New York startup LocalMaven is making it easy for local businesses to generate word-of-mouth referrals with a simple incentive: cash.
Upon reading this blunt summary, the more inquiring product manager will want to know how this idea actually works. Let’s begin at the beginning.
Frustration, the mother of invention
The company, which officially launched just yesterday (8th July), is the brainchild of erstwhile events business executive Arnon Rosan, and he hatched the idea out of his growing frustration that no reliable means existed to track or reward positive referrals. The only way he’d find out whether a recommendation he’d given for, say, a good tent company actually went anywhere was if he asked about it later. And, even though his referral could have generated a goodly slice of business revenue for the service provider, his only reward (if he was lucky) might be to be taken out for dinner.
The result of these irksome vexations was a unique platform capable of literally organizing an informal referral economy, operating across all market segments and industries (not just Rosan’s specialty, events businesses) and accessible anywhere in the world with an internet connection.
An online referrals marketplace
Now we can come back to our querulous product manager’s inquiry. It works like this: Rosan is recruiting a broad network of trusted experts or “mavens”, from the friends you always turn to for recommendations to the veteran hotel concierge (held out by Rosan as “the ultimate example of a maven”). Business then use LocalMaven’s platform – effectively, an online marketplace — to access those mavens, paying them a commission for their efforts in promoting offers such as discounts or other deals.
For their part, the mavens use a unique promotional code whenever they recommend a deal to someone else (friend, colleague, random passerby, etc.); as our canny product manager will immediately recognize, this makes it easy to track which recommendations actually generate sales. The maven gets a commission for each successful sale, bringing up LocalMaven on their smartphones to search for promotions whenever a recommendation opportunity presents itself and giving the recipient a referral code there and then. Businesses can decide the commissions they’re prepared to pay and how exclusive their offer will be.
LocalMavens has raised seed funding of $1.4 million but has not disclosed the names of investors.