This is our Deep Dive Into Local from November 27th, 2017. In our Deep Dive series, we take a closer look at one thing in local that caught our attention and deserves a longer discussion.
If you have a special topic you would like us to discuss for the Deep Dive in Local, please reach out to us. If you would like to be on one or the other of our segments, reach out and send us the topic and your availability.
If you are interested in sponsoring this weekly show also please let us know.
Mike: Hi, Mary. Welcome to Deep Dive in Local.
Mary: Hi, Mike.
Mike: This week we're going to be talking about how brand loyalty or the lack thereof is going to allow companies like Google to sort of disintermediate local businesses to some extent in local, but it might also be the savior for other businesses that have figured out how to create a real tight bond with their customers. Why don't you kick it off?
Mary: Well, I know that in my personal experience, certain things -- brand loyalty is very important to me, like my auto mechanic. I've used the same guy for 20 years, so I'm going to keep using him. I know anything that's wrong with my car, Allen and his guys are going to take care of me without ripping me off, and that's huge. But there's a lot of businesses where, as you say, they seem to be racing to the bottom on price, and that is not encouraging any brand loyalty at all.
Mike: And Google, I think, is stepping into that void with their Local Services ads. And when you go to their website, the very first thing is its Local Services used to be called Home Service ads. They rebranded it two weeks ago -- it's called Local Services, and then "ads" are in small letters, lovely letters. So it's capital L, capital S, small A.
Mary: But, meanwhile, the Google My Business forum is still part of the AdWords...
Mary: ...part of Google.
Mike: Although rumor is that's going to end too soon, so we'll see. So they are sort of stepping into that lack of loyalty breach and creating customer confidence to switch businesses at the drop of a hat, by guaranteeing any transaction up to $2,000. So in plumbing and HVAC, those types of industries, they are encouraging the sort of churn of customers from one business to another by saying, "These are all businesses that we've vetted, we have confidence in, and we'll guarantee your experience with them up to $2,000," which essentially puts it back on the business to resolve. Because I am sure that any business that gets nicked more than once, very irregularly, Google is not going to rank them very highly in this if they get more than a couple of times where they have to pay out the $2,000. So, in a sense, it pushes it back on the business, but it still disintermediates the business on the brand loyalty front. The question I have is, in which businesses and which markets does it take place?
So, in a rural market, you see that less. Because, one, you can't even find professionals in certain industries easily...like, finding good plumbers is hard. Finding good electricians is hard. Finding good handymen is hard. And so when you do find them, you're not as likely to go out looking, one, and, two, you're not as likely to switch. But, in urban areas, I think it's probably much more difficult to find a handyman, to find a plumber, and your need is more immediate. So you're living in an apartment, your sink's overflowing. You gotta get somebody right away, and the plumber you had last time isn't answering his phone. So, certainly, in those markets, Google is going to see a lot of success. The question I have is, are they going to be able to essentially Uberize plumbers; essentially turn plumbers into mere fulfillment of Google demand generation?
Mary: Yes, and what's kind of interesting about that is that all the problems Uber has had doing that with rides, all the missteps they've made along the way, has as Google learned from that?
Mike: Well, Google being a publicly-held company, being under more scrutiny as a monopoly certainly can't usually do the, you know, "ask for forgiveness rather than permission" approach although, as we saw with Android last week, that's exactly what they did, where they were snooping on people's privacy -- even if you'd set all your location stuff off, they were still gathering location data. So they still do that occasionally when they think that the penalties aren't going to be too bad, but for the most part they don't. So I think Google has every interest in taking over some portion of this local fulfillment, right? That they want to become more than a local search engine. They want to become a local commerce engine, and wherever there is opportunities just to disintermediate folks, do to low brand loyalty, I think they're going to be right there.
So, one, it seems to me it's coming. We're seeing it with Amazon as well, particularly in Home Services. But I think that it really speaks to the question of how does a business...you know, is it rural and urban? Is it every business? For me, there are some businesses that I would be less likely to change, for example, my physician, stable of physicians I have or lawyers that I deal with. I, for one, wouldn't switch. Now, maybe if it's a one-time lawyer deal, like DUI, and it was guaranteed by Google for up $2,000, maybe you wouldn't be the brand loyalist. You would then do a demand fulfillment through Google, and you wouldn't worry about it, I don't know. I suppose it could reach into legal professions, at least on emergency services and those types of things.
