I’ve been to hundreds of conferences focused on local over the course of 20 plus years. And last week’s Localogy 2022 stood out for the insights it offered.
There were dozens and dozens of really interesting comments from the stage. And offered up by some of the sharpest players in the local commerce ecosystem. After departing the Lowes Hollywood and driving 400 miles north, three insights really hit home.
The Customers as Sales Channel
First, the approach ActiveCampaign has taken to driving its business forward is compelling. Specifically, Maria Pergolino the company’s CMO talked about how ActiveCampaign has been intentionally focused on the customer experience they deliver to their small business and agency customers.
Now that focus isn’t that unusual today. Lots of companies are finally discovering that customer experience is the only true differentiator in a world of commodizied products and services.
And when it is done right, the magic that happens is that customers become the very best source of new customers. That’s because they shift from a user mind set to a advocate mind set. When you get advocates out there to recommend and direct their peers to your business, you lower your CAC, lower your churn, raise your LTV and start to really achieve great returns.
It was notable that so few attendees in the room at Localogy 2022 had ever heard of ActiveCampaign. At least they hadn’t until long-time local leader Nick Burgoyne took a leadership position there. Hearing the story was very compelling.
The second big insight came from an eye-opening session on TikTok. To hear the two small business owners talk about how they’ve turned to TikTok to drive their respective businesses demonstrated that yet another social platform can bring buyers and sellers together. They said during the session “don’t make ads, make TikToks”. How interesting is that point of view spoken to gathering of digital agency executives?
The extension of that is “don’t hire someone to make TikToks” because only by doing it yourself does it communicate authenticity. It sure seems like TikTok can work for a “Latina” foodie and an Asian beverage company. But we do wonder wonder where TikTok sits on the priority list for most local, small businesses. How many dentists are figuring out how to use TikTok? How many plumbers or painters are going to post with regularity on TikTok? We don’t know but we’re sure curious to see innovators in local test and trial what can and cannot work on TikTok.
Third, financial realism seems to be taking hold. We heard from a couple of investor types that those sky high valuations are finally coming back to earth.
So what are the implications of this development? Well, we’re not quite sure yet, but there are a host of SaaS companies that launched within the last decade that expected to be unicorns by now. A few have gotten there. Think ServiceTitan and Podium (at least based on its last round) to name just two. Many others have fallen short. Often well short.
What we wonder if what will come of those SaaS companies with 5,000 to 10,000 customers driving $15 million to $20 million in ARR. Will their investors shove another round of money their way? Will investors sell them for loose change? Or will they simply shut them down?
And finally, will management teams find ways to buy their companies back from thier underwhelmed investors and run them as “lifestyle” businesses? A business with a $20 million top line and 20% margin may not excite a VC. But it does offer a nice paycheck for its management team. Not to mention nice dividends for shareholders.
Lots to contemplate in the coming months for sure.