LocalTop Offers ‘Cost per Job’ Billing

There’s a new services directory called LocalTop, which I spoke with about two weeks ago. The site right now is unremarkable and the company is in a beta phase in the SF Bay Area only. However, the innovation is in the pricing model.

Though not unique (HelpHive uses a similar model) LocalTop is one of only a small number of directories taking a commission on a completed project: cost per job, in other words. This is enabling the company with a single sales person on the phone to enjoy an impressive close rate. That’s because there’s literally no risk to the local business.

Several years ago I organized a panel at SMX Local-Mobile dedicated to the idea that local “advertising” online would move from CPM/CPC to CPA. The consensus on the panel was a diversity of business models would co-exist  in the market. True enough, but we may see more pressure on market leaders if smaller sites gain traction with the CPJ/CPA model.

The technology and platform behind LocalTop comes out of BackWeb. Rather than reviews, the site is relying on third party certifications, badges and other mechanisms to ensure that only ethical businesses in good standing are included in the database.

The profile also provides lots of detailed information to help consumers make decisions about service providers:

Co-founder Bill Heye told me that businesses that receive complaints could/will be dropped. LocalTop follows up with customers to evaluate their experience.

The central challenge here will be getting traffic and routing leads through their site. With its “no risk” model the company has addressed the typically biggest problem that local startups face: getting attention and interest from advertisers. However, delivering projects to those SMBs requires traffic and consumer usage.

What do you think of the cost-per-job model and whether that will start to take greater hold in the local space?

9 Responses to “LocalTop Offers ‘Cost per Job’ Billing”

  1. Mike Ramsey Says:

    Cost per Job model is perfect for starting SMB’s into the world of interent marketing. The no risk approach would show how effective the internet really can be for marketing but the problem is, and has been, that there are no real big players that have been able to make this approach successful and well known for SMB’s on a large scale. If the Google Local Business Center, or Local Ads took on this approach, and already have the traffic that would make it effective/profitable for business owners, I think you would see the model gain major popularity very quickly as a basic approach to SMB marketing.

  2. Mike Ramsey Says:

    The question is can providers make it profitable for themselves…

  3. Greg Sterling Says:

    It’s all about traffic/leads volume. That’s where the challenge is for these folks; they can get the advertisers . . . but can they get the traffic?

  4. Mike Ramsey Says:

    That is a tough one. For directories, the competition is getting so thick. I think that there is room for local niche sites that really take a much deeper dive into the area, but from a traffic standpoint, I think the LBC, is about the only place currently that could pull off the amount of traffic necessary to generate a large enough volume of calls across the board. I am sure that Yelp for certain industries (like food) is to the point where their traffic is cost-per-actionable, but there are so many more categories where they would lose big time. And a start up??? pretty tough to make happen if you ask me.

  5. Greg Sterling Says:

    Agree traffic is a challenge here. I haven’t done the math but you’d need to deliver quite a few jobs across categories to make it work, unless you had a very lean cost structure.

  6. troy Says:

    Not only traffic is the challenge (a huge one) but what’s stopping others from offering the same business model.

  7. Greg Sterling Says:

    Nothing

  8. Annie Says:

    Greg,
    What I don’t get about this model is how the transaction is tracked when it occurs in the real world and not online. If I use this site to find a handyman, call him up and use his service, how does this site get credit for that transaction? If the handyman is smart, he would not credit this sale as coming from LocalTop and therefore not need to pay for the lead. Am I missing something?

  9. Greg Sterling Says:

    Annie:

    Most people are honest. If contact is through the site (via email or metered phone line) they’ll know. They apparently do follow up with consumers and potentially advertisers but honesty and self-reporting are expectations here.

Comments are closed.


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