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The increasing importance of local marketing and reputation management

Posted on October 11th, 2007 by Jonathan Trenn

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This morning I read two important posts written by Greg Sterling on his blog Screenwerk. One is Nielsen - WebVisible Data on Local Search. The other is New Findings on SMBs and User Reviews. It left me more and more convinced how local businesses must view the internet as a marketing and business development source, and as a customer relations and reputation management tool.

Now I’m combining the results of two surveys both taken on line, so bear with me but Greg teamed with Opus Research and AllBusiness.com to put forward a survey that netted them 1200 respondents. AllBusiness.com’s users and members are SMBs (small & medium businesses). Of those 1200, 55% said that they had a website. That figure is smaller that I would expect - which is a good sign. That’s because it means that it probably wasn’t heavily populated by web savvy or tech oriented companies.

Now the Nielsen-WebVisible survey found that 86% said that they had used the Internet to find a local business to actually shop at. And as far as usage, 78% responded that they use the internet more today to find a local business than they had done two years previously and that an additional 20% use it the same amount. Combined, that’s 98%. Wow.

What we’re seeing is that a significantly large (and getting larger) percentage of people - people who are looking to conduct some sort of business- use the internet to locate businesses within the category of the product and/or service of what they need…on a local basis.

This obviously underscores the tremendous need today for SMBs to have websites. Not having one is ludicrous. But it also points to the fact that, in today’s arena, it PAYS to develop an online marketing plan for one’s SMB. It should include SEO and SEM for most. Banners at times. Email marketing to current customers. Each business will have different needs and all of these methods may not apply, but we also find out from the Nielsen-WebVisible survey that 52% use telephone directories less now than they did two years ago. Disclosure: I still use mine and have no plans to use it less.

Now there’s going to be a gap here. And the gap is that many smaller businesses mistakenly view advertising as an expense. And they’ll go for the tried and true. Yellow pages and flyers. Or they’ll rely on something that is very effective, but may not be enough: word of mouth.

To be sure, in Greg’s survey, 60% of the repondents said that more than 50% of their business comes from referrals. And 30% said that more than 75% come from that same source. You won’t find me dissing WOM…

…so I’ll say this. I think a lot of business owners put too much stock in their product and/or service and rely on word-of-mouth…which while being very effective can be very slow. Which is why I think they’ll need to invest in some online strategies.

But going back to WOM, we see the internet is increasingly playing a major role. Greg also found out that 64% or respondents knew of online review sites and that 30% regularly check these reviews. About one-quarter of them said that these reviews led to new business.

So people are searching for and finding local business via the internet. They are then reading (or writing) online reviews. More evidence that developing an online strategy is becoming ever more important.

Close to 60% of respondents felt that customer reviews are “a good thing and help us improve our business”. Improve means that a business sort of has a free focus group online. And then it adds their favorite marketing tool…word-of-mouth.

Now a lot of Greg’s respondents not only recognize the importance of these reviews, they apparently understand that it’s important to address - no, wait, I’ll say that word - ENGAGE - their customers/reviewers because over 50% had contacted unhappy customers to address complaints. That’s a very smart thing to do.

This brings me to a final point. Online reputation management. Still today, with 45% of the respondents here without website, it shows that many SMBs are very much behind the eight ball. Because a company doesn’t have a website, or they have one that one of the officer’s nephews built four years ago, doens’t mean that they’re not being talked about online. And, if you are a business owner, you want to be the most prominent, the most central web presence out there.

I see a tremendous opportunity for not only local search, but local marketing, bizdev, and customer/business relation management that’s going on RIGHT NOW.