Episode 406: Conquering Local with Jeff Tomlin

Welcome to another episode of the Above the Business podcast. My name is Bradley Hamner, your host. On today's episode, we have the co-founder and former chief marketing officer at Vendasta Technologies, Mr. Jeff Tomlin. He's also the host of the Conquer Local podcast. In this episode, we talk a lot about the differences between online businesses as well as local businesses. So if you're a local business owner, and many of you, I know, you are, I think you're going to get a tremendous amount out of this. I really had Jeff to talk about some of the digital strategies, but also some of the things locally. You can tell Jeff is a wealth of experience about what it means to succeed in the digital landscape, but at the same time to understand some of the advantages that local businesses have. Without further ado, here's my conversation with Jeff Tomlin. Jeff Tomlin, welcome to the Above the Business podcast.

Hey, thanks so much for having me. I'm pumped to be on it.

Excited to have you. Well, we love to start with background and origin story and kind of bring us to present day. So why don't you take us— take our listeners back on your journey and how you got to where you are?

Yeah, I'll try to figure out how to do it in the right amount of time. I can get rather windy, but, you know, our origin story, you know, was like most businesses, almost every business that didn't follow a straight line. You know, there was myself and a number of colleagues who were working in a company, and we decided that we all, we wanted to do something on a bigger scale than what we were doing there. We wanted to do something that could have potentially a global impact. We had big ambitions. And so we put together a plan to step out and start something on our own, and it required a couple of things. Number one, it required a bit of a vision of directionally where we wanted to go and what we wanted to build. And then number 2, we had to be able to eat. And so when we started our company, you know, there was 7 of us at the time and we needed to put a team together as well. And so needed, you know, financing was important. And, you know, just by stroke of luck, you know, we had a longstanding relationship with a major, one of the world's biggest industrial auction companies. And we secured a contract with them to build a proprietary software system. And it was a $3 million contract and they prepaid a portion of it, which allowed us to basically open the door and be able to feed our families. There was 4 of us at the time out of the 7 that had brand new babies. And so starting a business at the time you know, it's a little bit nerve-wracking, especially with all the uncertainty that comes with that. And, you know, so what we did is, you know, a portion of the group broke off. We hired a software development team and they began working on that contract. And 3 of us stepped aside and started building a business plan for our own proprietary software. And, you know, the next magical stroke of luck that we got at the time is, you know, 6 months into our business, we developed a business plan and we were able to raise $3 million based on that plan. And I don't know how we did it because in today's day and age, if you didn't have, you know, a working piece of software that you could demo and you didn't have customers at the time, even reference customers and any type of proof of the revenue would be coming. You'd never be able to raise money like that. But we were in the right place at the right time, met the right people and we got a big break. And, you know, that sent us on our path to, you know, starting to build some of the products and services that we build now in empowering small, medium-sized businesses in their go-to-market.

Mm. How much was unification of the vision, do you believe, important to where you were then, but also to kind of where the company is today?

Well, at the time, I mean, you have to have a vision because you have directionally, you need to know where to go, but you have to be super, super flexible on which road you take. Um, and, uh, you know, so at the beginning, um, You know, it was always in our business plan that we were, we knew that there was going to be the need to be flexible and be agile in our approach. So we planned on building some piece of software that was, you know, according to the plan that we had. And then, you know, we, we determined ourselves that, that we were going to really listen to our customers and we're going to be flexible and based on, you know, what was being proven out and showing, you know, promise with our, you know, initial customer base, we go in that direction. And that's exactly what happened. The initial idea that we had was we were going to build a home, a social network for homeowners to share inspiration and home projects that they had done and talk about contractors that they had used and recommended. And on the other hand, we were going to create a free tool for home contractors to help them understand what people were saying about them online. And then we were eventually gonna put the two audiences together after we built two massive audiences of homeowners and contractors. We're gonna put them together and monetize referrals. That was the idea. And at the time, you know, based on how we executed and what, you know, our customers were and users were saying, The homeowner network really never took off for us, but we saw this huge demand in online reputation management at the time, you know, for not just home service providers, but all sorts of small businesses. And so our business went in that direction.

What do you think with so many things going online and then many companies just being online-based companies? I'm going to ask this in a series of different questions. So my first question is, what are the principles that you believe in marketing and sales are true whether the business is local, a local-based company, versus also being— or companies that are virtual or, you know, online-based companies? What are the principles that are the same regardless of the businesses?

