautiful place because of local businesses, like Angelica’s café. To a great 2013 and a very real trend which will finally level the playing field for local merchants.
[Thanks to Sarah Dekin, Adam Marcus, Marc Piette and Carrie Stalder for reading and providing helpful comments to drafts of this.]