This year is going to be an exciting and game-changing year for marketing: the opportunities to engage with customers will be endless and the technology available to accomplish that will become even more advanced. But what does this mean for small business owners? We surveyed 530 small businesses about their marketing initiatives for 2018. Eighty-six percent of participants also have a loyalty program at their business and gave us insight on program use and efficiency.
Businesses surveyed spanned across verticals and years in business.
Marketing Spending and Trending
Our survey found that the biggest marketing challenge was not enough budget. However, with more marketing platforms available, small businesses are able to access advanced tooling for far less than they were just a few years ago. The consensus is that marketing is a vital part of a business, with only 4% of businesses surveyed planning on spending $0 on marketing in 2018. The sweet spot falls between $1,000-$5,000.
A successful business will balance their marketing between new customer acquisition and customer retention. There are many factors that attribute to a business’ success, but 52% of respondents identified Revenue Growth as the top factor for success. Nearly 3x as many respondents identified Customer Retention as a better indicator of success than Customer Acquisition. They may be on to something. Just a 5% increase in customer retention can result in 25-100% growth in revenue.
This brings us to the age-old debate: should businesses invest more in customer acquisition or customer retention? It typically costs 5-10 times more to acquire new customers than it does to retain current customers and repeat customers spend, on average, 67% more than new customers. Given all of these factors, only 15% of the businesses surveyed said they planned on spending more on retention than on acquisition. Sixty-two percent responded that they planned on spending the same on both.
It is clear that business owners understand the importance of customer retention and the impact it can have on their bottom line. However, changes will need to be made in 2018 in how budgets are allocated and how ROI is measured in order to ensure the best possible outcome.
Pick a Channel, Any Channel
Regardless of what a business’s budget is, or whether they think retention is more important than acquisition, or vice versa, determining which channels will accomplish marketing goals can be difficult. In any marketing conversation, you’ve probably heard the word “omni-channel” thrown around quite a bit. This buzzword has taken a stronghold in the marketing world and doesn’t seem to be going anywhere any time soon. Customers live and engage across a variety of channels, and small businesses having a presence in many channels increases the likelihood and number of times they’re able to create a connection with a given customer.
We asked respondents to choose all of the channels they plan on using in 2018. The top two channels, Word of Mouth and Social Media, were also ranked as the most effective channels to promote a business.
Nearly across the board, digital channels are overtaking traditional channels with a surge in social media and email marketing. However, word of mouth continues to be a strong indicator of success and preferred method of marketing. Businesses should leverage this across these digital channels for an even greater impact such as encouraging engagement with customers on social media, or sending customer testimonials in email marketing campaigns.
Because social media was ranked as the top marketing channel for small businesses, we asked respondents to dive a little deeper and indicate all of the social channels they will use to promote their business this year. Unsurprisingly, Facebook came out on top. With its business pages that allow businesses to connect with current customers, and the intuitive setup of Facebook Ads enabling customer acquisition, it’s not surprising 97% of businesses will use it this year.
Gaining traction is Instagram, which is a great platform for visually rich businesses such as restaurants or salons. It opens the door to a younger demographic that is image-focused and enables businesses to showcase their services and products in beautiful and creative ways.
Loyalty Program or Bust
Rounding out the top 3 marketing channels used by small businesses, loyalty programs are a great way to increase customer retention. Nielsen’s Global Loyalty-Sentiment Survey found that 72% of customers will buy from a business with a loyalty program over one without. Customers want to feel valued by the businesses they’re interacting with.
Businesses should have goals in mind when implementing a loyalty program. The top goals from our respondents center mostly around getting customers back into their business, but business owners also know that in order to accomplish that, customers must be satisfied with their service. Most respondents felt like the loyalty program they were using was effective in achieving those goals.
While most of the businesses surveyed were in agreement that loyalty programs are an asset to their business, most of them don’t believe that they have very many customers enrolled. Unless a customer perceives real returned value, they are less likely to share their personal information by enrolling in a loyalty program. There are a variety of tactics to getting customers enrolled from low-value rewards to bonus points for signing up, and much more.
Small businesses should look for loyalty programs that give them the most bang for their buck and include other marketing tools such as email campaigns, customer acquisition, and marketing automation. Not only does this save businesses money, but it also keeps all of their tools in a central location.
To see how Belly can help your business increase its profits through customer retention, request a demo here.