Yeah, wow, okay, really good question. You know, I do think that there's a lot of things that are the same no matter how you conduct or where you conduct your business. Number one, you have to have a product or service that is not just accepted, but you've proven to be able to delight people. And so you land a customer, even, you know, your initial reference customers. And if you can prove that you can deliver a service and you can delight those people and they would recommend you and, and, and your service. And right there you've got something. Number 2, you have to be able to acquire customers and be able to scale customer acquisition. It's the biggest challenge of any type of business is how do we acquire customers and then how do we do it profitably? You know, the lifetime value of a customer needs to be sort of you know, 3 times greater than the cost to acquire it. And, you know, that's sort of, you know, just the rule of thumb. And so no matter what type of business you are, you have to be able to acquire customers at scale. So you have to know, you know, where to find your customers, you have to understand what channels to use, and you have to understand what those customers look like. And so no matter what type of business you have, you have to be able to develop an ideal customer profile. This is the type of customer that gets the most value out of my product or service, that I make the happiest, and that they are most likely to, to come back. And they, over, over the course of, you know, have many, many, and measuring many, many different types of customers, these are the most profitable types of people for us. And so, you know, those are, those are some of the principles that, that you know, stick no matter what type of business you have or where you operate. And, you know, on top of that, you know, as you get to scale, you have to look for economies of scale and you have to look to understand how you can scale your operation and grow it. Not everyone wants to grow. A lot of, a lot of really successful businesses are lifestyle type businesses. And, you know, the first principles stick no matter, you know, what size you are. And then if But as you grow, you have to figure out how to do that efficiently.

All right, for our listeners, he just said a lot of key information in about 3 minutes. You just jammed a bunch of stuff in there that could be almost 30-minute podcast episodes in of themselves. But I think it's great. Number one, I think I— one thing I really love that you mentioned is really going again back to who is your ideal client avatar, your ICA if you want to call it that. I think you called it ideal client profile. Number two, kind of working backwards. LTV, your lifetime value, which in and of itself we need to know kind of what that number is. What is a customer worth to us over the lifetime? And we don't want to spend any more than a third of that number to acquire them. I think that's incredibly important. And then one thing I want to ask a question around— you didn't just say like do a good job of servicing them, have a really good product, but you actually used a word that I think is not used, used very often. I'd love for you to kind of double tap for me for a second on this: delight. You said, hey, the product doesn't need to just be good, but it actually needs to, to delight your customers. Which in and of itself, I think it's an example of the power of words, Jeff, is that, man, okay, wait a minute, if I'm going to delight my customers, I'm going to actually have to think about this just a little bit more. Can you speak to that?

Yeah, you know, like there's all sorts of downstream effects of how happy you make your customers. And so first off, when you first start your business and you're testing out your product or service, you have to manage risk. Risk management is the most important thing because you've got a limited amount of resources and So when you're testing out your product or service, you don't want to just, you don't want to set the bar really low. Like, hey, I was able to make some money with this, you know, somebody exchanged some money with me in exchange for this product or for this service because you want it to be a repeatable thing. You want to be able to bank on that. Number 2, as you scale a business, it's oftentimes you'll find that it becomes, and this is a founder's dilemma, that your team that you build around you, you have to work really, really hard to ensure that they service customers as well as you do because you're the founder, you're the most passionate. Ideally, you're probably gonna be the most passionate about your business and you have to figure out how to scale that. And so you have to start from a place where, hey, we know this is a high watermark. Number 3, You're gonna undergo competition and you're going to feel pressures as you're in the market from people that are already existing in the market or new ones that enter the market, people that want to see your success and want to copy you. And in order to stand out, you have to go above and beyond. And I'd say number 4, is that, you know, I was mentioning at the beginning that customer acquisition is the biggest challenge to any type of business. And if you delight your customers, people will talk about you. And word of mouth is the most effective way and the most cost-effective way to acquire customers. And if you're in the type of business where you have to pay for every single customer that you acquire, it's going to be very, very challenging to scale because it gets expensive to acquire those customers. You're always paying for advertising or all sorts of different go-to-market. So it's almost a must given, you know, where customer acquisition costs are trending and how many different channels there are these days. It's almost a must that you have some some way to scale through word of mouth. And the best way to, you know, to start to think about that is, hey, do I have something that delights customers and that they're willing to talk about it?

I've done this podcast a long time. I don't think I've had— I think that is so good.

I don't—

listeners know that I circle my paper like a big key takeaway. And whenever you brought back from delighting the customers then to referrals, and then how that affects CAC, customer acquisition cost. That's, that's beautiful. I never really made— I mean, I guess intellect— intuitively, maybe subconsciously made that connection, but that was really, really well done. I love that. Okay, now here's my question then, specifically around local businesses. I think a lot of our listeners will really relate to that. What is unique about growing a business for local businesses that is different and unique, contrasting now, because we compared initially, now we're contrasting that to global/online businesses specifically.

