It's no secret that many of today's small business owners are experimenting with different tools and strategies in the hopes of increasing their revenue and overall success. However, trial and error can often be costly and result in the unnecessary loss of time and money. So, the real question is: Where should small businesses focus their efforts in order to achieve the greatest ROI?
For more insight, I interviewed Brian Sutter, Director of Marketing at Wasp Barcode Technologies. Brian recently surveyed over 1,000 small business owners, influencers, and leaders. Based on responses to the survey, Wasp put together The State of Small Business Report. One section of the report analyzes the marketing strategies used by these individuals and how (and where) they plan to invest their revenue in 2015. Many of these findings can help to significantly increase the success of your business.
Here's the interview:
1. What size companies participated in your survey and do those companies anticipate their revenue change in 2015?
Small businesses with 11 to 500 employees participated in the survey. On average, 57% of these companies expect to see their revenue increase in 2015 (10% expect double-digit growth), and 26% expect to see revenue stay flat. Interestingly companies who sell products are expecting higher revenue growth than service based companies, with 41% (of product companies) expecting to grow by at least 5% this year. On average, smaller companies (11-50 employees) were more optimistic about their revenue growth with 12% of these companies expecting to grow by 11% or more, compared to only 8% of companies with 51-499 employees.
2. What portion of their revenue is spent on marketing? And how do they anticipate growing their revenue?
Of the businesses surveyed, 56% spent less than 3% of their total revenue on marketing and new customer acquisition in 2014 (national avg. is 10.2% per Gartner Surveys). The top 3 strategies list to grow their revenues were: 1) Customer retention 2) New customer acquisition activities 3) Expand into new markets
3. Why is less than 3% of revenue used toward marketing? And what does that mean for lead generation and customer acquisition?
The main reason smaller companies invest such a seemingly small amount into marketing is because many of these businesses don't have the staff in-house to really drive marketing efforts (40% of companies 0 dedicated marketing staff). As a result, they tend to rely on lower cost or free advertising methods to drive revenue growth or new leads. With small business owners and employees wearing so many hats, it's all too common for leads and marketing opportunities to slip through the cracks, meaning their lead generation efforts are less than optimal.
4. What marketing tools do these companies use?
Over 61% of small business owners reported that they were fostering an active social media presence, with Facebook being the place where they spend most of their Social Media Marketing time. 46% also responded that they were using email marketing as a part of their overall marketing mix. Most other "modern" marketing techniques, like blogging, paid web ads, and Search Engine Optimization, were all being used by less than 30% of survey respondents. Interestingly a whopping 37% rely on print ads and 32% put a heavy emphasis on direct mail campaigns.
5. What percent of small business feel their website is an integral to their success? How much of their revenue is generated online?
59% of small business felt their website was an important part of their overall business success (should this be significantly higher?) with another 24% stating that it plays a role but is only somewhat important to the success of their endeavors. Interestingly, 51% of small businesses expect to generate less than 10% of their total revenue from the web. Another 23% of respondents were either not sure or didn't have a way to track web revenue, which is alarming.
6. How will small businesses affect the marketing industry overall?
Small businesses that spend on marketing have a huge upside revenue potential, but the lack of in-house expertise often curtails these efforts.
Since many small businesses don't have the staff in-house to execute on their marketing efforts, they will often work with freelancers or marketing agencies in order to supplement their lack of internal expertise. This is should provide a significant opportunity to marketing firms that specialize in working with small businesses.
7. Besides web presence and social media, what other opportunities do these SMB's have to grow revenue?
One of the biggest areas for opportunity for small businesses in 2015 is to capitalize on their existing leads and customers. This means, increasing customer lifetime value and converting more leads into sales. Since they are spending less than 3% of their revenue on acquiring new leads, it's extremely important that they take advantage of the leads they already have. One of the best ways to do this is with a CRM system, and with only 29% of small business owners currently utilizing one for their business, there a is a large potential for improvement.
Now it's your turn. What strategies and tools have you used to get the most out of your business this year? Let me know your thoughts in the comments section below.