Small-to-midsized businesses (SMBs) have come a long way from the neighborhood “mom and pop” outfits of the 1950s, according to a new research study from Forrester Research.
Findings from “Driving SMB Revenue in a Tough Economy” indicate top-performing SMBs have reacted to the “Great Recession” of recent years by adopting leading-edge online and social marketing tools and strategies.
The report surveyed 208 businesses with 50 to 2,409 employees and identified as top performers the 56 percent that beat their financial goals and grew revenues faster than planned despite increased business closures and decreased consumer spending. Only 33 percent of top performers cut marketing budgets while 27 percent increased them. Even more importantly, while 84 percent of all respondents use digital marketing tactics, top performers were far more likely to call online marketing a “game changer.”
Only 36 percent of the total survey population cut budgets in response to the economic downturn. Thirty-five percent kept marketing budgets steady, while nearly a quarter of respondents opportunistically increased budgets.
SMBs Favor Traditional Marketing Techniques
All performers reported using a similar mix of marketing tools and strategies. Interestingly, Forrester found that SMBs were most likely to use traditional, but difficult to scale, techniques such as personal relationships (95%) and trade shows (89%), perhaps showing some residual habits from the “mom and pop” days. Easily scaled techniques favored by large enterprises, such as email marketing (72%) and social marketing (69%) were less popular.
SMBs that do use social marketing follow generally accepted trends, with the most established social channels such as Facebook, Twitter posts, video marketing such as YouTube and LinkedIn pages far and away having the highest levels of engagement. Large percentages of SMBs using all of these social tools says they’re not sure how well they’re working, another sign of SMB lag in the area of social marketing.
For example, 32 percent of SMBs using Facebook say they don't know if it's working, compared to 4 percent who know it's working and will continue usage at current levels and 28 percent who know it's working and will increase usage in the next 12 months.
SMBs Manage Leads
SMBs are much more likely to cite converting more leads into opportunities and closing more deals from existing lead flows as top marketing challenges than generating new on-target leads, showing a greater emphasis on lead management than lead generation.
However, top and bottom performers still separate themselves in this area. Forty-four percent of top performers consider converting leads into opportunities as a top challenge compared to 34 percent of bottom performers, while 51 percent of bottom performers focus on increasing sales from existing customers compared to only 34 percent of top performers.
Top of the Funnel Needs to be Top of Mind
Forrester suggests SMB marketers may want to focus more on driving top of the sales funnel activities. While the average SMB lead-to-deal conversion ratio of 28 percent is in the same 25-28 percent lead-to-deal conversion ratio larger enterprises report, only 35 percent of the average SMB sales pipeline is sourced from a marketing program, compared to a 38 percent average rate at larger enterprises.
Therefore, SMB marketers should investigate paying more attention to activities such as driving website traffic and increasing visibility and awareness with target consumers.
SMBs behind the Times in Marketing Automation
In addition to being behind the times in adopting social media tools, the report indicates SMBs are also lagging in adopting marketing automation technology. Nineteen percent of SMBs have adopted marketing automation solutions, compared to 45 percent of larger enterprises. In addition, marketing automation adoption among SMBs pales compared to a healthy 56 percent adoption rate of CRM automation technology.
Forrester advises that by combining marketing and CRM automation tools, SMBs can better manage the complete sales pipeline. In addition, survey results show that 68 percent of SMBs that use marketing automation to manage leads report high lead management collaboration compared to 57 percent of all respondents and 75 percent of marketing automation adopters reported above-plan revenue compared to 53 percent of non-adopters.
Furthermore, SMBs that employ marketing automation technology are 55 percent more likely to measure campaign payback, 40 percent more likely to measure social media engagement and 100 percent more likely to measure lead funnel conversion ratios. Forrester attributes these results to a generally tighter marketing management process among SMBs with marketing automation.
Five Steps to SMB Marketing Success
Based on report results, Forrester offers the following five steps to success for SMB marketers:
- Don’t Reactively Cut the Marketing Budget -- Top performers show that increasing marketing spending in a tough economy promotes better-than-expected revenue growth.
- Take Lead Generation as Seriously as Management -- SMB marketers' need for improvement at the top of the sales funnel demonstrates that generating new leads is just as critical to creating and growing revenue as managing and converting existing leads.
- Use Digital Marketing Techniques -- SMBs need to move away from familiar, hard-to-scale marketing techniques such as in-person networking and embrace modern digital marketing techniques such as email and social to remain competitive with larger enterprises.
- Get Serious about Social Marketing -- SMBs need to recognize that true “social marketing” means engaging consumers via social channels and not simply creating a brand page on a social network.
- Complement CRM with Marketing Automation -- Automating marketing along with CRM enhances the effectiveness of both activities and improves execution of the entire “lead to revenue” process.