SMBs Shift Best Practice in Marketing Approaches
The top two priorities SMB leaders are revenue growth and customer retention; their most critical marketing tactic is community relations; and they believe email's most important purpose is communicating with existing customers. These are some of the key insights uncovered by the Spring 2005 Business Barometer, the latest in a series of semiannual surveys by SMB sales and marketing consultancy Interland. The survey of 1,032 SMB leaders showed some noteworthy statistical shifts from recent reports.
Among the biggest changes reported is the perceived best approach to marketing techniques. One year ago seven in 10 SMB leaders felt their companies' Web sites were the major business driver. Today, the crucial practice is community relations, at 55 percent, while the Web has dropped to second place, with 47 percent. According to Mike Neumeier, Interland spokesman, some of the discrepancy is accounted for by a change in the sample. "Last year, that question surveyed only SMBs with Web sites. For 2005 we used an open sample of all businesses," Neumeier says.
Another reason for the strong focus on community relations is SMB's more local nature, according to Sanjeev Aggarwal, senior analyst for small and medium business at Yankee Group. "Only 24 percent of SMBs with a Web site even have online sales tools," Aggarwal says. "Much of their online presence is devoted to driving sales in the local business ecosystem, generating word-of-mouth."
Online selling is a growth area for SMBs, both in terms of direct and indirect sales, according to the study. About 25 percent of all businesses surveyed indicated that 26 percent to 100 percent of their revenue in 2004 was generated through online purchases or offline purchases influenced by their Web site. Of those businesses actually selling products online, however, 31 percent reported that 10 percent or less of their monthly sales came through the Web.
Email appears to have become less important for business communications in the SMB segment. While 70 percent of respondents see email as very critical or somewhat critical to their business, the way in which they use it has changed. Communicating with existing customers was a factor for 72 percent of businesses, down from 85 percent in 2004. Similarly, communicating with partners/associates (56) and potential buyers (53) decreased sharply from last year's 80 and 67 percent, respectively. This may be related to fallout from another of last year's statistics. In 2004 Interland reported that 34 percent of SMB leaders hadn't even heard of the CAN-SPAM Act, which regulates unsolicited commercial email, and a further 28 percent didn't know whether it applied to them. According to Aggarwal, a number of factors contribute to this retreat from front-end email contacts. "In addition to CAN-SPAM, SMBs are very concerned about viruses and other security issues," Aggarwal says.
The survey also reveals that 45 percent of SMB leaders were unsure whether changes to the civil justice system would benefit them, and a surprising 66 percent rarely or never evaluate their vulnerability to a lawsuit when making business decisions.
The top marketing techniques are likely the best takeaway from the survey. But the additional data in the survey support the premise that SMBs have an untapped resource in the Web, and those who take advantage of it wisely can reap rewards.
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