Small Business Marketing Health Check

Transcription

1 Sanjeev Aggarwal, Partner Laurie McCabe, Partner

2 Contents Page Highlights and Key Findings... 1 Section 1: Small Business Economic Outlook and Challenges... 2 Figure 1: Median Annual Company Revenues for Businesses with 1-20 Employees (by size band)... 2 Figure 2: Top Business Challenges for Small Businesses... 2 Figure 3: Expected Change in Annual Revenues for Businesses with 1-20 Employees 2008 v Section 2: Attributes of Small Businesses that Expect Growth... 4 Figure 4: Top Opportunities for Small Businesses... 4 Figure 5: Total Marketing Investment Correlates with Expected Revenue Growth... 5 Figure 6: Small Business Use of Marketing Tools... 6 Figure 7: Small Business Marketing Use/Plans Correlates with Expected Revenue Growth... 7 Section 3: Conclusions... 8

3 A Hurwitz White Paper Highlights and Key Findings Economic conditions have had a mixed effect on small businesses: 46% of the small businesses surveyed continue to see increased revenues coming out of the recession; 22% expect flat revenues; and, 32% expect revenues to decline. A significant percentage of small businesses see this as an opportune time to introduce new solutions and make selective investments to position themselves for growth as the economy improves. Small businesses expecting revenue growth invest more in marketing especially in digital marketing, such as marketing than small businesses whose growth is flat or declining. Digital marketing tools such as marketing are helping small businesses extend their marketing reach and results in a cost-effective and scalable manner. Small businesses that want to weather the current economic climate, and thrive as the economy recovers, should reassess how they re allocating their marketing dollars. This report, the first of two, highlights key findings from a survey conducted in July 2009 by Hurwitz & Associates, and sponsored by Campaigner. The survey investigates how North American small businesses with 1-20 employees are succeeding today, and how they are adapting their marketing plans and budgets to compete more effectively in the future. This first report focuses on what small businesses view as their top challenges and opportunities, and how using different marketing approaches and tools correlate with business growth. Page 1

4 Section 1: Small Business Economic Outlook and Challenges The economic environment has been challenging for many businesses. In many industries, fewer customers are buying. Those who do make purchases are often spending less. Even as competition intensifies, many businesses have been scrambling to do more with fewer resources. With limited cash flow and capital reserves, small businesses have been particularly challenged to grow their business. For instance, median annual revenue for businesses with 2-4 employees is under $250,000 (Figure 1). Figure 1: Median Annual Company Revenues for Businesses with 1-20 Employees (by size band) Number of Employees Median Annual Revenues 1 Under $50, $100,000 to $249, $249,999 to $749, $500,000 to $999,999 Consequently, it s not surprising that 50% of all survey respondents cite attracting new customers and retaining existing customers as their number one challenge (Figure 2). Fifteen percent state the closely related goal of growing revenue as their number two challenge. This is followed by improving cash flow and maintaining profitability, both of which are critical to keeping any business afloat. Figure 2: Top Business Challenges for Small Businesses Source: Hurwitz & Associates, 2009 Page 2

5 A Hurwitz White Paper Small businesses face common challenges, although economic conditions have had a mixed effect on their revenue outlook (Figure 3). In fact, 46% of the small businesses surveyed expect revenues to grow, while 22% expect flat revenues and 32% expect revenues to decline. Figure 3: Expected Change in Annual Revenues for Businesses with 1-20 Employees 2008 vs { 46% anticipate revenue growth 32% { anticipate revenue decline Source: Hurwitz & Associates 2009 Page 3

6 Section 2: Attributes of Small Businesses that Expect Growth What distinguishes small businesses that are growing from those that are not? (Figure 4). One of the key distinctions may be the propensity to look for a silver lining in a cloudy economic climate. Agile, flexible small businesses are looking for opportunities to beat slower competitors to market and capitalize on the next opportunity. Among survey respondents, 52% intend to introduce new products/services to tap into new market opportunities. Meanwhile, 19% indicate that they are selectively investing now to position for growth as the economy improves. It s likely that some of this investment will be made to support their new product and service introductions. Eleven percent also see technology vendors more willing to negotiate on price as a top opportunity. We expect that many of these companies will choose to invest in technology-based solutions. This will allow them to streamline business processes, and help them be more effective in marketing, sales, and serving customers. Figure 4: Top Opportunities for Small Businesses Source: Hurwitz & Associates, 2009 Page 4

