There are some people who think so. I can see why – but they’re not. Still, they’ve got issues, which I’m going to explore here…
I was reading a series of comments regarding Yext over at Local SEO Guide, and think they are bringing up some interesting points. People are discussing Yext specifically, but a lot of this carries over to all the big venture funded companies attempting to sell online marketing services to small businesses. (Yodle, Reachlocal, and others. I’d say some of Yelp’s recent problems are related to this.)
All of the companies I just mentioned have a bunch of negative reviews floating around online. Very frequently it sounds like this fictional story:
I was cold-called by “Rachel” at “insert company name here.” She said that they could send me lots of great phone leads from local customers. I would only pay for the actual calls, and could try it at no risk! Sounded great, so I signed up. They sent me 10 phone calls, but none of them were very good, I didn’t get any sales. I cancelled the service, but then they billed my credit card for $200! It was a battle to get rid of the charge. Plus now their phone number shows up instead of mine on Google.
It’s not that Yext is a scam, although they do have some problems. The bigger issue is that there’s a communication and expectations gap when it comes to these big marketing companies and the businesses they’re serving.
There are a host of issues that go into this, but some of the important ones are:
- True non-referral or repeat business is more expensive to acquire than many small businesses realize.
- Yext, Yodle, etc. all have lots of venture dollars and high attrition rates. The only way to hit their targets is to aggressively acquire new customers.
- There are a lot of channels available for marketing online. It can get complex, and is often not explained well enough to the business owner (even assuming the salesperson really understands what they’re selling).
The Cost of New Business
One of the complaints seen in regards to companies such as Yext is that the leads are too expensive, or don’t convert well enough, compared to existing leads. This can be legitimate, but it also may be that the business is underestimating the true cost of acquiring a new customer. Many businesses do not do a good job of separating out returning customers, or referrals, from the average Yellow Pages call. This both lowers the true cost of a new lead, and the value of a new customer.
I am not saying that all the phone calls being sent to businesses are good. Another problem is that not all of these companies have good feedback mechanisms from their clients. For effective lead generation, the company driving leads needs insight into the true value of those leads to the business. This is generally lacking – even if there’s a feedback mechanism, not all business owners will use it.
In addition to the above problems, many companies are horrible at dealing with Internet leads. If they come in by email, there’s a tendency to think they are not urgent – even though conversion rates rapidly decline over time. If they come in by phone, there are two potential problems:
- Some calls come in after hours. Small companies generally don’t answer their phone late in the evening. It’s amazing how difficult some people are to reach when you miss their call – and even if you reach them, they may have already chosen someone else.
- Some calls are largely informational. A few questions are answered and the caller goes away forever. These are inherently less valuable calls – but can be made much more useful by simply asking when a purchase decision might be made, and if it’s alright for the company to follow up at that time.
Almost all the complaints you see regarding the Yexts of the world start with a cold call. These companies are hiring small armies of salespeople. They have lots of money (raising well into 8 figures each, although I think there’s some consensus they’ll need more to reach all their potential clients) and a complicated service that benefits from direct contact, so it’s not surprising that cold calling/visits is the best method. Check out the career listings at ReachLocal to see what I’m talking about.
The problem seems to largely stem from the fact that most of these salespeople are working for a commission, and business owners are hesitant to commit their money to an untested venue/provider. Therefore, the pitch is all about bringing in no-risk leads. There’s not enough education about what the service really is, and perhaps over-promotion of money back guarantees. The leads don’t turn out as good as implied… the business owner is mad… and the provider is faced with more people looking for refunds than is really reasonable, because they think they’re providing a good service.
So you’ve got all the above going on. There would be problems regardless, and then you throw in the complexity of the online marketing landscape. Different companies have different strategies, but many are using a combination of paid search, free and paid directory/local listings, and even possibly getting some traffic via organic search.
Questions about who owns the website, whose phone number goes in the directories, whether paid search bidding will include branded keywords, etc are significant questions. However, they are complicated to discuss, which is going to make it harder to get businesses on-board, and possibly increase admin costs. The result is that they are often glossed over – or explained, but not sufficiently for a person new to online marketing. In the end, a company ends its relationship, but sees that directories all over the web are plastered with the now-defunct tracking phone number (a great reason to own your tracking number, if possible).
I don’t have a solution for Yext, ReachLocal, or Yodle. They’re pursuing a huge, potentially lucrative market, and have lots of people working at that. I really think that what they are doing is difficult, and they will struggle to run profitable businesses without any complaints. Maybe the real answer is for everyone to use a local online marketing consultant – but this has issues as well (including a lack of standards, and a difficulty in serving clients with very limited budgets).
On the other hand, I think there are real solutions for the business owners out there. The absolute key is to educate yourself regarding online marketing. You’re surely used to being a jack of all trades. Getting a basic understanding of online marketing will take some time, but this is the future of your business, and it’s not that hard. There’s a wealth of resources available online.
Once you know what’s going on, ask real questions. What websites will the leads being sold to you come from? What will be driving traffic to these websites? How much of the money you’re spending will go directly into paid advertising? Then the only other thing you can do is try it. Allocate a budget, large enough to get a real sample, and dip your toe into the water. My online marketing guide might help.