Reviewers Mostly Positive, 67% on Yelp Are Either 4 or 5 Stars

Yelp logoThere are lots of data about consumer reliance on reviews and the impact of reviews on purchase decisions. Surprisingly, however, there’s not a ton on review distribution or consumer motivations for writing reviews.

There’s an “anecdotal” perception in the market that most reviewers are motivated by anger or frustration and that the bulk of reviews accordingly are critical. Among the few studies I found on reviewer motivation, the bulk of research shows people are typically motivated to help others or by what might be called “constructive reasons.”

For example, a 2007 Bazaarvoice-sponsored survey of 1,300 online review writers found that 87% of reviews were positive and that reviewers were motivated to help others:

  • 90% said they write reviews to help others make better buying decisions
  • Roughly 70% want to help companies improve their products
  • 79% write reviews in order to reward a company
  • 87% of the reviews are generally positive

Yelp review distribution

Above is a comparison of the distribution of reviews on Yelp from 2009, 2012 and 2014. As you can see, there has been growth at the extremes: five star reviews have grown and, to a lesser degree, so have one-star reviews. Yet the majority of reviews on Yelp are positive: 67% are either four or five stars. Only 33% are 3 stars or fewer.

This should help remove some of the fear and trembling associated with embracing online reviews, which many small business owners continue to resist.

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The ‘Moral Imperative’ Behind Small Business Marketing

SMB local

There are a lot of people I meet in technology who want to talk less about about the money-making side of the businesses than about the “social good” that their companies do or contribute to. I see this as part of a larger human desire to have a positive impact on the world.

Whenever I encounter this sentiment I find it very interesting. And I share it.

A couple of years ago at an LSA event in Las Vegas I was doing a joint presentation with Neal Polachek called the “SMB State of the Union.” The theme of the presentation was the discrepancy between SMBs survey data and “behavioral” data — what they’re saying and what they’re actually doing.

Surveys tend to paint a rosier picture of the SMB world than the data gleaned from crawling the web. Accordingly, most small businesses are simply not keeping up with the market — and it’s largely unreasonable to expect them to. Technology change is happening too fast for even the most sophisticated brands and agencies to adapt to.

At the end of the LSA event presentation I offered an impromptu pep talk to the people in the room. There is a “moral” dimension to helping SMBs succeed with digital marketing. If they don’t get it right they will fail and our economy will not only suffer but we’ll all be reduced to choosing between Walmart and Subway: giant corporations that don’t particularly care about communities and franchises that have no local character.

Last week I was in Chicago for a presentation and visited a childhood friend. My wife had earlier told me that our dryer had broken at home and he said that there was a great independent appliance and electronics store called ABT in his area. We went there and it was truly impressive. The selection but most importantly the staff knowledge was so much better than anything I would encounter at a chain or big box it was really striking.

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Back in the SF Bay Area this weekend my wife and I were shopping for that dryer. We planned to visit Sears, Best Buy and Home Depot, the usual suspects. But based on my earlier ABT experience I did a Google search on my iPhone on the way to Sears. I was looking to see if there were any non big box stores like ABT in our area.

Scrolling through search results I found a family owned independent appliance store called Airport Home Appliance. My intuition was that we were going to have a better experience or at lease become better educated by visiting this store first. Conveniently there was one on our way. (The store has multiple locations.)

There was a mobile website but it wasn’t as easy as it should have been to find store locations and addresses.

The short version of what happened next was: we had a great experience with a very knowledgeable salesperson, we found a great deal on a washer and dryer, bought them and didn’t visit another store. And while Sears may have had some reasonably well-trained personnel I was anticipating little or no real help at Best Buy and Home Depot.

Had Airport Home Appliance not had a mobile-friendly website and not ranked well in Google search results I never would have found it and we would have been relegated to another mediocre big box experience.

Generally speaking the big boxes and Walmarts of the world don’t pay well or train their people well and experience high turnover. They’re being forced to look at these policies because of showrooming, but overall the shopping experience is inferior because of poor service. Airport Home Appliance has multiple locations and is large enough to be able to compete on price with some of the big boxes, so the company may not be typical. But it is a local business vs. a national chain.

