Category Archives: Sales Channels

Gannett Buys ReachLocal to Anchor its Digital Business

Gannett announced today that it will buy ReachLocal, giving it a more solid anchor for selling digital marketing solutions to national brands targeting locally, as well as SMBs. The deal, at $4.60 per share, values Reach at $156 million – 188 percent above its closing price on Friday. Reach’s annual revenue of $320 Million will more than double Gannett’s digital business.

Gannett’s acquisition follows on the heels of’s acquisition of Yodle in February. It represents the end of a bold vision – shared with WebVisible, LocalLaunch, Weblistic, SpotRunner and others — of a local ecosystem dominated less by channel (i.e. Yellow Pages) than by a neutral sales force providing efficient solutions.

In the end, the vision was made moot by Google’s dominance of the marketplace. As SMBs found cheaper and more personalized solutions, all the ISOs suffered astronomical churn rates. Reach’s churn, at one point, was said to be above 100 percent.

The company, meanwhile, has evolved with the marketplace. In various bids to create a more sticky solution, Reach tried one local trend after another, including bids to integrate daily deals (DealOn), social platforms (Bizzy) and even a consumer-facing home services leads company (ClubLocal).

More recently, the company has marketed itself as a provider of local front and back office marketing solutions to both SMBs and national marketing entities, such as Scion and Eyefinity. Indeed, the company has seen some wins and has seen growth in less competitive international markets. But its customer count has also gone down from announced levels of 32,500 during the super high churn era to 16,000 today.

Gannett, which operates in the U.S. and UK, seems likely to sell off or close Reach’s international divisions. While Gannett is limited in its ability to integrate with Reach until 2017 because of current sales agreements, it says it will eventually use Reach as its main SMB and national digital services platform.

ShopTalk: ‘Digitally Native Vertical Brands’ Anchor

Bonobos CEO Andy Dunn (On Right)

The next generation of retail brands will win if they pursue a “digitally native vertical brand” (DNVB) path. So says Bonobos CEO Andy Dunn.

“Vertical brands were a huge part of the last era of retail (Zara, Ikea, Gap), aka the offline one, and now they become the driving story in the future of digital retail,” said Dunn in a Medium post.

Speaking May 18 at ShopTalk in Las Vegas, Dunn says there are 65 digitally vertical brands. Besides Bonobos, a high-end men’s fashion brand, others include Warby Parker, Dollar Shave Club, BirchBox and Jack Threads. We’re just in the “first inning,” he says.

Dunn’s definition of a DNVB is a brand that is customer-centric and highly personalized, while most ecommerce-only companies provide anonymized service with superficial, broad personalization. Nordstrom, which owns 5 percent of Bonobos, is an obvious cohort. But so is Tesla in automotive.

The digitally native approach differs from pure-play ecommerce, “where we have seen a lot of failures,” says Dunn. It is also far removed from legacy retailers and offline brands. Aside from leaders such as Nike and UnderArmour, most are unprepared to disrupt themselves and they also tend to lack their founder’s conviction.

Like Warby Parker, BirchBox (and Amazon), Bonobos is now taking its approach from online to offline. Stores are “amazingly profitable. Productivity is so great on that box,” he says, noting that the average Bonobos location is 800 square feet.

They also allow Bonobos to “sell with the highest possible customer service,” while “pulling back on marketing and technology.” Bonobos currently has 21 stores, and will open 11 more this year. But these aren’t “software companies,” says Dunn. “This is retail. It takes a long time to build. And ultimately, profits and cash-flow matter.”

Local Onliner Bookshelf: Disrupted: My Misadventures in the Start-up Bubble

I had mixed feelings when I first heard about Dan Lyons’ new book, Disrupted: My Misadventure in the Start-Up Bubble.

The book focuses on Lyons’s short, 1 ½ year tenure as a content person at HubSpot, the much admired SaaS (Software as a Service) company for SMB Inbound Marketing that successfully IPO’d in 2014. Lyons clearly had some scores to settle with the company, where at 52, he was twice as old as the average employee. As a lifelong journalist who rose to be Newsweek’s Tech Editor and the secret writer of The Fake Steve Jobs blog, he was unlikely to drink the non-critical, cheerleading Kool-Aid that he claims the corporate leadership demanded in exchange for little supervision, endless snacks and beer, and “unlimited vacations.”

In my own experience, the HubSpot leadership team has done a great deal to articulate the opportunities of social media and content marketing focused “Inbound marketing” as a cheap and efficient substitute for advertising. But Lyons lands many punches against the company, whose executives he derides as “charlatans.”

