The Local Search Association (LSA) has recently published a study dedicated to the relationships between local businesses and marketing service providers. “The Customer Funnel: A new framework for local marketing” argues that “the current approach of selling SMBs into individual digital channels and point solutions doesn’t work any longer - it creates complexity for the sales channel and the SMB buyer.” In other words, if you provide marketing services to local businesses, you better expand your portfolio beyond just building websites, selling SEO or managing social media to more comprehensive packaged solutions that address the entire marketing and sales funnel.

Greg Sterling, VP of Strategy and Insights at LSA, presented the report at SIINDA Local Search Conference and then in a recent LSA webinar. He also discussed the findings with Ziv Koren, Camilyo’s CMO. Here are the most interesting points from both discussions.

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Photo: SIINDA LocalReach 2016

Greg: You came to LSA almost a year ago with a hypothesis that you wanted to check: you felt that the way digital services were being sold to SMBs was wrong. What were you observing back then that made you think there was a need for a paradigm shift?

Ziv: Working closely with major marketing service providers for 6 years, we saw the MSPs (marketing service providers) struggle with a declining customer base in a market that should have been growing. We saw MSPs spend huge efforts on customer acquisition, just to lose them (or a lot of them) after the initial signup. We also saw a focus on deliverables (websites) and on communicating top funnel KPIs to the customers, while we felt that the SMBs really sought bottom of the funnel results. We also saw presence and awareness being commoditized. Based on those observations, we started to believe there was a need to cover the entire funnel. We strongly believe that MSPs must move to a more holistic, service-based model on not-yet commoditized aspects and harder to transfer assets, like for example, a CRM (customer relationship management platform).

Importance of funnel.pngLocal businesses understand the importance of addressing the entire funnel in marketing but to date were unable to actually get a chance to do it.
Photo: LSA Report: The Customer Funnel

What does it mean, on a practical, product level, when you talk about the customer funnel and how the “ideal” solution would respond to that?

Let’s look at a simple consumer journey. I want to get a haircut. I search on Google and see their site and Facebook page. The day after, I suddenly see a cool “happy hour” discount there, click on the ad and it takes me to an appointment booking form. I make an appointment and receive a reminder beforehand. After the appointment, the stylist asks me to take a selfie with him. As I come back home, I’m pleased to find, in my email, a coupon offering a discount on my next visit. What does the SMB need to do in order to realize this kind of happy consumer journey? I can count about 8 different marketing products: website, SEO, Facebook page management, Facebook app management, online booking, text reminders, mobile app, CRM and email automation, all of which need to work seamlessly and fully. How possible is it for an SMB to create this consumer journey using multiple, non-integrated tools?

I’m sorry, but even with a sophisticated technology tool in the background, how can an SMB manage this in a way that doesn’t impede on the customer experience?

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Photo: LSA Report: The Customer Funnel

The transition we are speaking about also implies a shift towards an assisted DIY (do-it-yourself) model. The MSP needs to switch from being a marketing provider to becoming an enabler. This means they need to start providing their local business clients with the tools, but also guiding them to become more effective. It entails a shift in the organizational structure, creating a layer of web consultants to monitor, train, help SMBs, retain, upsell and change the way the MSP interacts with his own customers - the SMBs.

So, you’re talking about adding efficiency to the process and assisting the business owner in capturing the lead or better servicing the customer.

I’m talking about empowering the SMBs to use online tools to provide their customers with a much better all-around experience.

I’m wondering if there’s any practical evidence that you have, pointing to this model’s success?

I can’t really share any specific customer data here, as it belongs to our partners, but today, 5 of our top partners have moved to selling integrated full-funnel packages. All are reporting significant sales increases, almost from the get-go. We asked them if they can explain it, and we essentially discovered that the packages are working well for small businesses with limited budgets because they take away the need for the SMB to choose. When you sell a number of point solutions a-la carte, the SMB has to think about “What do I need from all of this, I have a fixed budget.” Say in Israel: they would have $500 a month, and now, surprisingly, SEO would cost them $500, minimum social media management would costs $500 etcetera but they only have those $500. So, on which service will you spend it? Once an SMB has to make such a decision, a service provider is likely to lose him.

Maybe we’re the first to push this concept, but now we see others launching an integrated set of tools on top of their website offering, like Facebook offering a mini CRM and consumer interaction via messenger, or Wix launching ShoutOut mobile app. This concept of an all-in-one well-integrated service that provides the consumer with a consistent journey - we now see more and more people trying to realize this.

There are a number of people who've commented to me after reading the report that they agree philosophically with the approach and idea. But the challenge is execution, of course. What do you believe is the most difficult part of transitioning from a point solutions model to a more integrated funnel model?

I think that the transition is not just from selling a point solution to selling an integrated multi-service packages, but actually is in switching from a pure DIFM (do it for me) model to a hybrid: DIFM + assisted DIY model. While some tasks like designing an effective website and creating compelling content will always require experts the day to day interactions between the small business and his customers can not be offloaded to the marketing service providers. This means that the MSP needs to become an enabler, providing the SMB with tools and helping him use them effectively. To achieve this, MSPs need to invest in creating a layer of web consultants responsible to monitor and guide the SMB on how he can use the online tools to better manage his business. This layer will also be responsible for retention and upsell of new services or increased quotas.

Sounds like a lot of the heavy lifting is shifted from sales interaction to after the sale, account management, where the complexity now resides in the model you’re advocating.

It also makes our task focus on how to scale this. The way to do it is to provide web consultants with tools that enable them to respond to the accounts that need more help. Increasing the ratio of the consultants to SMB is what can make this whole model scale or not.