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These independents need exposure, even in their own communities. They need to be discoverable, get reviewed and rank in local search results. They need mobile sites and social sites. And in the majority of cases they’re not going to be able to accomplish these imperatives without a great deal of help. This is even more the case for truly small businesses with four or fewer employees.

National entities have massive advantages over SMBs when it comes to marketing, not least of which are their top-of-mind brands. I didn’t know about Airport Home Appliance. I would simply have gone to the stores I knew. There’s a big “discovery problem” for most local businesses.

It’s up to all the sales entities and players in the local/SMB ecosystem to genuinely help these business owners succeed — not just push “products” on them. There’s a lot of lip service paid to the “trusted advisor” role.

Yet that’s what these business owners genuinely need. And the economy needs them to succeed (lifestyle businesses or not) in order to maintain the vibrancy and diversity of local communities. Otherwise, as I said, the future is Walmart and Subway.

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Despite Disappointments, Social Is Still Top Marketing Priority for SMBs — Survey

Facebook Places

Local directory site Manta has come out with another of its regular SMB surveys, most of which I don’t write about because they tend to be focused on taxes, politics or hiring and are intended to attract mainstream news coverage. The most recent one however a couple of findings that struck me.

The survey asked, “Of the following, what is the main technology investment will you make in the next six months in an effort to help increase sales?

  • Social media promotion/advertising – 31%
  • Web upgrade (mobile optimized, online payments, etc.) – 17%
  • Search marketing – 15%
  • Create a website or other online presence – 14%
  • Adopt mobile payments processing – 5%
  • Other– 18%

As you can see, social media marketing was the top response. This confirms numerous previous surveys that indicate social is either the top SMB channel or one of very high interest. Anecdotal information continues to support this idea as well. Just this evening I heard about the demand for Facebook Pages among SMBs in Sri Lanka.

Manta also found that “access to a social media guru” was number three on its top 10 “holiday wish list” for these SMB survey respondents. Number one was a new computer and number two was free advertising space.

There continues to be huge interest in social media mixed with strong ambivalence about the time commitment and confusion about ROI. The Manta survey polled just over 1,200 of its members in October.

A year ago I wrote about the gap between SMB social media adoption and perceptions of effectiveness. The large majority of “serious” SMBs are on social media in some form. However only a minority see it as “most effective” vs. other channels.

For example, a 2013 survey from Vocus found that 77% of SMBs use social media in some form to market themselves. Yet the survey also discovered that social was deemed “most effective” by only 25% of respondents (and only 20% in the $1 million+ revenues category).

I attribute this gap to the SMBs’ lack of expertise in using social media. This likely explains why they want “access to a social media guru.” They know it has huge potential, they just don’t know how to use it effectively. (This story repeats itself across most of digital marketing for SMBs.)

Ultimately what I think will be bundled in third party Facebook marketing programs for SMBs are the following:

In other words, this is what I think the Facebook package will probably become — all or most of the elements above. And I think the outsourced content creation (e.g., a post a month) will eventually be minimized or fall away entirely.

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StepsAway Offers App-Free Solution for Indoor Marketing in Shopping Malls

StepsAway

One of the major challenges of indoor location and marketing for venue owners, malls or individual retailers is getting an app onto users’ smartphones. Retailers need to make an argument to consumers to download their apps and engage them to ensure usage. That’s because without an app there can be no notifications or other promotions — until now.

A company called StepsAway now offers an indoor marketing solution for mall owners that doesn’t require a prior consumer-app download. This is quite significant for obvious reasons. Shoppers sign in to the mall’s WiFi network and then are re-directed to a browser-based HTML “app,” featuring stores and promotions for that that location.

Users can search the app by category or store name. Time-sensitive offers for that location can be promoted by any participating retailer. StepsAway also has a WiFi business but its portal can work with any existing WiFi system.

