The “small business market” is a vast and diverse place, though I and others often speak about it as if it were a monolith. Variations by industry, headcount, revenues, marketing budgets, years in business and desire for growth (or not) create nuances and differences that are often lost in the many discussions we have about “SMBs” generically.
Because of such differences, it’s important to take any single survey about SMB attitudes and behaviors with some caution. We have to look at directional trends over time and the totality of evidence to get a better sense of how SMBs are thinking and acting.
It’s also the case that survey respondents can misrepresent their level of sophistication or activities. Many SMBs say they are adopting or actively implementing some digital strategy or tactic (e.g., mobile) than actually are. These kinds of responses are often statements of intent or on the to-do list.
One generalization about the SMB market in the US that can be made with some confidence is that digital “churn” is still rampant. Privately many vendors of digital marketing services to the SMB market report stubbornly high non-renewal rates.
In many cases and for many companies these rates are north of 50% or 75% annually — meaning 75% of their advertiser base turns over on an annual basis. The LSA is preparing to do some benchmarking and industry wide analysis of churn to determine what might or might not qualify as “acceptable churn.” But for most service providers churn remains unacceptably high.
Despite this, one often sees SMB marketing surveys that reflect high satisfaction levels when it comes to digital media and marketing. The most recent example comes from SEO firm BrightLocal, which not long ago released SMB survey data showing high “internet marketing effectiveness” ratings.
In this survey most of the SMBs respondents “had just 0-3 employees (58%) [and] were spending less than $500 on marketing per month” (70%). While some respondents were spending much more money on digital marketing, the respondents generally, across vertical categories, rated internet marketing “effective” or “very effective.”
A broader survey that I wrote in 2013 (n=1,255 US SMBs) found similarly strong satisfaction with digital channels. Company websites, social media, even online display advertising saw satisfaction levels of 60% or more among SMB respondents.
The question arises: given these high digital satisfaction levels, why does churn remain such a persistent and widespread problem? One would expect satisfied SMBs to stay with vendors that are presumably delivering the results they’re seeing.
It’s tough to reconcile these high satisfaction numbers with the churn figures in the market. The 2013 survey I conducted revealed that low pricing was the single most important variable to SMBs when it comes to selecting a marketing services vendor. This finding might hold some insight into churn: price sensitivity and aggressive competition among vendors in some cases might in part be luring SMBs to switch providers.
But that’s not a sufficient or satisfying explanation. I know from all the empirical and anecdotal evidence that high expectations are a churn factor and ROI uncertainty is a factor, as well as cost. The dissatisfactions and demands of SMBs in the market that one hears about with regularity seem to directly fly in the face of these survey data arguing SMBs are fairly satisfied with their digital marketing programs.
It’s curious and I have no good explanation of the seeming paradox. What are your theories and thoughts?
At LSA 15 we’ll be devoting a good deal of time to discussing sales issues and SMB retention. On Monday April 20 in the afternoon we’ll be presenting a sales transformation workshop that will dive deeply into many of these issues and offer best practices recommendations and pragmatic advice regarding churn and SMB retention.