Report: Solid Opportunity to Sell Marketing and Data Management Services to Local Merchants

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As local merchants increasingly shift their marketing spending to digital tactics, they’re becoming more sophisticated in how they manage those programs. Street Fight’s latest analysis of its local small business survey shows a much higher adoption rate of digital dashboards and the like compared with previous research, and it’s not just driven by the big spenders.

To help suppliers better understand and meet the needs of local merchants, Street Fight in February conducted an online survey of owners and decision-makers at over 25o small and medium-sized businesses (fewer than 50 employees but with at least one physical location). Since the last time Street Fight surveyed this type of company in 2014-15, we’ve observed an increased movement towards digital tactics that continues to be lead by social media and email marketing. 

This year, we also focused in on local merchants that spend $25,000 or more yearly on marketing of all types. These big spenders — comprising nearly 30% of local merchants — are the best targets for new marketing products and services, as they’re the most likely to increase spending across a variety of marketing categories and they’re the earlier adopters of new technologies. However, they’re not the only game in town. Our survey showed evidence of momentum spending at all budget sizes. That is, the more a company spent, the more likely it was to increase spending, even if starting from a relatively small base.

Tactics these local merchants found most effective, e.g., social and email, will see more businesses boosting their budgets for them. But even areas where local merchants said they needed help, such as search marketing of all types, and digital display advertising, should see more spending this year.

At the same time, local merchants are getting smarter about how they measure marketing effectiveness. While the plurality ask customers directly, and just under 20% don’t try to monitor where business is coming from, the use of site analytics has doubled, and promotional codes and call-tracking have more than tripled in the last two years. 

As shown above, nearly half of local merchants use social media management tools, a figure that’s up nearly 15 percentage points versus our previous survey, when it was also the top-ranked tool. More striking, over a third of survey respondents said they used a digital dashboard, which is more than twice as many as before. Other techniques show 20% penetration or better, but these figures are boosted by the big spenders. They’re three or four times more likely to use things like marketing automation, listings management, or third-party site analytics than those with smaller marketing budgets. Still, fewer than half use those services, so there’s lots of opportunity to sell them to the bigger guys, and, in time, to the smaller spenders.

The survey tells a similar story on customer information tools. Local merchants regardless of budget size use spreadsheets and paper about equally. But the big spenders are three times more likely to use a real CRM platform, systems that integrate point of sales systems with marketing, or third-party data on purchasing.

Our analysis suggests there’s a solid opportunity for suppliers and agencies to assist local merchants with their marketing ROI analysis through dashboards that bundle third-party data that they can compare with their own customer info. That data will likely be stored and managed in rudimentary databases, to use the term “database” loosely. So that means either a lot of handholding or simplified data absorption techniques.

These dashboards should help coach the local business what matters and what to do about it to earn their full engagement. That also requires a complex sales and training process, or easy-to-use templates and mocked-up processes adaptable to a variety of industries. Neither approach is easy, but the installed base of tools, while growing, is still under-populated, even at businesses with larger budgets.

David Card is Street Fight’s director of research.

Click here for more on the Street Fight Insights’ The Local Merchant Report 2017.