The company makes money on monthly subscription fees that are paid by retailers to distribute content and offers through local mall “apps” provisioned by StepsAway. The company works with mall owners and retailers at the national level. It doesn’t approach individual stores in specific locations.

This should make penetrating the market much faster. And because there’s no app to develop deployment should be much quicker. The company currently works with 10 malls around the US. Obviously retailer participation is key to the success of this initiative.

StepsAway

Here’s the company’s pitch to retailers:

Our patent-pending proprietary desktop platform is built to easily repurpose your existing digital content. Whether there’s inventory that needs to move or a ‘price-test’ to capture more gross margin dollars, SA Connect is your ‘go to’ solution to communicate with shoppers for your ‘Regular Promotions’ or ‘Flash Sales’.

There is a StepsAway-enabled mall not too far from me but I’ve not had the opportunity to test out the experience. It’s not clear whether the portal can be used to promote individual retailer app downloads but it doesn’t appear so currently. It’s also unclear whether the company will be selling ad placements or position within the browser-based “app.” I suspect it will over time.

More than 80% of US consumers have used smartphones in stores to look for coupons, check prices or product reviews (various sources). And while nearly 90% of time spent with mobile devices happens in apps that’s not true in the retail vertical.

According to consumer research from Local Corp, conducted by the eTailing Group earlier this year (n=1,300 US smartphone users), when it comes to product research only 24% of consumers use an app. Most use a search engine (Google) or mobile website.

The StepsAway solution is thus well aligned with the current state of the market and the limited adoption of retailer apps.

Given all this I would expect that national retailers and mall owners will be quick to embrace StepsAway as one indoor marketing solution that removes much of the current friction and barriers to adoption from the consumer experience.

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Google Promotes Yelp, Facebook, Twitter in New Videos Aimed at SMBs

Google funnel

On Monday Google posted a series of six videos aimed at helping SMBs get online and improve their digital marketing capabilities. Together they represent about 30 minutes of viewing time.

Narrated by Google’s Maile Ohye. They’re mostly basic and pretty accessible:

In the videos Google explains and promotes Google My Business but, interestingly, also discusses the value and importance of Yelp, Facebook, LinkedIn and Twitter. To my knowledge this is the first time Google has “officially” and publicly promoted third party services that in one way or another compete with the company’s own offerings.

Google third party sites

I’ve long wondered if Google would build or embrace presence monitoring, listings syndication and reputation monitoring tools involving third party sites. This video series implies that it could well do so.

Take a look at the videos and tell me whether you think their recommendations are well calibrated for online newbies or whether you think they’re still too challenging for most SMBs to implement.

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Right Time and Place for Curbside

Curbside

Curbside a new mobile shopping app has formally launched with almost $10 million in funding. Jaron Waldman is CEO. He was the head of the “Geo Team” at Apple following the acquisition of his mapping startup Placebase.

Simply put, Curbside taps into the “buy online, pick up in-store” infrastructure of major retailers such as Target, Toys R Us, Home Depot and Crate and Barrel. Just as that suggests, users shop and buy within the app. They then pick up the merchandise at the physical store.

It’s very analogous to online ordering for restaurants; however it’s about products. Waldman launched the app in private beta earlier this year (he and I had a quick discussion about it some time ago). He told me today that their early repeat usage numbers are strong and that people find the app “pretty compelling.”

Lots of startups have in way or another been trying to solve the real-time product inventory problem for years. The first of these was Kendall Fargo’s StepUp Commerce, later followed by NearbyNow, Milo, Krillion, Retailigence, Goodzer and others. Nokia dabbled in this space for a little while.

Curbside arguably offers the most complete consumer experience available to date: inventory + in-app payments. Waldman and his team are only able to do this because the digital inventory systems of major retailers have matured to the point where he can access their data.

The “omni-channel” movement in retailing is also helping his cause. Many retailers, he told me, see this as another way to combat pure-play e-commerce. He added that he’s getting access, as far as he knows, to all the real-time inventory the retailers make available on their own sites.

