Small businesses aren't called the backbone of the U.S. economy for nothing. Though their day-to-day business may not make headlines, companies with fewer than 500 employees account for approximately 99% of the 29.6 million businesses in the U.S. and employ 60.2 million people—just over half of U.S. workers. Companies with fewer than 20 workers employ 21.6 million people, according to the Small Business Administration's Office of Advocacy.
Those numbers add up to substantial buying power: Small businesses spent $4.8 trillion in 2008, or 23.8% of total U.S. commercial spending, according to Visa Inc.'s annual global “Commercial Consumption Expenditure Index.” In short, small business represents a big opportunity for marketers.
Many marketers are wise to the possibilities the small-business market holds and, despite the past year's dismal economic climate, continue to find ways to connect with this lucrative and very loyal audience.
Office Depot in September launched a small-business campaign leveraging its primary sponsorship of NASCAR star Tony Stewart and the No. 14 Office Depot/Old Spice team in the NASCAR Sprint Cup Series. The campaign, created by Wunderman and Edelman, both Chicago, accompanied the announcement of an “Official Small Business of NASCAR, Courtesy of Office Depot” sweepstakes winner, who was awarded a $14,000 small-business makeover from Office Depot. The company also awarded gift cards of $1,400 each day of the monthlong promotion entry period in May.
Office Depot's key message in such efforts has been about providing value, said Jeff Herbert, senior VP-marketing. “During these tough times when every little bit helps, [$1,400 can buy] a computer, and a printer and supplies that our customers have told us are very helpful,” he said. “We're committed to being there for small businesses during the good and bad.”
However, that message of value isn't focused only on price, Herbert said. “It's about incremental value—providing something that our small-business customers would find interesting and that would help them in some way,” he said.
For instance, Office Depot has a loyalty program that, with 10 million registered customers, is a significant part of the company's business, Herbert said. It also provides small-business resources at a Web site launched this year (www.thesurvivalofthesmartest.com).
Visa Inc. also recently kicked off a campaign targeting small-business owners and focusing on how the Visa Business card can help them manage their finances better and move their business forward. Created by TBWAChiatDay, Los Angeles, and dubbed “Go Biz,” the campaign, which debuted in August, relies heavily on online marketing. It also includes national network radio and trade print advertising.
Visa carefully considered small-business owners' media consumption habits and determined that connecting with them online was critical, said Alex Craddock, head of global commercial marketing for Visa. “[The Web] is a business tool they use every day, several times a day,” he said. “A significant percentage of their time is spent online; it's where they're going to find information on how they can run their business better and how they can grow their business.”
The campaign features online videos with stories about five actual businesses, each highlighting a benefit that Visa can offer small businesses. Banner ads are running on sites that provide broad reach, such as AOL, Yahoo Mail and Microsoft Office Live, and also on sites that small-business owners visit when researching and pricing products, such as Amazon.com, Craddock said. Print ads are running in publications that target specific markets, such as Builder Magazine, Dental Economics, Physicians Practice and Restaurants & Institutions.
Visa chose to feature actual business owners in the campaign because its research showed that small-business owners turn to each other for advice and support, especially in trying economic times.
“There's a great quote I always hear, and it's that "being a small-business owner can be a lonely walk,' ” Craddock said. “They often, in 80% of the cases, are individuals who don't have employees; when they do have employees, it tends to be a small number of employees, so there are few people to turn to for advice.”
Small-business owners' desires to connect with each other, coupled with the rise in social media, present interesting opportunities for marketers, Craddock said. “The great thing about the online space, whether it's review sites or social media sites, is that customers can let you know what they think about your business, and you can connect back,” he said. “You start to refine and build your business around the feedback you're getting. That's exceptionally useful for us.”
Visa has been using its Visa Business Network, an online community the company debuted last year, to engage small-business owners in a dialogue, he said.
FirstBank, Colorado, a division of FirstBank Holding Co., is also using real small-business owners—or rather, their business cards—in an out-of-home effort that is part of an ongoing small-business campaign.
The effort features hundreds of business cards collected from the bank's small-business customers in displays on rotating, backlit signboards in Denver International Airport. The ads read, “FirstBank. We care about small business.” The campaign, created by TDA Advertising & Design, Boulder, Colo., is intended to show the bank's support for its small-business customers by offering them free, high-visibility, out-of-home media placement.
“They wanted to do something that would actually help small businesses,” said Jonathan Schoenberg, creative director at TDA Advertising. “The idea was to put up all these people's business cards in the same way a local coffee shop would in a small town—except we'd be exposing the cards to hundreds of thousands of people a day.” (DIA main terminal monthly impressions are estimated at 6,576,612, according to Posterscope USA, Denver, which handled media placement for the campaign.)
Companies that sell to the nation's small businesses may have much to gain, but they also face significant challenges. For one, the market is highly fragmented across many different verticals. Plus, the individual who makes purchasing decisions may differ greatly between, for example, a company with 99 employees and one with fewer than five.
The best way to segment this very fragmented market is by industry, said Stephen Smyth, director-relationship management at the Enterprise Council on Small Business. “Marketers really ought to develop messaging and offers and, in some cases, even products that are suited to a business owner's industry,” he said.
Many marketers are inclined to segment by number of employees or revenue when targeting small businesses, Smyth said. “We found that both of those were reasonably inaccurate and did not really reap the kinds of benefits you're able to gain through segmenting by industry,” he said.
AT&T Business this year increased its segmentation and industry-specific marketing as a result of a reorganization within the business unit. (AT&T Business now delivers all AT&T services to business customers of all sizes from one unit.)
“That structural change has led to a set of segmentation efforts that have in particular really re-energized our small-business marketing activity,” said Bill Archer, CMO of AT&T Business Solutions.
This summer, the company kicked off an integrated campaign targeting the small-business segment. The campaign, created by BBDO, New York, includes print ads, direct marketing, a Web site for small-business users, a social media effort, and various promotions and contests.
“It's all about really reinvigorating small business and bringing together our mobility and wire-line services in integrated offerings that make it easy for small businesses to ... transfer complexity to us so they can focus on dealing with issues like the challenging economy and the competitive issues they have,” Archer said.
After segmenting by industry, Smyth said, segmenting further by company size can be useful.
For Office Depot, segmenting by size can help determine who the decision-maker is. For instance, Herbert said, in companies with one to five employees, it's typically the business owner who buys paper, printers and other office products. In a company with 20 or more people, however, it might be an office manager making those purchases. With even larger small businesses, administrative assistants might make those decisions, or there could be one central buyer who's best reached through a sales force.
Because small businesses have fewer resources to draw on, they have little room for error in the purchases they make, said Jon Morris, CEO of Rise Interactive, a Chicago-based marketing agency. “They're much more demanding because they can't afford failure,” he said.
On the flip side, Morris said, small businesses tend to be very loyal. “They tend not to leave as much,” he said. “You can really develop a true partnership where you can grow the relationship over time.” M