Wednesday, February 27, 2013
How ReachLocal Wants To Own The Consumer Transaction
Story by Benjamin F. Kuo
ReachLocal (www.reachlocal.com) was born in the age of Internet search marketing, and helped define Internet marketing from local service providers--letting people know about your local business via the Internet. However, the Woodland Hills-based firm isn't satisfied with stopping there--it now wants to own the entire transaction--from finding a local service provider, to booking an appointment with that provider, to presenting estimates, invoices, and collecting payments, and has launched a whole set of products in that area yesterday. We caught up with Zorik Gordon, CEO of ReachLocal, to talk about the new products and the strategy and inspiration behind the firm's big announcement Tuesday.
What's the idea behind the rollout of all these new products, and the expansion beyond the search marketing area?
Zorik Gordon: Obviously, we've been a local leader in that business. What we see, is this is a way to evolve our business beyond local lead generation to lead conversion. We're taking all of those leads, and creating the tools to convert them to customers. The big part of the vision is really helping when leads convert, and to enable a transaction with businesses. In a sense, it completes the funnel. When a local consumer has a need, they can use the service to figure out who they are going to transact with, and then go through the lead gen process, through the conversion to a customer, where we help them book an appointment, and buy. We're powering that whole process. That's the genesis of our strategy, and which has contributed to several new products. There's our lead conversion product, ReachConvert, and we also introduced ReachCommerce, providing booking and buying for home services. There's also ClubLocal, which we think of as the Uber for home services. That's really our own, end-to-end funnel, where we own the consumer and are the brand. We're making a real big statement that the future of local services is about transactions, and we want to power transactions via our own brand as well as through merchant's brands.
What drove the move into this area, and this shift in strategy?
Zorik Gordon: I think the birth of Groupon really opened up our eyes to the fact that local services was not just going to be about marketing, where our focus had been, but about the transaction. For the first time at Groupon, you were able to buy local services online. You could buy a restaurant meal, you could buy a space service. That was really an a-ha moment for us. It was clear to us, that all these local service transactions were going to somehow be brought online. We've given lots of thought to the state of transaction processing, and what it is really like for that local consumer who has a busted water heater. What we found, was it was so fundamentally broken, that it could be made better online. What that process is today, is if something breaks in a home, you have to find someone local to fix it. You go to a review site and the search engines to find local vendors, where they are dozens. Once you sift through and pick someone, you have to get pricing. That's one place that this space is really suffering. There's zero pricing transparency. You can't tell me how much it costs for plumbing or an exterminator. We're used to now having pricing at our fingertips for travel, for retail, but for local services, it's a black hole. Figuring out what is going to fix the problem and how much you are going to pay is really a horrible process. And, onec you make your decision, and book over the phone, you end up with a six hour window where someone might show up. It's a very primitive transaction. And, at the end, it's carbon copies in triplicate, and papers to lose. We said--wow, this needs to change. That's the genesis of ClubLocal. We are going into a local market, sourcing the best merchants, figuring out who they are, background checking them, doing a criminal check, and then we continuously monitor them. Plus, we also standardized what local service providers are doing into a set of SKUs. For plumbing, there's 5,000 SKUs, encompassing everything a plumber can do. We also did that for electrical, carpet cleaning, and other categories. Carpet cleaning is easier than plumbing, but for all those categories we've standardized all of those procedures into SKUs, and figured out how much things really cost. We then negotiate a price and discount on behalf of the consumer. That's what retailers do, use their buying power. We made the process very thorough and very simple, and built the technology platform to put the consumer, merchant, and technician on the same system. A consumer can come onto our website and download and app, tell it they need a plumber, find the times that are available, and get one there between 2 and 4, within a two hour time windows. They can click a button, and they're done. Now, literally, they can get done in 20 seconds what was a huge, painful headache. Merchants see that appointment request, and our system provides calendaring and a map system, and they can assign a tech to that call. Those techs are actually carrying tablets, so that if they are going to an appointment between 2 and 4pm today, once a tech is en route to the house, they status that they're en route, the consumer gets a notification, and they can track that the technician is only 29 minutes away. There's no waiting around, and you know exactly where they are on their route and when they will arrive. We're using technology, so when they show up, the estimate, invoice, and payment is all on the tablet. It's emailed to your inbox, housed on our site, and we also stand by that transaction and make sure if something goes wrong--just like Amazon and Zappos--we take care of you.
How much of this applies to your prior customer base, and how are you able to leverage those existing customers?
Zorik Gordon: We've been building this for awhile. We launched our initial beta in Dallas in July. Some of those vendors were current or former ReachLocal customers, but some weren't. The idea was really to take the best local merchants we could find. Sometimes, that ended up being someone in our current customer base, sometimes it wasn't. But of course, we have a huge asset, which are 800 sales people and 20,000 existing clients, and we have a good financial position. We think the base we've built and assets in the core ReachLocal business will really help us leverage this. ReachCommerce is really the same technology platform as ClubLocal, which we are offering to any of our merchants. It's not just built for consumers to interact with ourselves, it lets other merchants have their own brand. ClubLocal can be used by any customer, by buying ReachCommerce, and they get booking notification, tablet capabilities, payments, and all of that stuff. It leverages our core business in a big way.
You've gone over the years everywhere from small startup, to a large company--what are the new challenges being a big company?
Zorik Gordon: I think every stage has its challenges. I think the most important for companies, regardless of stage, is you have to innovate and create great products that solve real problems. That's a constant. I think that's really the impetus of why we went down this route, and made us do these things. As a big company, you have lots of asstes, but you also have an existing business. That a plus, and a minus. The most important thing, is to continuously try to move the space forward, before the space moves forward without you. You try to get those opportunities to bring to market products that are needed by your customers, first.