According to Lyons, the new concepts of Inbound Marketing are a cover for little or no controls, and in fact, the company doesn’t even abide by them internally. Lyons observes that its sales and marketing costs aren’t based on inbound marketing. The high levels of SMB churn that the company experienced required endless pitching by the company’s telemarketing center to bring in replacement customers.

Lyons also notes that companies like HubSpot tend to get a free ride from critical eyes, with the tech press looking for exciting VC heroes like Marc Andreessen and John Doerr. The VCs are really just glorified salesmen, he feels, with little concern for making profits or rewarding mom and pop investors.

Much of the book focuses on a terrible human resources situation at Hubspot for Lyons, who was a prize catch to join the team as TheFakeSteveJobs celebrity blogger and was given a very senior level salary (never disclosed). He never really fit in at the startup with its cult-like culture (he claims), lack of a hierarchy that would reward senior level people, and constantly shifting strategies.

To be sure, Lyons, while often funny, can be a self-righteous whiner at times. But in this account, he takes no prisoners, and raises many important points about the need to look beyond the rhetoric when evaluating new, high-flying tech companies.

Tailoring Sales and Marketing to SMBs: The bizHive Approach

bizHive CEO Kim Feil

Major brands theoretically see a huge market in SMBs. But for the most part, they’ve been tone deaf in reaching, engaging and serving the SMB market.

Insurance companies, tech brands, financial institutions, credit card providers and other big enterprises are all guilty of “one size fits all” efforts when it comes to SMBs. Each assumes they can “micro-size” their big enterprise B2B services and methods. In the end, they tend to leave SMBs scratching their heads at complex ordering processes; products that don’t fit their smaller businesses; and 1- 800 customer support lines that are transactional, rather than relationship-based.

Enter bizHive, a four year old, Chicago-based company dedicated to helping brands tailor their products for SMBs, while also creating a marketplace that helps SMBs learn about, explore and buy the services they need. The company is led by CEO Kim Feil, formerly CMO at Office Max, Walgreens and Sara Lee, and co-founder Dave Walker, a former CMO at Circuit City and Toys R Us (who frequently advises us.)

The offering consists of several components. The bizHive “Advisor” helps SMBs with objective “why and how” information to educate them. The “Marketplace” allows SMBs to see pricing and options to solve their needs. There is also free access to virtual events, interactive tools, “Moneycomb” price guides and “bizKeeper Checklists.” At this point, over 150,000 unique SMBs have come to bizHive, with more than 25,000 users coming every month.

Feil says the typical brand only goes through the motions when it comes to SMB support. “They try to micro-size their B2B efforts; put out a mini-version,” she says. “It has absolutely no relevance” for the SMB, who is looking for personalized service and willing to pay for it. It is also condescending, she says.

bizHive works to develop a more authentic and thorough SMB reachout – a “plain English” approach. Given the high cost of SMB acquisition, the effort that quickly pays off. “It’s not a black art. We are just pivoting their mindset,” notes Walker.

The company’s efforts touch on any department that interfaces with the SMB, from sales and marketing to delivery. Some bizHive clients have even gone the extra step and hired dedicated SMB executives.

Sometimes, the root problem lies in the org chart. In some cases, responsibilities for SMBs have been buried in irrelevant divisions (i.e. digital sales). “Many of the sales had nothing to do with digital,” says Feil. “There are very few dedicated divisions building capabilities right for SMBs.”

While SMBs are notoriously price sensitive, Feil says that brands often make the mistake of focusing entirely on prices. “(SMBs) don’t want to be gouged, but what they really want is the right-sized solution, she says. “They don’t want to buy something that is geared for a 20 person company when they only have 6 people.”

Just this week, I found out that Bank of America had sold all its area accounts to Bank of the Cascades. The latter send me a brochure with the new fee schedules. It was the first I heard of the deal. What didn’t they send? a thank you letter, gift card and free trial services. (Guess who closed their account?)

Vistaprint Adds ‘Local Listings’: Our Interview with Scott Bowen, VP of Digital Services

What’s really important to SMBs in digital marketing? SEO/SEM, social media, Websites, mobile optimization and promotions immediately come to mind. The core feature probably remains listings (and “enhanced” data related to listings such as location info, hours and photos.)

Listings are seen as the #2 offering after Websites by Vistaprint, which has just launched Local Listings in the U.S. and Europe. The $10 a month service is aimed at micro businesses and will distribute enhanced data such as business hours, locations and photos to 100+ publishers, as well as provide detailed analytics at perhaps “half the price” of competitors such as Yext, Moz, Go Daddy’s Locu, Constant Contact’s Single Platform, etc.

