A report was released to today by Borrell and associates showing the huge churn there is in small to medium sized business customers buying paid search. Greg Sterling and David Mihm gave some excellent analysis on the report but in short it said that:
- The local search advertising market is huge and there has been some significant growth by industry players such as Yodle, Reach Local, and Local.com
- Being a great sales force is one thing but re-sellers of the major paid search need to find ways to add value. This make sense as a smart business will always be asking what are they paying for and will eventually go direct if they dont see the value.
- The biggest challenge for resellers is churn. Estimates are that 60% of customers leave every 12 months. The biggest reason is that the small businesses not perceiving a return on investment, particularly in the first 90 days.
The reason for this failure is the failure for the re-sellers to clearly understand the amount of business being brought to the small business and clearly and easily communicating that to the owner. To a business owner that has just made thier first purchase of search engine marketing campaign to expect them to immediately understand the value of a click is naive. If I own a local restaurant do my 500 extra clicks on my website per month result in a good investment of my $500 per month. When they read that i bet most owners dont think it does. If they can show it resulted in 50 new reservations, then it is so much easier for the owner to understand without having to be an SEM expert.
Tracking online reservations and calls sent to a business is the only way to determine the true effectiveness of a local search marketing campaign and until the business models and sales commission structures are based around that then there will always be some misalignment between the business, the local search directory and their users. The industry isnt there yet and its because half of the 100,000 sales people selling to these businesses are yellow pages and local newspaper people so its the history of those industries that are still leaving thier legacy.
If you are interested in learning how to re-align your online directories to be more inline with business owners and users get in touch with dean (at)bookingangel (dot) com or follow me on twitter
Open Table IPO seems to be the oasis in the desert of tech public listings but is it simply a mirage?
There is no doubt that there is a worldwide meme in online reservations /bookings and Open Table has benefited from this. Check out Google Trends to see what I mean. People trained in booking their travel online now understand the convenience of organizing their life online and want to be able to do it in other areas of their life. There is no doubt consumers like online reservations, as they become more trusted they will continue to grow. The question is how do you get restaurants to adopt it and how do you make money. Sarah Lacy wrote some interesting points in a recent article. Its a good article along with some of the other articles she links to and I agree with some but not all of her points
She highlights how difficult the sales model is. It has taken Open Table $48million in funding and 10 years to enable 9000* restaurants with their technology, most of which are in the Bay area and New York. Thats a pretty expensive cost of acquisition and its because they have to convince a restaurant owner to completely change their behaviour, to throw away the restaurant diary which worked pretty well and replace it with a complicated computer terminal that all of the staff will have to be retrained on and that will inevitably, like all technology go down. Tough sell.
I dont think local has to be hard to monetize its just about understanding that business just want more business. If you are selling them more business, they will pay for it. Its just when you try to sell them a monthly subscription that offers them no benefit that it gets difficult. Business owner in the past have all been ripped off by some advertsing / yellow pages sales person that sold them ads or services that didnt bring them business but if you can prove to bring them business they will pay.
I understood from being in the tech industry for 5 years before buying a share in a bar and restaurant that the problem is not that local / small business people are luddites, its that they are so damn busy working in their business. As a restaurant owner I was pitched advertising / new business opportunites 3 or 4 times a day. The only things that got any of my attention where things that guaranteed me more business at a reasonable cost.
That is what we realised in the beginning with Booking Angel. You get maxium adoption with the least friction when you fit in with the way that restaurants work today, make technology work for the business. You can then slowly start to bring them more business and only offer them more advanced technology solutions when they are needed and not before.
Compare the stats.
Open Table Funding prior to IPO $48 million - restaurants enabled 9000
Booking Angel funding to date $250,000 restaurants enabled 27,000
Its exciting times ahead for this industry. Opentable proves there is a large market and services like ours prove there is an easier way to approach it.
*(There are over 220,000 full service dining resaurants in the US according to the National Restaurant Association)
Tags: business model, local search, opentable IPO
Do you know more people search for “restaurants” than “travel” on the internet? Millions of potential customers are walking past your virtual front door every day. Are you really open for business on the internet? How do you make sure you get this business instead of the restaurant down the road. Its all about understanding your customers better and talking to their goals in a relevant and succint way.
Who visits your restaurant and why? Who do you want to visit your restaurant? Maybe the competition attracts a type of client that you don’t or you have identified an untapped market you want to focus on. These need to be explored. Try and categorise these people into groups and understand their needs. Who are your most important customers? Rank them. Are your clients mostly tourists, business people or locals? Why are they there? Is it casual dining with friends, entertaining clients, holding a function, just a quick easy meal or walking past? When you know this you can prioritise their goals and focus your site, not just its layout but its language and style as well. For example you might conclude that the most important customer group for your restaurant is business people entertaining clients.
Customer Groups >>> Business People Tourists Locals
Customer Goals
Entertaining clients
Holding a function
Quick easy meal
Walking past
Casual dining
Special night out.
The objective of your website should be to provide the most pertinent information to the right people at the right time. You will understand what type of customer already visits your restaurant and you should have an idea of the type of customers that visit your competition. That will help define how you structure your site. Dont get caught in the mistake of trying to be relevant to everyone because you will find on the web you will be relevant to nobody.
You can download the full whitepaper here that talks about 9 easy steps to creating a restaurant website that will get you more reservations
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Tags: restaurant marketing, restaurant trends, restaurant website
