Yext 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).
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.”