In anticipation of our Techonomy Detroit conference on September 16, we are profiling Detroit-area tech startups that are driving the city’s re-emergence as a center of innovation.
NathanWhen we have important “life administration” decisions to make—getting a loan or a new health insurance plan—we often turn to people we know and trust. A Detroit startup called Stik is asking, “What if businesses could use the Internet to better harness the power of recommendations and benefit from the emerging ‘reputation economy?’”
Stik’s end-to-end solution helps businesses grow through referrals, and lets consumers discover businesses they can trust using a new form of social advertising. We spoke with co-founder Nathan Labenz about the age of advertising built on personal testimonials, and why he moved his startup from Silicon Valley to the Motor City.
How does Stik work?
We help businesses leverage their customer’s stories to achieve their goals. If you ask business owners how they would like to grow, they’ll say, “I’d like to grow with my existing customers telling more people about me.” That is true in auto, home, mortgage, insurance, education, health and wellness—all sorts of people who have businesses that want to get more customers to refer more business their way.
We help businesses collect a high volume of authentic success stories and then we package those up into marketing assets, which can be advertisements, things that can be put into a newsletter or website, across different touch points that reach the customer.
What does that kind of customer outreach do for businesses?
It results in the right kind of awareness and the necessary level of trust. It’s one thing to see an ad that says “we are the best;” it is another thing to see an ad that says a particular customer or your friend had a great experience. That is the Holy Grail, when you can show customer success stories in a way people can believe. Our research has shown that a marketing message that features a review gets three times higher engagement than a standard brand ad. People like to see what other people are saying. When a friend is in an ad, engagement is 13 times higher than a standard brand ad.
How do you collect customer feedback?
It’s pretty simple. We work with businesses to reach out to customers and we just ask them, “Do you mind doing a testimonial for us? We would really like to use your words in our marketing material.” If you are a business and you do a good job for people and you ask the right way—which we understand how to do better than most of our clients—people will just do it.
We require everyone who does this to validate his or her content with a Facebook account. We want to ensure no one is posting fake stuff, which is a huge problem across a lot of review sites. And because this content we are creating is going to be available to businesses, we need to be sure the testimonials are credible. How do you make a testimonial really credible? It helps a lot if you have a person’s full name. And showing their face personalizes and humanizes it. Because we are sending them through Facebook, we can just point to their profile picture.
Do you use the same advertising tools on Facebook that regular businesses do?
There are some similarities, but we do not use the same tools. We are a Facebook ads API partner, so we have programmatic access to this stuff; we’re not limited to the tools that a local business can use. We are making promoted posts, but it is something more than that. Who do we target with this message? How do we make sure the message is right for the right audience? How do we make a message that can be as credible as it can be? That’s where so much of the value is.

The Stik team, with Detroit's Comerica Park in the background
The Stik team overlooking Detroit’s Comerica Park

What distinguishes you from other advertisers who use customer testimonials? 
What we do that is different is provide an end-to-end solution. A lot of businesses have happy customers, but they do not have a good library of customer success stories. Helping them get that content in the first place is huge. The production is also a challenge. If I have 1,000 success stories, how do I put them in a marketing format that will look good in places where I want to use them? We have software that makes it easier.
Most of your clients are in real estate and insurance. Why not focus on restaurants or small shops?
[In real estate and insurance] trust is a big factor in the decision-making—it’s a big dollar value, it’s a major life decision, it’s something people really fear potentially getting wrong. If the stakes are high, we are much more valuable. These are the markets that we are very effective in.
We look for high trust, big decision, big dollar, and big importance markets.Yelp does a very good job with restaurants, but they don’t do a very good job with the categories we serve. I don’t need a very strong reference to feel comfortable to go to a new restaurant.
What does the future hold for Stik and for advertising in general?
This platform will be integrated with more social media platforms like Twitter, LinkedIn, Google+.
There is a great study from Deloitte that says the number 4 factor driving consumer purchases decisions in America is online reviews. Number 3 is TV. Number 2 is recommendations from social media and number 1 is friend recommendations. But most of the ad spend goes to TV and other traditional advertising channels. No one has figured out how to get their marketing departments to influence numbers 1, 2, and 4.
Going forward we will see a big shift away from generic brand messaging and much more emphasis on what we have done for a customer, someone you know, or someone who looks like you, has overlapping characteristics with you, or is in the same situation as you.
You moved Stik from Silicon Valley to Detroit in 2012. Why?
The talent wars. Being from Detroit and realizing there is a ton of talent here, but not a lot of startups, we thought we could build a better team in the longer term. I think that has proven to be true. There is no Google or Facebook sucking up all the software developers. We have a great team.
What will it take to rejuvenate Detroit’s economy?
In the last five years, I’ve seen tremendous progress in Detroit. Quicken Loans and Dan Gilbert are in many ways leading the charge, making a ton of investments, not only in real estate but also in companies like ours. They have invested in us through Detroit Venture Partners, and they have moved into the downtown area and infused a “yes you can” spirit.
There is a sense of momentum. Is there a long way to go? For sure, but I think that the bottom has passed and the city is definitely on the upswing. The ingredients needed here are in place. There are people who believe in it. This is the place to be right now.