Why We Put On Hold Our Local Small Business Social Media Service Offer

Until a couple months ago we (Rock&Social) run a very complex operation into the local small business sector. Our intention was to sign social media accounts for most local business in historically high traffic streets in a city (Montreal). We have set up a simple client acquisition program; build and tested a production process with all the necessary tools and templates; hired and trained a specialized team and went to work.

A month and a half in, we realized the futility of our endeavor. We were signing clients but not at the rate necessary to keep the unit profitable. The communication was very difficult and the cost of our services in constant negotiation.

We finally decided to leave this sector to consultants and to Yellow Pages.

Here are a couple reasons that made us close our local social media service.

1. Local store owners don’t understand social media

Let’s face it, social media professionals don’t understand social media, let along small business owners. More than that, many small business owners don’t understand business very well.

2. Local is an extremely volatile business

The lifespan of small local businesses is very short and the client relationships build will have to be renewed constantly.

3. Local SMB owners are over-solicited with social media offers

It is very hard to keep your eye on the ball on the immature social media market. Everybody from PR firms, social media consultants, group deal sites to Yellow Pages solicit small business owners with social media offers.

4. Local is cheap

The average service for local is extremely low (max a couple hundred $ a month).

So in order to make money with social media local services you have a couple options:

• sell high volumes
• sell smaller volumes of luxury services // not really available in local SMBs
• create a pay-per-success model based on sales // this requires a different type of partnership SMB usually don’t understand

5. Sale efforts are very expensive

Selling to local business is very hectic especially since local store owners don’t understand very well the added value social media can bring them. Sometimes the owners are convinced their nephew knows better social media since he’s all the time on Facebook.

6. Local is not profitable

With profit margins around 3 – 12%, small local is not a very profitable business. The financial health of your clients is a very important aspect to consider before engaging yourself in a business relationship.

7. Local business are not your romantic vision of Mom&Pop store. Most of them don’t care about their customers.

This makes them unable to think in terms of building a loyal following and a brand community.

IN CONCLUSION

This program helped us understand local is not the holy graal everybody thought it was. In theory everything makes sense, until you start adding people into the equation. And this simple addition makes your theory fall appart.

We are not saying that there aren’t a lot of business opportunities where social meets local. However, those opportunities are not ripe for a business like ours, where brilliancy of strategy and perfection of execution is crucial for profitability and success.

Of course, we still work with large brands on their local social media strategy, but until further development we are not developing anymore the small local business sector.

If you own a small local business don’t expect us to come knocking, but if you contact us it might mean that you understand what you need, and we’ll be happy to provide you our services.

We’d love to hear your opinion on this matter.

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On a side note, here is a presentation I gave last year about connecting reality with virtual through social at the point of sale.