LocalOn

Shahbano Imran and David Tolioupov’s parents are both small business owners — Imran’s mother had a small consulting company, and Tolioupov’s father had a massage service — so they are intimately aware of the challenges entrepreneurs like their parents face.

“Business owners know they need to get into online marketing, but they don’t know how,” Imran says, marveling over the fact that 53% of local businesses still don’t have websites.

Imran and Tolioupov’s parents were lucky — they had computer-savvy kids who could build websites for them — but not every business owner has a kid who’s destined to be a high achieving CS grad.

That’s where LocalOn comes in. It makes web marketing easy, and gives small businesses the efficient solutions they need.

How LocalOn Works

“We replace about five web marketing systems and simplify things into one platform,” Imran says. “A merchant logs into the LocalOn portal and shares their events and deals through our app. Then, we publish that information where thousands of locals see it — on their website, neighborhood websites, the local paper’s website, and across social media.”

“It’s kind of like a Hootsuite with local channels built in,” she says.

LocalOn bypassed the traditional door-to-door sales team approach, and instead focuses on developing relationships with merchant associations and local newspapers, which receive kickbacks for every referral.

“We hacked the sales process by deciding not to directly sell to merchants at all,” Imran says. The company markets itself to so-called “merchant aggregators” — a niche market of 20,000 merchant associations, trade associations, and publishers — and gets them to handle sales.

“Newspapers are used to selling local marketing, and have a foot in the door with the right customers,” Imran says, noting merchant associations have the same advantage.

And because the aggregators get a cut of every LocalOn sale, the start-up offers them significant potential to boost their bottom line.

With this in mind, LocalOn is helping breathe new life into the cash-strapped newspaper industry. In fact, one publisher has projected that earnings from LocalOn profit-sharing will soon represent 25% of that paper’s revenue. (About a quarter of LocalOn’s aggregators are newspapers; merchant associations facilitate 78% of their business.)

LocalOn pays, on an average, $435 per client acquisition, but the company quickly recovers its costs, and currently achieves a $1,320 2-year LTV per customer. (The average subscription fee is $55/month.) Meanwhile, they have so far experienced no churn whatsoever. That’s right: They have yet to lose a single customer.

LocalOn generated $12,000 in revenue in August, and is projecting to hit a $5-million ARR by the same time next year. While those numbers are encouraging, Imran says the overall U.S. market is worth $5.9-billion.

Customers, Not Cheapskates

LocalOn helps businesses reach people in their communities who will become lifelong customers, while avoiding Groupon-like marketing techniques that attract deal-seekers who come in to use a coupon and never come back.

“I would feel bad about using a Groupon,” says Imran, who is well-aware of the ways that deep discounts that attract one-time customers inevitably hurt businesses.

Underdogs

Imran and Tolioupov met as computer science majors at Boston College, and got to know each other while participating in MIT’s Media Lab. When they came up with the idea for LocalOn, they threw a business plan together and entered the school’s prestigious venture competition.

“We were the only team of computer science grads!” Imran laughs. “All the other contestants were either Harvard MBAs, or Boston College business students.”

“No one expected us to win,” she says. But their idea didn’t just impress the judges — it blew them out of the water.

“Not only did we win, but one of the judges offered us $150k on the spot,” Imran says