7 A Hurwitz White Paper Further analysis reveals that companies expecting revenue growth are more likely to have increased marketing spending in 2009, as compared to counterparts that anticipate flat or declining revenue growth (Figure 5). The difference here is dramatic: Sixty-five percent of small businesses that expect revenue growth reported that they are either spending more or plan to spend more on marketing. In contrast, 32% of those that expect flat revenues and 36% of those with declining revenues are either spending more or plan to spend more on marketing. Figure 5: Total Marketing Investment Correlates with Expected Revenue Growth Increase in Flat Decrease in Increase in Revenue 65% 30% 5% Flat Revenue 32% 57% 10% Decrease in Revenue 36% 23% 41% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Source: Hurwitz & Associates, 2009 Page 5

8 Overall, small businesses are shifting more of their marketing initiatives from traditional media to Web-based tools. marketing and social media, such as blogs, discussion boards, Twitter, LinkedIn and YouTube, are increasing in popularity and effectiveness (Figure 6). These marketing tools are often less expensive to use than such traditional marketing options as print advertising and direct mail. A small investment can help companies significantly boost marketing reach and return. With both marketing and social networking on the rise, small businesses should consider how they can integrate the more ad hoc nature of social media with more structured marketing campaigns. Integration can significantly boost the value of both methods. Figure 6: Small Business Use of Marketing Tools!"#$%&'(#)*+,$%#* Digital Media Source: Hurwitz & Associates, 2009 Page 6

9 A Hurwitz White Paper Notably, small businesses that anticipate growth were more likely to use or planned to use marketing than other small businesses (Figure 7). Specifically: 82% of small businesses that are using or plan to use marketing expect revenue growth 18% of small businesses that do not use or have no plans to use marketing expect revenue growth Figure 7: Small Business Marketing Use/Plans Correlates with Expected Revenue Growth Source: Hurwitz & Associates, 2009 Page 7

10 Section 3: Conclusions Economic conditions have imposed burdens on companies of all sizes, but the pressures have been more pronounced for small companies. Typically, they lack the resources and cash to weather a storm for extended periods of time. Many small businesses, however, are using their natural flexibility and agility to their advantage. They are positioning themselves for the recovery. By identifying new product, service and marketing opportunities, they can beat larger, often slower competitors to market. Small businesses that currently invest more dollars in marketing are more likely to anticipate increased revenues in In particular, businesses that spend more on digital marketing, including marketing, are more likely to be on a growth trajectory than businesses that are not using digital marketing. Small businesses that use these tools wisely can gain a competitive advantage over those that do not. To position themselves to thrive as the economy continues to recover, small businesses should reassess how they are allocating their marketing dollars. By shifting marketing investments toward digital marketing tools, many small businesses can extend their marketing reach and results in a cost-effective and scalable manner. This report, the first of two, highlights key findings from a July 2009 survey conducted by Hurwitz & Associates, and sponsored by Campaigner. Read the second report, Small Businesses Put Marketing to Work, at Page 8

11 About Hurwitz & Associates Hurwitz & Associates is a consulting, market research and analyst firm that focuses on how technology solutions solve real world business problems. The firm s research concentrates on disruptive technologies, such as Service Oriented Architecture and Web 2.0, Cloud Computing, Service Management, Information Management, and Social and Collaborative Computing. We help our customers understand how these technologies are reshaping the market and how they can apply them to meet business objectives. The team provides direct customer research, competitive analysis, actionable strategic advice, and thought leadership. Additional information on Hurwitz & Associates can be found at www. hurwitz.com. About Campaigner Campaigner s software-as-a-service marketing solutions enable organizations to have highly personalized one-to-one dialogues with their customers, measure how they respond, and analyze those responses to interact in a more intelligent, automated way - resulting in more profitable relationships. It is part of a total Software as a Service (SaaS) business communications offered by Protus that also includes MyFax, the fastestgrowing Internet fax service used by individuals, small, medium and large business, and the my1voice featurerich virtual phone service. Additional information is available at Copyright 2009, Hurwitz & Associates All rights reserved. No part of this publication may be reproduced or stored in a retrieval system or transmitted in any form or by any means, without the prior written permission of the copyright holder. Hurwitz & Associates is the sole copyright owner of this publication. All trademarks herein are the property of their respective owners. 233 Needham Street Newton, MA Tel: w w w. h u r w i t z. c o m