Curbside

I asked about smaller retailers; is there a plan for them? Like others before him Waldman said that smaller retailers’ inventory systems are mostly not ready for prime time and so cannot participate at this point. He would like to help and include them however. Indeed, that was his original vision.

The company had to turn to larger retailers when it became clear that SMBs weren’t able to support Curbside. Waldman thus found out what StepUp, which had a similar vision, discovered more than eight years ago.

The difference now is that new POS systems, such as Square Register and others, could enable SMBs to participate in Curbside. Most of the inventory in the Square Market is coming from inventory cataloged in Square Register. As more SMBs adopt iPad-based POS systems they will be increasingly able to participate in digital product syndication.

One interesting thing the company is testing with the Oakridge Mall in San Jose California is a multi-retailer curbside pickup. Currently only a couple of retailers offer this (e.g., Target) but on an individual basis. However we’ll probably see this feature expand.

He also told me that at the Oakridge Mall customers get temporary preferred parking (and can go into stores to shop thereafter). That’s another incentive to use the system.

Most of e-commerce is about convenience rather than price. This is a hybrid: ensure the product you want is there waiting for you and then go into the store/mall to shop for other stuff. This buy online, pick-up in store solves many of the same problems as e-commerce same day delivery, but without the massive cost involved. (Google Shopping Express is probably not going to survive long term for this reason.)

There are many product extensions available to Curbside over time: coupons/promotions, FSI circular data and even indoor location. Regardless, Curbside appears to be at the right place at the right time. Retailer inventory systems are mature enough to support this; consumer mobile shopping (and payments) usage are fairly well established and retailers are investing in supporting multiple sales channels.

Waldman is therefore lucky but he’s also experienced and smart. He knows the local space well and is familiar with its challenges and opportunities. And I think that based on the early feedback and momentum, Curbside looks like it’s tapped into a big one.

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ReachLocal Co-Founders Back in SERVIZ with New Marketplace

Serviz ReachLocal co-founders Zorik Gordon and Michael Kline have formally launched SERVIZ. The successor to ReachLocal’s ClubLocal, which was spun out when the two left the company, they call SERVIZ “an on-demand home services company.”

I might use the more descriptive term “end-to-end marketplace.” Regardless of the precise terminology, SERVIZ joins a segment of companies and startups creating complete marketplaces that handle everything from discovery to booking and payments. There’s also a set of merchant-facing tools to help them operate their businesses.

OpenTable is perhaps the original example of this idea (although payments was just added). More recently there’s Uber and AirBnB. But established local companies such as HomeAdvisor (the former ServiceMagic) have  moved into this arena with the recent acquisition of Mhelpdesk.

Gordon distinguishes SERVIZ from Angie’s List, Yelp, Thumbtack or YP.com by saying that the company isn’t simply trying to aggregate listings and reviews and hand off traffic to a local merchant or service provider. The company aims to develop a consumer brand more analogous to Uber, which consumers directly seek online or access via the company’s mobile app.

SERVIZ is currently only operating in the greater Los Angeles area but will be expanding geographically soon. Impressively SERVIZ has already secured funding of $10.7 million, led by Groupon (a potential buyer down the road).

Serviz 2

Like Uber, the business model is transaction based. SERVIZ will take a 20% margin on top of the base price of the job.

Gordon promises that SERVIZ will “disrupt” the huge home services industry by charging consumers “50% less” and paying service professionals more. The company is recruiting skilled professionals who are either independent or working for other companies but making less than they might be with SERVIZ.

SERVIZ will be undercutting the pricing of the numerous branded home service companies such as ServiceMaster or Roto Rooter. The company also aims to have transparent pricing for consumers and offers a 100% satisfaction guarantee. Consumers will pay between $45 and $60 per hour depending on the category (and probably later the market).

To some degree this is similar to the ReachLocal model, which sought to bring greater efficiency to local marketing services. The difference is that ReachLocal sells traffic and leads with fulfillment from third party networks (e.g., Google SEM). SERVIZ controls “the entire funnel,” from traffic acquisition to transaction.