Well, I mean, first off, I think, you know, online businesses have a lot of advantages when it comes to scaling with technology and through through network effects, being able to scale businesses that, but I think that local businesses have built-in network effects that are geographically or geographic in nature. So you've got a population of people that are very close together. It's easy to spread a word and word does spread. It's often, you know, some people call it dark social. It's stuff that you can't really measure, but you know, by the number of times that your phone is ringing and your email is dinging and people are reaching out to you. And so, you know, intuitively, whether you're measuring it or not, if you're getting a lot of word-of-mouth advertising and you're getting a lot of referral business because people are reaching out to you and your schedule books up. And so, you know, the geographic nature of local businesses is one advantage to them. And that not only impacts how word spreads in a local community, but also the cost of spreading that word in terms of, you know, there's, there's ways of, there's a variety of ways of advertising on a local basis that are more cost effective than reaching scale on a global level, especially when you don't have network effects, especially, you know, for companies that are paying for more of their customers than they should be. So, so those are some big advantages that, that, that I find. And then, and, you know, I have a special place in my heart for local businesses because, you know, they're the ones that build our communities. They're the ones that, you know, they sponsor the Little League ball teams and, you know, they supply, you know, our first jobs and, you know, they supply some, you know, 60%, 70% of all jobs in a local area. And so, you know, they're the employers, they're really the, the, you know, the businesses that build our communities. And, uh, so there's a lot of advantages that go along with, uh, with, um, you know, a, a local-based business.

There's a never-ending amount of good ideas for any business. And so a local business, let's just say, to your point, they, they want to get their name out there, they want to, they want to advertise, they want to, they want to market and they can support every— they can put billboards up on the main highway, on the interstate. They can support all the local schools. They can do all these branding initiatives. They can find centers of influence. They can advertise on Meta that's hyper-targeted locally. They can do display ads. They can do radio spots for the local radio station, sports talk radio. Station, they can do the local news channel. Look, I don't know how many seconds that was, but I just named probably what, 6 or 7. And if I kept going, we ended up naming about 25. My point is, if it's a small business, Jeff, doing between half a million and I don't know, $3 million in top line revenue, at the end of the day, there's just still limited resources, both in money, but then there's also not just money resources, there's time, energy. Effort, attention, team capacity to be able to do it. I think that with a lot of businesses, they're challenged to try to figure out what's the right channel. They talk to their buddy they play golf with on Friday afternoons. They say, what are you doing? Well, we're doing this. Well, I guess I should do that. And then they ends up becoming a lot of spaghetti in the wall. How do you work with people in maybe walk through a hypothetical about how could someone begin to kind of figure out what is the right places for them to fish to figure out how to be able to acquire customers in a local market?

Well, I, I think that a lot of times you have to rely on, on some scientific research. And, uh, you know, a lot of, a lot of businesses don't do this in a regular cadence, but I would always do a little market experiment at least once a year to talk to a handful of your customers and, you know, your most recent customers to see, number one, how did they find out about you so that you find out, you know, what are they reading, where are they hanging out, what are they paying attention to, and what are the What are the main reasons that they came to your business and what was the particular value? Now, sometimes, you know, you might say that it's obvious to a typical business of what those things might be. But when you see economic downturns and you see upswings as well, you have to be always measuring what types of things are changing within my— I'll call it my ideal customer profile. Because when times get tight, their needs change, their preferences change, their willingness to pay change. And so you have to keep thinking about, hey, how would this impact my messaging, the channels that I'm using, my pricing? And you'll find out over time that people, the channels, especially today, in today's day and age, the channels that people are using and hearing about you will change over time. And, you know, the value, the things that they say about you will change over time. The willingness to pay will change over time. And some of that depends on the way that you're running the business. Some of it will change in the market dynamics, right? And so it's something that you have to pay attention to. I don't know if that answered the question exactly how you wanted me to go about that one, but Actually, I think it does.

I think it does. I think what it, what it lends to in my mind, the one thing I'm thinking is, is that there are times where you just have to continue to do what's working, but then at some point that thing that's working is not going to work anymore. And so being aware of that and having not just intuition but actual data that says that thing we did 5 years ago is no longer working, we're going to have to, you know, go to fish in another pond. We're gonna have to try another channel, uh, because it's just not working anymore because things change. And I, and I actually circled specifically willingness to pay changes, and a lot of that is based on economics. And, you know, obviously in the US there's a presidential election, and I was talking to a banker friend of mine— yeah, tangent for a second— and he said— I said, well, how, how are things going? He goes, man, let me just tell you, I have one phone call and somebody says, hey, presidential election, this is a great time for me to refinance, I'm going to do it. And the banker goes, yeah, that sounds great. And he said literally the next phone call, the person says, presidential election, I don't think it's a good time for me to refinance, I'm going to wait. And the banker's like, sounds good, you know. And so it's like whatever they've made in their head of like, that's what that particular thing means, that's what they, you know, they, they're just kind of going with it. So I really think that though, that people's willingness to pay though can change by some macroeconomic changes and also some even local microeconomic changes. I think that's great.