VP of Digital Services Scott Bowen tells us that Vistaprint is ideally positioned to reach customers that already buy its business cards and its growing list of supporting physical and digital products. The listings product, which has been built in partnership with Neustar-Localeze in the U.S. and Uberall in Europe, can boost their website traffic rates by up to 60 percent.

Even businesses that aggressively claim listings don’t often go much beyond Google, Bing, Yelp and YP, says Bowen. “The three or four dozen ‘long tail’ publishers give you that more reach and make a positive impact on your organic search position,” he notes.

Listings also complement Vistaprint’s other digital offerings – some of which are being white=labelled from other vendors. They’re anchored by the company’s website business (as low as $5 a month), but also include social media marketing ($10 a month); and email marketing (as low as $5 a month).

Currently, Vistaprint’s digital services are being offered a la carte. Some customers are already committed to other vendors for components such as domain listings. (in fact, Go Daddy looks like the closest competitor here). Bowen believes that microbusinesses will ultimately want a one-stop shop for all their physical and digital marketing needs, positioning Vistaprint as an omnichannel provider to small business owners.

While it is an intensely competitive space, Vistaprint has some advantages over the others in terms of its huge base of business card customers, and by extension, being able to populate the most up to date info in the listings template. “There is a lot of information on a business card,” says Bowen.

The service is currently live in the U.S., France and the U.K., and will launch within the next couple of months in Germany. Bowen feels that the various European markets have more potential in terms of being a greenfield, but they also have “very different competitive landscapes.”

Vistaprint VP of Digital Services Scott Bowen

On Demand Trends: ‘People as a Service’ (PaaS)

We talk a lot about “on demand” jobs, or gigs. But does the on demand economy extend to full time, professional positions for administration, marketing and sales? Longtime local search and promotions vet Andy Steuer (IdeaLabs, Merch Engines) thinks so.

Steuer is an investor in two sister companies based on the idea of “People as a Service,” or PaaS — a play on Software as a service. Helpware provides employees on an as needed basis; Leadware helps sales teams build out va targeted research, lead generation, leads and sales. “The challenge in any business is to keep operating costs lower,” says Steuer.

Both companies provide English-speaking workers from The Ukraine. Workers are billed out at $1,800 to $2,600 a month based on disciplines, with an account manager for every five consultants to insure high quality output from the team. The workers are entirely dedicated to the hiring company for as long as they are needed. Many are proficient in a number of categories.

Typical Helpware roles include customer service, accounting support, search marketing and marketing support. “They work with a lot of CFOs on billing reconciliation, analytics, and support customer service teams and marketing teams to onboard and manage client campaigns effectively” and things like that, says Steuer. Leadware operates on the same principals, but operates on its own, helping companies build out their own “predictable revenueve sales” funnel.

“With Leadware, for every thousand leads, you might may have 200 conversations and emails, leading to 20 appointments and four sales,” says Steuer. As companies build, they can keep adding more Leadware consultants. Then as sales are made, Helpware is there to help companies scale their back office operations efficiently so they can boost their EBITDA quickly.”

Restaurants Disintermediated by New Sites That Make and Deliver Food

There is a new front in the food delivery wars: food delivery companies that make and deliver their own food. Sites such as Blue Apron, Munchery and Sprig are focused on on disintermediating restaurants and the food delivery companies that rely on them. including GrubHub/Seamless, Yelp’s Eat 24, Groupon’s OrderUp and PostMates.

In a macro way, the restaurants are being made to realise they are only brands in a broader “food at home” category. As Business Week’s Brad Stone reports in a great new article, the only question is whether the new food prep and delivery companies will serve the food hot (like Sprig) or require that it be heated up (like Munchery).

Stone’s report focuses on Munchery, which now runs mega-kitchens with $50,000 industrial overs in San Francisco, LA, New York and Seattle. Munchery – a Y Combinator reject in 2012 now valued at over $300 million — makes about two dozen gourmet items every day, centrally directed by star chefs. The high volume of orders lets the food scale and means lower costs for consumers. Stone notes that a salmon dish that was $22 when first introduced, for instance, currently sells for $11, which seems to be the average price.

Munchery has also proved to be an activist in on demand labor issues facing many of the on demand companies. When Hilary Clinton recently visited, Stone notes that the CEO lobbied her on the need to find a middle ground between full time employees and part time workers. Munchery’s workers are all fulltime and enjoy full benefits. But a new classification between contractors and full-time hires wouldn’t require employers to shoulder the full burden of health and retirement benefits. It would also allow companies to employ more people to work a few hours a day around dinnertime.

Photo from Forbes