Recently, ADP (the association of yellow page publishers, not the payroll company) announced something called “Trusted Local Directory,” an online directory of “Trusted Local Businesses.” To become a Trusted Local Business, a company is “thoroughly investigated” and if worthy receives both a Trusted Local Business seal for its use, along with a listing in the Trusted Local Directory.
I give ADP kudos for trying to find ways to breathe new life and relevance into the yellow page directory business, but I have to admit some skepticism as well.
First, this model is not a new one, and the track record of third-party trust evaluators isn’t a good one. Trust is hard. Perhaps more to the point, trust is expensive. And to a great extent, trust is in the eye of the beholder – simply defining how a company can objectively prove it is trustworthy is remarkably challenging. That’s why this is one tough model.
Consider as a case study the Better Business Bureau (BBB). They’ve been providing assurances of trust for over 100 years. But they’ve come be viewed as a consumer advocacy organization when in fact they are supported by their business members, setting up all sorts of inherent conflicts. Moreover, new BBB business members automatically receive a top rating upon joining. The rating may then be reduced over time depending on how the business handles its complaints. That’s a loophole that scammers can drive a truck through. Moreover, BBB has set itself up to process and resolve mountains of consumer complaints, something it doesn’t get paid to do. More fundamentally, BBB has a pay to play business model. It makes no money unless a business becomes a member, and once a member the business automatically receives a top rating from BBB.
If BBB has trouble with this model, consider that ADP has the additional hurdle of being an unknown brand. Moreover, rather than leveraging the directories of its members, ADP has created the Trusted Local Directory as a new directory site that will need to build usage from scratch, a daunting task at this late date. And lest you think that the Trusted Local Directory is a directory of trusted local businesses, be advised that it appears to be a national directory of all businesses, one that offers no more than business name, address and phone.
An online directory of trusted local businesses could be a good and useful product. But the business model inherently fights you every step of the way. A directory like this needs a critical mass of businesses to be useful and viable. But assessing trust at anything more than a cursory level is slow, manual, expensive and difficult to scale. So you can’t do it for free. But by charging for inclusion, fewer businesses will want to be included. To combat this you can reduce your price, which means a less rigorous assessment, which in turn limits the value of the product. Alternately, you can give the impression of a rigorous review without actually doing the work, but that is more likely to lead to court than to success.
Crowdsourced reviews have come closest to making the third-party review model work. They are low cost and do readily scale, but many suffer from gaming and have credibility issues of their own. To succeed, they need a lot of policing and quality control, and that quickly gets complex and expensive, and there only a few examples (TrustPilot is one good one) of meaningful monetization with this model.
Again, kudos to ADP for thinking outside the box, but it doesn’t seem to me they’ve cracked the code on this inherently challenging business model. And for anyone else considering this model, trust me, it’s hard.