Editor’s note: Miki Velemirovich is president, Cargo, Canada, a business-to-business marketing agency.
Small business owners (SBOs) are often misunderstood, underappreciated and underserved. They are different from big business leaders and thus deserve a different marketing approach. Enterprise-level B2B strategies aren’t effective and, more often than not, SBOs say that big brands don’t talk to them – they just sell to them.
As SBOs climb out of the depths of the pandemic, many brand leaders are asking, What’s next for small and medium businesses (SMBs)?
My team talked to over 500 SBOs in the U.S. and Canada, and reviewed over 200 research reports, articles and studies to gauge how they’re doing, what they’re planning and where they’re going. We assessed their survival and revival mind-sets, we looked at the natural development of the SMB market recovery and we explored all the macro influences on what’s next.
Survival and revival mind-sets
Unsurprisingly, COVID-19 dealt a hard blow to small businesses across the U.S. and Canada. Eighty-three percent noted that they were negatively affected by the pandemic, while 54% reported being negatively or even catastrophically affected.
The pain is real. But the good news is that levels of optimism are higher than the media suggests: 58% are optimistic about the future of their business. Furthermore, 66% of all SBOs feel their business model will change or evolve because of the pandemic, through digitization of their sales channels, business operations and innovation.
Nearly 40% plan to launch a new product or service in the next six months. Thirty-three percent plan to shift their customer focus in the same period. Their mind-sets are fueled by the need for innovation, and they are about to kick-start the Great Reinvention era.
The resilience, positivity and optimism are in the DNA of SBOs. It’s why they are entrepreneurs. Our advice for brands is this: feed this optimism. Energize the positivity.
As marketers, we must shift from messages of empathy to clear messages of empowerment. Instead of a hug, it’s arm in arm, together toward this bright future. They feel that they are the architects of the new normal, so let’s help them get there.
With over half pivoting their business models and many launching new products, marketing to them needs to become fluid. Agility and adaptability are the name of the game. Small wins and shorter plays versus heavy, long campaigns. Brands need to stay close to these pivots and changes and redesign the buyer journey accordingly. Don’t push SBOs where you want them to be, rather meet them where they are.
SMB market recovery
As optimistic as many of these SBOs are, not all will recuperate at the same pace. Recovery will be staggered, depending on geographical location, government mandates, business lifecycle and the industry the business operates in.
State and provincial governments hold the ultimate power when it comes to the shutdown and economic restart. We saw it at the start of the pandemic and again in the second wave.
Another important consideration, one that drives even more granularity in targeting, is the size of the city or town in which a particular business operates. Large metropolitan areas have seen much higher levels of COVID-19 infections – due in part to the difficulties to effectively distance – and, in turn, slow rates of recovery. On the other hand, businesses located in smaller metros and towns have seen quicker opportunities to get back to work.
Young businesses (less than five years old) and smaller businesses (less than 20 employees) will face greater challenges during recovery. These businesses typically lack great degrees of liquidity and have greater credit constraints, so they are more sensitive to weak consumer demand. However, this is not to say that they will not recover; they will simply see a longer road to get to improved revenue and profit levels.
The industry type is perhaps the most important element that will define the business recovery. Until a vaccine is available, consumers will demand low-touch environments, from virtual and remote to touchless everything.
Naturally, the hardest hit industries are the ones that rely on large gatherings, close human interaction, high levels of hygiene and travel. The speed of recovery for these industries rests on the redesign of operations to minimize high-touch environments and to make their customers feel safe through digitization of purchase journeys, curbside pickup, deliveries, touchless payments and virtual interactions.
So, what does this mean for big brands facing the evolving SMB market? First of all, there will be three speeds of recovery:
- Slow: urban, high-touch, smaller and younger businesses.
- Medium: suburban, medium-touch, established mid-size businesses.
- Fast: rural, low-touch, mature businesses.
Marketing efforts need to match the speed – big brands, don’t go after them all. Focusing on the fast recovery industries with historically low reliance on high-touch environments must be of immediate priority. They are running and some are downright growing. Help them grow.
The industries with historically high reliance on high-touch environments are not ready. But here is a critical point: helping them move along the path to low-touch environments presents the largest opportunity for growth.
Before we can identify these growth opportunities, we need to take a look at the future.
What’s next?
COVID-19 has caused a major consumer behaviour shift driven by the need for physical distance, health and safety. This has manifested itself in two major ways: e-commerce and digitization of business operations and virtual experiences.
The new consumer will dictate how they are comfortable buying, how willing they are to buy and how they are willing to engage. Online shopping, once a convenience, is now essential. Eventually, we will see a hybrid of in-person/virtual experiences, but for now, virtual is leading the charge.
Professional services, such as consulting, accounting and even medical are moving in this direction. And guess what? Some consumers are finding virtual experiences to be superior. Helping SBOs with this transition will pay off with both acquisition plays and retention.
“We are in this together” was a resounding theme throughout the early days of the pandemic: communities pulling together to help its members, citizens coming together to celebrate those on the front lines and communities getting behind the re-opening of their favorite small businesses. When that spirit and vibrancy waned, many consumers realized just how important small businesses are. Doing good for communities and having purpose has become more prominent.
Even before the crisis, there was a growing sense that shareholder value should not be the only business value in sharp focus. The idea of the “triple bottom line” was coming into play, balancing profit with purpose and people. In our 2019 study of Millennial Small Business Owners (registration required), we found that purpose was one of the strongest drivers of brand choice. And now, this is even more critical as SBOs are reacting to brands’ response to COVID.
Seventy-seven percent of SMBs surveyed said they currently allow employees to work from home (WFH), and 48% of those will make it permanent. Talent acquisition and retention will be driven by WFH policies, so small businesses will need to fully embrace this. They will need to invest into technology to make this viable: tools for productivity, collaboration and security protocols to protect the data.
But technology isn’t the end of the road as many are trying to envision the new world of leading their teams remotely. How will they hire, train and retain? How will they coach? Finally, the entire buyer journey will need to be rewritten since they are buying from brands sitting at home.
Mind-sets, staggered recovery and the impacts on what’s next caused by major shifts in consumer behaviour and WFH revolution will have monumental effects on how SMBs conduct business.
This new landscape will require a new, innovative and re-imagined marketing approach for brands trying to find, engage and motivate SMBs. Transformative times call for transformative strategies, so big brands, here is what you should focus on:
- Messaging strategy: positive, partnering, pioneering.
- Targeting strategy: micro vs. macro.
- Brand strategy: purpose driven experiences.
- Content strategy: support digitization, WFH revolution and stay agile.
- Retention strategy: focused, collaborative and helpful.
And with this new approach, we will see that this new world isn’t so dangerous after all, just different.