Mary: Yes, it's kind of hard for me to see how Google can do that with legal services, medical services. I mean, how can you guarantee somebody with a DUI is going to be happy with the results?
Mike: Well, they're not guaranteeing that. They're guaranteeing that the company you're dealing with is upstanding, has a record of doing whatever, and has good reviews and good customer feedback. So they're guaranteeing the company, not necessarily the activity, so there's ways to do it. I see, for example, tires. Like, what difference does it make where you get the brand of tire you want, right? It doesn't. I see there's very low brand loyalty there. Car repairs to some extent, things like mufflers, sort of throwaways, batteries, very little brand loyalty, whereas regular repairs, you know, I -- like you -- have found a place that I communicate with the people, they treat me right, I don't change, but I wonder if that's enough. David in the article mentioned a auto repair place in Portland that had you on a subscription basis, $15 a month, and they would do your oil changes, and your checkups, and your inspection for you on a subscription sale.
Mary: Concierge auto repairs.
Mike: Exactly. So even there, where the low end might be susceptible to this sort of lack of loyalty, they were trying to cement the customer relationship. And you mentioned a liquor store in your area. Maybe you could talk about that.
Mary: Yes, we had a liquor store that opened in downtown Glenwood Springs, and we've got a lot of liquor stores around here. This one, it doesn't have a parking lot. You're going to have to downtown park, and metered parking to use it. But people do walk around our downtown area quite frequently -- tourists and locals. So what they've started doing to really build up their brand in downtown Glenwood Springs is have wine tastings, craft beer tastings, even whiskey tastings, and vodka tastings.
Mike: I'm in for the whiskey tastings.
Mary: Right. And, you know, they have snacks, and they do it on a regular basis so everyone knows about it. They put it as events in the local media so people hear about it. And they also have started carrying fancy snacks to compliment people who are having a happy hour, like cheese plates or fruit and cheese plates, and fancy dips and that sort of thing. And so they're killing two birds with one stone -- they're letting you try their products, they're creating a little social event that happens almost every night at this liquor store, and it's really become one of the things that everybody in town recommends to their guests. So, yes, "Go down to Cooper Wine and Liquors for happy hour." So, they've really created a lot of brand loyalty just by doing something that's a little bit more, a little bit different. You know, they didn't have to change their entire business model. They just took the business model they had and made it more customer-oriented and more social, and it's really paying off for them. So I think that that's what most local-type businesses need to do, is figure out what works with their clientele and how they can cash in on it.
Mike: And then being sure that they've gathered up all of the data about those clients so they can stay in touch with them inexpensively, that they don't have to go back to Google or Facebook and rent their customers back from those guys, that they've got their own mail list, that they have an email newsletter, or they have segmented mail lists that they can then send out event updates, so that when events are no longer free in Facebook or events or no longer schema-driven at Google, they can be sure that they're driving their own interests, it's important that they leverage their position with these events into a sustained relationship with their customers. I think that's true even with plumbers. What plumber do you know actually gathers email addresses and yet... they go out to Google, because they're not busy enough next week. So they go on Google, they have to pay $25 for the quote and then guarantee it through Google for $2,000. I mean, why wouldn't they just keep their own email list and say, "Gee, I've got a slow week the week after next. Anybody need non-critical repairs?" right?
Mary: Right. Or, "Is your plumbing ready for the holidays?" I read an article on the internet talking about plumbers refer to what most of us call Black Friday as Brown Friday because of all the plumbing problems people have to contend with during the holidays. So why not be proactive and say, "Let us come check out your system. Has your drain been running slow? You better let me roto-root it out now instead of the day after Thanksgiving."
Mike: When it's overflowing in your kitchen sink. On the side of that is I read that there's this massive sort of sludge balls in the New York City sewer system, literally hundreds of yards long that are sort of fat, grease, diapers, and toilet paper. They all sort of congeal into this sort of...and you got to... so the problem scales, Mary.
Mary: Right. yes.