Let me ask you, but by the way, I'll just add super quick, you know, sometimes, you know, when you do these little studies of, you know, interviewing customers and see what they're saying, sometimes you'll find just subtle things. Um, like, you know, you might discover a new channel. Oh, a bunch of people are talking on Reddit that are looking for this type of thing, and it would be— it turns out to be a great place to find new customers, or you might find this new channel, or sometimes you might really discover a way to reimagine your business. And we had an example, I think a lot of businesses went through this during COVID where they had to reimagine themselves. It's actually probably the greatest example of people reacting to market conditions, and it was either change or die and end up closing up shop. And, you know, I remember one great example of a marketing guy on our team has an uncle that had a comic book store and he was doing a great, you know, had a great local business and it was his passion, still is his passion. And we tried to convince him in the past, or my colleague had tried to convince his uncle in the past to take his business online. And he said, you know, I'm too old to learn all that stuff and I'd rather just close up my doors and learn than learn how to build an e-commerce store. And lo and behold, COVID comes around and, you know, number one, economically, he couldn't afford to close up shop. And number two, he didn't want to depart with his passion. So he was really motivated and he said, okay, let's do this. And, you know, it represented a complete shift in the way, hey, where he was finding his customers and how he was thinking about his business, local versus, you know, marketing beyond, you know, the local geography and taking it online. And he put his in, you know, we created an e-commerce store for him on his website. He put a whole bunch of his inventory on that thing. And in a matter of, you know, the first 3 months, he had sold over $100,000 of comics and games and of inventory. And it was, you know, a complete reimagination. So, You know, moral of that story is, you know, sometimes when you, when you go through these shifts, you find out little insights, and other times you can, you know, really change the trajectory of a business that you might not have, you know, imagined going in one way, you know.

Next to last question: What is one thing that you're seeing right now that seems to be working just in the marketing space with a number of the clients that you're working with?

Well, one big thing is AI-driven features and chat especially. So, you know, we're used to seeing all sorts of different chatbots and service-type features on websites that were very, very, you know, that, you know, you would chat with a bot and it would, you know, at the end of the day, it'd probably point you to a resource or something. Very unhelpful. It's amazing what, what AI-driven chat is doing these days. People are, and, you know, consumer expectations have completely changed. You know, we're used to talking to Alexa and talking to Google and, you know, asking a question and getting the answer, right? And this is the way that people want to interact with businesses now. And so AI-driven chat features, when we educate them and then we put them on a, on a local business site, it is like having an employee that is working 24 hours a day and is always in a good mood and never lets you down and super serves your customer with an incredible amount of empathy that you could only hope to get out of an employee that you've ever had, even the best ones. And it's able to drive people to either call or to message or to book in ways that are more efficient than any type of conversion type rates that we've seen in the past. So long story short, I think, you know, if you're a local business and you're not looking at AI-driven you know, chat features and looking for different ways to scale your business with AI, you really, you really need to because it's transformative.

That's great. Jeff, people want to connect with you and your team. How, where would you point them to?

Well, yeah, you can learn about our company at vendasta.com. You can always reach out to me on LinkedIn or email me at jtomlin@vendasta.com. And those are the best channels to learn about us and to connect to me if you so choose.

Awesome. Jeff, what does working above the business mean to you?

Well, to me, it's making sure that you've got time to look back of where you've been, reflect on where you need to go. That road, again, that road can always change. You can take different routes, but you have to have a destination in mind. And to me, it's, you know, having the time to take a look at your business and figure out, hey, what parts of it are really working well that I can continue that going? What are the parts that I need to work on? And I need to improve, I need to make more efficient, and making time for that. And, and in, in the most simplest of terms, I think that's, you know, the, the essential elements of working above the business to me.

I love that. That's great. Some things that really stood out to me— I love the reminder of delight. I think I've heard people talk about how can we surprise and delight our customers. Love that. Great reminder on lifetime value, customer acquisition costs, and again, even on ICA, the comments around surprise and delight back into referrals, how that affects your customer acquisition costs. That was a great tie. I love that. And the discussion around kind of where we talked about willingness to pay. And then in addition, the comparing and contrasting of local businesses versus some of the online-based businesses. Jeff, you've been a wealth of knowledge. Thank you so much for coming on the podcast.

Hey, it's been an absolute pleasure. Thanks for having me.

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