A year ago, Alex Hennick, the president of ADH Sales, was struggling with a marketing problem at his four-person appliance wholesale business in Toronto. He had been placing ads online and posting on his company’s Facebook page from time to time. Although the ads generated a lot of interest and many people called in to ask questions, they rarely made any purchases. Hennick figured hiring a social media specialist to manage the company’s Facebook page would help draw customers.
After conducting four interviews, he still hadn’t hired anyone. But then the CEO of Needls, a Toronto-based creator of marketing automation software for small businesses, approached him to beta-test the company’s product. Needls asks clients six questions about their businesses and has them provide five key words to describe their products or services. It then uses data science to produce up to 1,000 different ads in real-time to disseminate across Facebook, Twitter, Google+ and Instagram, targeting individuals whos recent posts indicate they have a need for a particular product or service. Let’s say you’ve locked yourself out of your Toronto home at 3 a.m. and tweeted in frustration. You’d then see an ad on Twitter from a local locksmith, courtesy of Needls.
Hennick signed on to be one of its first customers. “Needls makes up a significant chunk of our sales,” he says. “We’re not wasting time talking to unqualified leads anymore.” And at $100 per month, it’s cheaper than hiring a social media specialist.
In recent years, many startups have sprung up to provide marketing and lead-generation tools to small businesses, previously available only to large corporations that could afford it. A few factors are at play. Small businesses are starting to recognize the advantage of marketing-automation tools, for one. The technology has advanced and costs have come down, making services more affordable. And these startups can function as lean operations, which further reduces costs. In the second quarter of this year, more than $300 million of new funding was put into marketing-automation companies around the world, according to VentureBeat Insight. And so far, there have been five marketing tech companies that either sold or went public for more than $1 billion. “We’re giving small businesses and independent professionals what they hope to get from an agency that does social media at a price they can afford,” says Justin Hartzman, CEO of Needls. “Without the right tools, the smaller guys are really at a disadvantage to the big boys.”
Wishpond, another marketing-automation tool catering to the smaller players in business, started in Vancouver in 2009. It finds sales leads by deploying landing pages, forms and contests. The software keeps these leads interested with personalized email marketing campaigns, essentially warming them up until they are assigned a salesperson to close the deal. Ali Tajsekandar, Wishpond’s CEO, believes that small businesses need to make investments in marketing tech. Most of them don’t. “The tools out there were really built for large businesses,” he says. “Small businesses don’t have the money or the time to be trained by consultants to use the software.”
Setup and training fees for enterprise-level solutions cost upwards of $1,500, and the price increases very quickly from there, Tajsekandar says. HubSpot, which went public in a $1.23 billion IPO last year, charges professional marketers a monthly fee of $800 to develop 1,000 leads. Wishpond boasts it will provide the same core functionalities with a simpler and slicker platform for $44. Tajsekandar’s company currently has more than 5,000 active paid users, and claims it’s adding 1,000 new customers per month.
The market is huge for companies like Wishpond and Needls. Currently, there are 40 million small businesses on Facebook alone, and only two million are advertising on social media. The adoption of marketing automation platforms has also been slow across businesses of all sizes—only 10% of businesses in North America are using these tools, as many just started learning about the possibilities. That number is even lower for small businesses. “There’s a huge gap between those who are leveraging software solutions and those who should be,” says Hartzman.
The challenge ahead for these startups lies in marketing their own products so that the small players can become educated about the automation software. Additionally, as these startups ramp up in scale, they need to be able to grow their support team along with it to ensure customers are getting the best level of support.
“The market has shown they really like our platform,” says Tajsekandar. “Going forward, it’s about continuing to listen to our customers to perfect it.”
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