The High Cost of Missing Listings: $10 Billion (or More)

yext logoYext asked me and Andrew Shotland to figure out the “cost” of missing and bad SMB data. What we discovered was kind of shocking.

Using a mix of proprietary consumer survey data, Yext internal data and US government information (re consumer spending) we calculated that there may be more than $10 billion annually in lost sales to local businesses because their information is missing online.

The internet (and search engines) are the top source for local commercial information. Yext internal data indicate that 14% of business listings are missing from online databases and sites and as much as 43% of listings contain errors of some kind (bad address, name, phone number).

top local sources

According to US government figures there’s more than $800 billion in annual consumer discretionary spending in the US (in fact that’s a conservative figure). US retail spending in 2012 was about $4.5 trillion (e-commerce is just over 5%) and offline spending on local services and travel exceeds $3 trillion annually. Accordingly total “local market” spending approaches $8 trillion annually.

We determined that about $369 billion in offline spending is impacted by the internet. This relies a Google figure about online-influenced, offline sales. (There’s a Forrester calculation from a couple of years ago that’s pretty close re O2O retail spending.) There were several other steps in the process (e.g., how many online sources are used by consumers, etc.). But we arrived at a lost potential sales figure of $10.3 billion in the aggregate.

We employed other methodologies and approaches to check ourselves. They yielded even larger numbers. Indeed, if we include the listings with errors and the fact that 15.1% of consumers said that they would move on to competitors in those situations, the numbers grow significantly. (We did not calculate a “mitigation factor” if these businesses appear in other media, e.g, printed directories.)

In the end, to eliminate some of the “gray,” we limited ourselves to the Yext datapoint: 14% of businesses listings don’t show up in the database online anywhere and can’t be considered by internet users accordingly. We know that nobody on “page 2” of search results is even considered.

Figuring out lost sales or the “opportunity cost of missing local data” is an admittedly challenging task. To my knowledge this kind of calculation has never been made before.

But think about the size of the local market (trillions), the consumer reliance on the internet and the abundant choice users have in every local category online. In that context, it’s quite reasonable to imagine that in the aggregate billions are being lost by businesses that don’t appear anywhere online.

It’s analogous to the old yellow pages slogan: “If you’re not in the book, maybe you don’t exist.”

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16 Responses to “The High Cost of Missing Listings: $10 Billion (or More)”

  1. dave says at

    Greg:

    However you do the calculations, one impact of missing listings is that a different business with the listing information showing can pick up those sales.   

    The loss factor may fall on those businesses that don’t have listings or have listings w/ bad or wrong info.  The businesses w/ listings have a better shot at gaining those listings.

    Our smb’s have both benefitted and lost from that phenomena.  When competitors listings are missing, full of errors or weak, we see the leads.  When we suffer from lost or weak listings we know some of that business goes elsewhere.

    Parenthetically when google hit websites with panda penalties, we had content that rose to high visibility.

    It may all not be a loss but rather movement of sales in different directions.

  2. Greg says at

    Dave:

    What we mean is precisely that: these invisible businesses lose the sale, which then goes to someone else. 

  3. Adam Kaufman says at

    What about the lost value of lifetime value of a customer? And using Yext as a data point is insane.

  4. Greg says at

    Adam:

    Why is it “insane”? 

  5. Michael Bauer says at

    Yeah, why insane?  I would argue that using any local data from any source to reach any conclusion about anything local is insane.   But why Yext in particular?  🙂

  6. Andrew Shotland says at

    Ditto.  Should note that the 14% came from looking at businesses that signed up with Yext before they used the service.  So the data may have some bias built in, but in my experience these numbers are not out of the ordinary.

  7. Michael Bauer says at

    And from what I know (which is less than either of these two guys) Yext is the least insane source of which I can think.  But anxious for illumination.

  8. Rebeca Greif / Zaraz Collection says at

    a comment from one of the “great unwashed” of the SMB community
    and this comment does NOT refer to Messrs Shotland, Bauer et al
    who battle daily to fix the Model T that is local search via GBY
    and i speak from the User’s perspective
    in the “old” “cave man” days when you wanted to drive 5-10 miles
    and in person pick up an oscillating fan, or look at some wallpaper, etc
    you looked in a PRINT book, found some reasonable categories, selected those stores that were close by or on your way to somewhere else, maybe called them to check hours, if they had one, etc
    by and large – ALL businesses were listed – some with enhancements but you could pretty much see every b&m presence in your communities
    and it wasn’t all that hard
    now in the “modern” era you GBY for an oscillating fan and your local community you get directory mashups from local.com, yellow page directories from across the country, movie reviews, and ppc-prioritized feeds (forget relevance) and you give up in disgust ( we’ve heard this .. ) and ask a friend
    so:
    * the GBY “YP product” should be at least as good as the old Print Book
    if not better .. currently it’s a Yugo.. put up a pdf of the Book if need be
    * we ( the great unwashed SMB and User Community ) humbly suggest that while you folks work valiantly to get 20 million motors to work with 50Hz power
    * you hold up a mirror to the GBY “power plant community” and say
    you know what –
    – you need to start generating 60Hz power
    – relabel your “YP” product as “Advertising Mashups” until you’ve got one
    – and stop trying to patch the tires with “social duct tape”

  9. Andrew Shotland says at

    Thanks for the props Rebeca, but I think you are viewing the print experience through the rose-colored glasses of memory.  While print books have advantages over the Web, some initial disadvantages that come to mind:

    1. If you were a new business, you would have to wait until the next edition to be included – which could be as long as one year.

    2. If the books had incorrect data for your business, you would have to wait until the next edition to correct it.

    3. Long-time advertisers had “seniority” and could effectively buy most of the “traffic” to a category, leaving its competitors to fight for the crumbs. 

    I am sure there are more.  While I feel your frustration with GBY, etc., I think this is a case not of “the grass is always greener”, but rather, “the grass is always just as brown”. 🙂

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  12. Dave says at

    Greg, Andrew:

    Been under the weather and very busy.  You answered my first question.  Its the logical response.  If an smb is “missing” than another smb gets the business.  Thanks for the clarification.  It is the logical response.

    My next question for clarification:  The 14% factor:  ie the smb’s with missing, incomplete or confusing data represented a portion of Yext’s customers is that accurate?   How long did it take while being a customer of Yext to move from missing or full of bad information to having accurate information across the board?

    If 14% of Yext’s customers have missing information than Yext isn’t doing the job they promise.  If they are correcting those problems, how long does it take to get the proper accurate information upstream to the partners?

    thanks in advance for a response

  13. Greg says at

    Those missing data numbers are pre-Yext as I understood it.

  14. Dave says at

    Greg:

    Is the data correct now?   How long did it take to get the data correct?  Does Andrew know?

  15. Greg Sterling says at

    I do not. Andrew may know. 

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  18. Andy Kuiper says at

    …and it still a huge mess; in large part to Google’s longstanding (until recently in the USA) inability to provide SMB’s a reasonable way to correct things. 

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  24. Juliette Cowall says at

    So, is there a number that says …

    An incorrect phone number or address can cost a business x% of revenue over a year … I’m wondering what that actual cost to a small business is … the $10 B is too much for a single SMB to translate to their own business.

  25. Greg Sterling says at

    The inability of a high intent customer to locate or contact a business that might satisfy his/her commercial need or query is the potential loss of that customer. What’s an individual sale worth? That’s going to vary by category and by individual business. A pair of shoes, a stove, a car . . .

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