By controlling the transaction SERVIZ is able to do a number of things that may ultimately bring it competitive advantages. First merchant ROI isn’t a question the way it is with many SMB marketing services programs. Fulfillment is through the platform itself; service professionals will be paid by SERVIZ in the same way that Uber pays its drivers.

Serviz

Another potential advantage is the way in which SERVIZ can optimize its own online marketing campaigns. It’s not buying keywords or managing campaigns on behalf of thousands of advertisers with small budgets. It’s just buying traffic for itself.

SERVIZ can buy Google keywords that are most likely to lead to sales because it has complete visibility into the entire purchase funnel. Thus it will understand which terms convert in which categories and can bid more intelligently.

One thing that may appeal to some service professionals is the idea that they can simply not worry about the complex “outside” world of online marketing. There’s no worrying about ranking or SEM, no Facebook and Twitter updating and so on. SERVIZ will deliver all their jobs — provided it’s working and growing.

Local digital marketers would likely argue that SMBs should be building their own brands and shouldn’t walk away from that objective and responsibility. However many SMBs will be happy to turn marketing over SERVIZ even if it means they’re not building their own brands.

Gordon says there were many lessons from the earlier experience with ClubLocal and that SERVIZ represents a significant upgrade and improvement of that original concept. Currently SERVIZ is targeting roughly 300 home services “headings” but Gordon believes the model is broadly applicable beyond home services.

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It’s the Ad Creative — Stupid

Blank canvasTime and again at tech marketing conferences the subject of ad creative is neglected or not discussed at all. Sessions are devoted to targeting, big data, attribution and so on. But creative is rarely seriously talked about, though there is some discussion going here in New York at Ad Week.

Often the people who want to talk about creative don’t want to talk about technology and vice versa. Both sides need to come together. All the big data and targeting in the world won’t rescue a terrible campaign. But great ad creative can go some distance to compensate for otherwise poor planning or execution otherwise.

Various studies from comScore, Millward Brown and Nielsen (summarized here) repeatedly have shown that ad creative matters in terms of consumer response, brand perception and purchase intent. Another immediate reminder of that lesson is GE’s new LED bulb commercial featuring Jeff Goldblum (below).

Why is this ad great?

  • It’s funny, getting lots of coverage and being shared widely (earned media)
  • It showcases the product quite effectively, building awareness and purchase intent

Why aren’t more ads effective like this? It shouldn’t take millions of dollars and a Super Bowl slot to generate clever and interesting ads.

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Cities Trying to Protect Taxi Biz Against Uber Onslaught

Uber

I hate the overuse of the term “disruption.” It may be descriptive but it has become a cliche. It clearly applies, however, in the case of Uber, and similar ride-sharing services Lyft and SideCar.

While the taxi business is still healthy in New York it has dramatically declined in other US cities. For example, an article appearing in the San Francisco Chronicle cited this remarkable statistic about the fall off in ridership:

The number of trips taken by taxi plummeted 65 percent in just 15 months, according to a report presented to the San Francisco Municipal Transportation Agency board Tuesday…

The average number of trips per taxi has been on a steady slide – from 1,424 per month in March 2012 to 504 this July.

The reason for this is clear. Notwithstanding that Uber is ethically challenged, the user experience is superior to conventional taxis — from the condition of the vehicles to the app experience, tip-free pricing, mobile payments and emailed receipt. The payments experience is one of the primary reasons I use Uber.

District Attorneys in San Francisco and Los Angeles have reacted to the near-mortal wounding of local taxi businesses by threatening a crackdown on Uber et al. The DAs sent letters to the ride-sharing companies last week citing a number of laws that they’re allegedly breaking. The companies disagree and have protested.

There may indeed be ways in which Uber and its peers are not in full compliance with the law (e.g., insurance requirements). Yet I also believe that at least part of the DAs’ motivation for sending the letters is lobbying by the taxi industry. This is a case of vested interests being threatened and using government to try and stop or slow a competitive development in the market.

It’s also the case of change happening too quickly for government officials. In Europe reactions against Uber, etc. have been stronger. Uber is perceived as a kind of threat to a way of life. And in a way it is.