Mike: So the question is... talking to Ted Path last week, he felt that customer loyalty was very low and that many industries, Google would have no trouble dis-intermediating customers from these businesses and turning businesses into mere fulfillment of customer demand generation at Google's hands. I suppose that it's different rural versus urban, right? Where, like, literally, I know the plumbers, I know the guys I went to school with, that sort of thing. Whereas in urban environments you don't have that kind of relationship. So maybe in urban environments it's more likely to be easily disrupted. I don't know, I think it also might depend on the types of industry you're in although it seems to me that even plumbers could value add just by showing up on time, putting down mats on the floor so they don't leave a mess, billing what they say they're going to be billing, following up and making sure they did a good job with the customers. I mean, I think even, as you pointed out, some low level of customer interaction service might be enough to distinguish them to develop a favored long-term relationship with their customer.
Mary: Right. I had an experience where one of my tenants was having problems with their faucet not shutting off. My plumber came, and not only did he fix it, but he showed him how the next time that happens it's very simple to fix this, you can do it yourself. I appreciate that, the tenant appreciates that, and the plumber can stick with the big high-paying jobs...
Mike: Well, what happens when they say that to me? I say, "No, no, no, no, no, no, no. I just want you to come fix it next time. I don't want to fix it myself. Damn."
Mary: Not all of us are like that, Mike.
Mike: No, I get that, I get that. But I am an outsourcer of those kinds of jobs. That's all I'm saying. I am a plumber's best customer. I had a tree guy who didn't finish his job from the spring, right? He left a couple stumps. I had to call him a couple times to remind him, and so he came. I said, "Well, while you're here, take down a couple extra trees." It's like, I mean, he didn't want to bill me for these extra trees. I said, "What do you mean you don't want to bill me for these extra trees? I asked you to take 'em down. I know they're extra." It's like he felt bad because didn't come in a timely fashion. And he didn't really return my calls either, right? It's like sometimes it's just doing the basic do of...
Mary: Yes, just doing what you're supposed to do.
Mary: You don't have to go beyond that.
Mike: Right, and take it out when you say you're going to take it out if you can, following up with a schedule, coming up when you say you are, it's really basic stuff. But I guess in that context Google can disintermediate. But I think the question I have is, where will they disintermediate? For, initially, they're disintermediating in plumbing, HVAC, locksmiths. The question is where in the rebranding and the minimization of ads in that context. Clearly, they have other areas they're going to go into. I think payments is a likely one. Delivery is a likely one. We've seen those experiments going on forever. Loyalty is possibility, but less likely, and I think it's incumbent upon businesses to have their own loyalty stuff in place, whatever that means. I still see email marketing as one of the best protections any business has against having to rent their customers back from Google or Facebook, you know, to advertise to. Although it doesn't get you into new markets, one of the nice things about Facebook is you can do people similar to these people that I just shared all my customers with you.
Mike: Right. But I don't know.
Mary: And I think in some cases they're going to have to earn brand loyalty one customer at a time. For example, I was shopping for some new cross-country skis, couldn't really decide if I needed another pair of skis.
Mike: You'll always need another pair of skis. I mean, it's like some people buy extra tools. I buy extra skis, Mary. You always need another pair of skis.
Mary: But what they did is they said, "Here, take these for the weekend. Rent them for the weekend for 30 bucks, and if you decide to buy 'em or not buy 'em, we'll apply that 30 bucks to whatever skis you want to buy."
Mary: They have my loyalty now.
Mike: That's good. That's a good plan.
Mary: When I'm thinking about skis, try before you buy.
Mike: You know, I have to travel to get a real ski shop. Like, I live in good cross-country ski area, but cross-country skiing isn't popular. I literally have to travel 300 miles to find a real cross-country ski shop.
Mary: Oh my God.
Mike: So I end up buying at Miller, but there you have it. Guilty of my own sin. All right. Well, anything else on this topic, Mary? How far can Google Local Services go? Their ambitions are broad, I can say that, you know, then they see the world as their oyster. If you're in their path, I'd say be sure to get your practices and procedures in place now so that you do build some brand loyalty, and then if they do come into your market, I'd say duck and cover.
Mary: Right. And I think that, you know, every business is going to have to figure out their own way to build their loyal customers, and it's going to be different in different verticals, it's going to be different with different types of owners of the businesses. What they see is that giving value to customers. But building that brand loyalty locally pays off in a million different ways, not just in Google search.
Mike: With that pearl of wisdom, we will conclude this session and say thank you for joining us.
Mary: Thanks, Mike.