Local is hard… which is why relatively few companies survive the game of selling marketing and operational tools to SMBs. One of those companies with proven staying power is Mono Solutions, whose CEO Louise Lachmann joined us on a recent episode of Localogy Leaders to pass along some wisdom (video below).
So why is local so challenging? Outside entities often gaze at the sheer mass of the SMB population but fail to consider the sector’s inherent and vexing challenges. There’s a fragmented base of buyers, each of whom represents small budgets and high churn. This can make acquisition cost (CAC) exceed lifetime value (LTV).
Making matters worse, there are opposing forces in that CAC vs. LTV equation. You can improve customer retention by offering more high-touch services to hold SMBs’ hands through their marketing fulfillment. But by doing so, you compress margins that are already small due to SMB ad budgets.
On the other hand, a digitally-streamlined approach maximizes margins at these low budgetary levels. But that’s where rampant SMB churn kicks in. This has been a longstanding issue with SMB search advertising for example. So what’s the right balance and how does one crack the code of SMB digital services?
The SMB Wild Card
Lachmann tells us that the answer isn’t just striking the right balance in how products are positioned but how they’re executed. It’s all about improving metrics across the board — retention, ARPU, LTV, etc. — through fire-tested best practices of SMB sales and fulfillment. These are talents Mono has refined over the years.
Starting with product positioning, Mono launched in 2007 as a DIY website builder for some of the reasons above around unit-economics. But it quickly realized that SMBs need more support. Specifically, Lachmann cites three key attributes that characterize the sliding scale of SMB personas: skillset, time, and money.
Time and money are mostly constants in this equation, as they’re common scarcities for SMBs. These are the biggest drivers for products that include SMB support. But the third variable is a wild card. Skillset and digital competency can vary widely, indexing high among emerging generations of SMB owners.
This variability compelled Mono to have a hybrid approach to accommodate varied SMB personas. The result is its “Do it With Me” model, which has a sliding scale of benefits that sit between DIY and DIFM. Congruent with this optionality, Mono has expanded its bundle to adjacent services like eCommerce, email marketing.
Scale & Efficiency
Moving on to the second big factor, execution, the magic words for Lachmann are scale and efficiency. This goes back to the above challenges of carving out margin while providing a high touch service. The way to do it is through lots of smart technologies, automation and structured content for use across its SMB base.
For example, Mono has de-coupled the data and CMS layers of its core platform. That way, its channel partners who resell digital presence products to SMBs can easily add services on top of the platform. This carries the benefits of the “headless” software-stack approach that’s all the rage in the SaaS world.
Another example is platform standardization. This is critical in serving a fragmented market like SMBs. When Mono had to make quick changes for GDPR compliance, it did so with one API call for tens of thousands of websites. The name of the game here is automation to achieve scale and workable unit economics.
“Helping one business with a website… we can do that,” said Lachmann. “But if you want to help thousands and thousands of them, you need to have the right toolsets.”
See the full interview below.