KnexxLocal is working to tackle automated word-of-mouth marketing for local merchants

By Editor March 4, 2013

KnexxLocal logoA Q&A with KnexxLocal founder and CEO Paul Chen. The Toronto-based company was founded in 2012 and launched its word-of-mouth referrals app in early February. The team also recently closed a Seed funding round led by investor and Lavalife founder Bruce Coxon.

SUB: Please describe KnexxLocal and your value proposition.    

Chen: KnexxLocal helps local businesses grow their business through word-of-mouth referrals online. Using the Instamonial iOS app, businesses can request online reviews from their best customers, combine those reviews with photos, and then share those Instamonials across social networks like Facebook, Twitter, and LinkedIn. The app also makes it easy for customers to share their Instamonials with their own friends, creating opportunities to get word-of-mouth referrals in a whole new way. Since word-of-mouth referrals convert at much higher rates than other lead sources, this is a powerful way for local businesses to grow their business.

SUB: Who are your target markets and users?

Chen: We are targeting local businesses and service providers, particularly those that rely heavily on referrals from friends. The best examples would be home improvement companies like contractors, interior designers, and landscapers, but we’re also seeing a lot of interest from businesses like catering services and event planners, as well as real estate agents.

SUB: Who do you consider to be your competition?

Chen: There are a number of different providers that automate the process of requesting customer reviews and posting them on the business’s website—CustomerVoice and Testimonial Monkey would be two examples. We have a similar offering; however, the big difference is that we’re focused on a mobile-first product, and we are offering the service for free.

Our product is also the only customer review solution on the market that incorporates photos. Those pictures not only provide added credibility, they also help to drive both views and shares in social media. We don’t believe that the real value is in simply getting the review, we think that finding ways to get those reviews shared across the Internet and various social channels is equally powerful.

It’s also worth noting that people often jump to the conclusion that we’re competing with consumer-driven review sites like Angie’s list, Yelp or Homestars. In fact, we’re not looking to compete with these sites—if anything, we see our solution as complimentary to them.

SUB: What differentiates KnexxLocal from the competition?

Chen: For starters, our app is free and mobile-based—that’s the most obvious differentiator. We also have a focus on local businesses and service providers while most other online review solutions are largely focused on online retailers.

SUB: When was the company founded and what were the first steps you took in establishing it?

Chen: We founded the company in early 2012, and I’m pretty sure the first thing we did was buy a couple of chairs. We then basically locked ourselves in a room and whiteboarded ideas until we felt like we’d landed on something we could be passionate about. That ‘thing’ was helping small businesses to be more successful. Since we knew many of those businesses live or die by their word-of-mouth referrals, we committed to finding ways to help ‘supercharge’ those word-of-mouth referrals by putting them online. We believe word-of-mouth marketing is the last frontier for automating online marketing technology.

SUB: What was the inspiration behind the idea for KnexxLocal? Was there an ‘aha’ moment, or was the idea more gradual in developing?

Chen: It’s a gradual process. When I think about building KnexxLocal, or the other startups I founded, I’m reminded of this time a few years ago when I met a guy golfing on vacation. He worked in the film industry, and he told me that making a movie is like making sausage—the end product doesn’t look anything like what it started out as. Ultimately, it’s a messy process where you throw in a bunch of stuff, season it here and there, and hope that it tastes good when it comes out. I think building a business is similar—you’re constantly making adjustments, and there’s really no single formula that will work.

SUB: How did you come up with the name? What is the story behind it?

Chen: Our name is pronounced ‘Ko-nex,’ and our inspiration was connecting local businesses with more customers. Instamonial was inspired by ‘Instant Testimonials,’ and since the app is so photo-based, the natural comparisons to Instagram were helpful in explaining what we’re doing.

SUB: What have the most significant obstacles been so far to building the company?

Chen: Balancing resources and staying focused.

SUB: You just launched to the public. Why was this a particularly good time to launch?

Chen: First and foremost, we launched because the product was ready. However, we also saw the beginning of the year as a time when many businesses re-evaluate their marketing and think about how they can grow their business. It’s also off-season for a lot of home improvement businesses, which means they have time to think about marketing. All of these factors came into our thinking.

SUB: Have you raised outside funding to this point? If so, how much?

Chen: We recently completed a Seed round of $1.1 million.

SUB: How does the company generate revenue or plan to generate revenue?

Chen: The basic application is, and always will be, free. In addition to the app, we’ll be offering a series of premium services over the coming year that will help local businesses to grow through word-of-mouth marketing online.

SUB: What are your goals for KnexxLocal over the next year or so?

Chen: We hope to create a foundation so we can build a sustainable business for the long term, committed to helping local businesses through online marketing and word-of-mouth.

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