Uber is an interesting example of several things. Like AirBnB, it’s an end-to-end local marketplace. It’s an example of how mobile payments are being successfully implemented for offline services.

But for purposes of this post it represents a radically better user experience demolishing a relatively poor one. While taxis are entitled to try and “level the playing field” by getting Uber to comply with regulations they must adhere to, in the end taxis must fundamentally change how they operate or face further losses.

Though it happens all the time, it’s ultimately folly for vested interests to use government to block or put the brakes on upstarts and competitive pressure. That only delays the inevitable.

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Apple Pay Triggered eBay-PayPal Spinoff

Apple Pay mobile apps

This morning eBay announced that it would split itself into two publicly traded companies in 2015: eBay and PayPal. Beyond ongoing pressure from investor Carl Icahn, the announcement of Apple Pay was likely the trigger for the decision.

Here’s what eBay said this morning:

eBay Inc. today said its Board of Directors, following a strategic review of the company’s growth strategies and structure, has approved a plan to separate the company’s eBay and PayPal businesses into independent publicly traded companies in 2015, subject to customary conditions.

Creating two standalone businesses best positions eBay and PayPal to capitalize on their respective growth opportunities in the rapidly changing global commerce and payments landscape, and is the best path for creating sustainable shareholder value, the company said…

However, a thorough strategic review with our board shows that keeping eBay and PayPal together beyond 2015 clearly becomes less advantageous to each business strategically and competitively. The industry landscape is changing, and each business faces different competitive opportunities and challenges.

While Square, Stripe, Google, Amazon and others are PayPal competitors there hasn’t been a company until Apple that could radically impact PayPal’s business. PayPal is well known but it’s brand and loyalty remain paradoxically weak.

Depending on how well Apple Pay actually works (usability) it could take much of PayPal’s mobile business and eventually blunt its offline growth in just a year or two. The outlook for PayPal could get very grim very quickly.

While PayPal is interested in working with Apple Pay so far the company doesn’t have a deal. These factors are what motivated eBay to decide that PayPal needs more dedicated and strategic focus and thus to become a stand-alone company.

PayPal has an “account base” of more than 220 million users globally. How active and loyal they are isf20

another matter. By comparison Apple has more than 800 million credit cards on file with iTunes. Apple’s brand is at least 10X as strong as PayPal.

Apple Pay is likely to quickly take hold for in-app payments as most commerce apps adopt it as a payment option on iOS. NFC/in-store payments will be slower to take off but eventually they will.

The anticipated ease of using Apple Pay (one thumb or one click) for in-app payments will make other payment methods (including PayPal) much less desirable. Just having to sign in to PayPal is a major competitive disadvantage. PayPal’s obnoxious use of your bank account (vs. credit card) as the default payment method is also a major disincentive to use the system.

Not having to sign a receipt or payment slip (and potentially skipping the line) will be drivers of in-store usage of Apple Pay, along with increased consumer awareness and merchant NFC-terminal adoption. But we’ll see in-app payments ramp very fast now and many of those will be for offline services (think OpenTable, Uber). If Apple Pay is genuinely secure and as easy to use as promised it will gain mass adoption quickly.

And that could be very bad news for PayPal.

Updated: here’s the story behind the story of why Apple isn’t working with PayPal. According to this report:

Apple and PayPal started talking early on in Apple’s development of Apple Pay, as Apple was setting up partnerships with the card issuing banks and card networks. Since PayPal’s a payments industry leader, it would have been shortsighted for Apple to not reach out to PayPal.

But while these talks were going on, PayPal went ahead and partnered with Samsung on the Galaxy S5 fingerprint scanner, a move that was reportedly forced onto PayPal by eBay CEO John Donahoe. PayPal’s now-former president David Marcus was purportedly categorically against the Samsung deal, knowing that it would jeopardize PayPal’s relationship with Apple. Donahoe won the day, however.

Donahoe miscalculated and now is forced to split his company in two probably to the ultimate detriment of both halves.

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