Report: Matching Up With Local Merchants’ Marketing Objectives

Street Fight’s analysis of local merchant surveys show that SMBs are spending more money on digital marketing — particularly social media and email — because they find those channels most effective. However, based on their self-professed marketing and advertising objectives, there appears to be some missing links between new customer acquisition and their favorite tactics.

Earlier this year, Street Fight 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 a continued shift away from traditional media to digital marketing tactics and a growing sophistication in how they use them. 

We also saw this year, as detailed in Street Fight’s 2017 Local Merchant Report, a pattern of spending momentum, i.e., the more a local merchant spent on marketing, the more likely he was to say he would increase his budget. As that pattern held true regardless of budget, it revealed that for a supplier it’s worthwhile to get in early and grow along with the customer. Nevertheless, the best prospective customers – accounting for about 30% of the survey respondents – said they would spend more than $25,000 on marketing and advertising across digital and traditional channels in 2017. They’re increasing the digital mix of their spending significantly and twice as many said they would increase any of the six digital tactics we surveyed. They use a broader variety of channels, media, and management services.

Advertising and marketing suppliers will want to align their sales pitches with their customers most important objectives. As shown below, there’s some nuance to understanding the differences between local merchants with larger or smaller budgets, but they’re united in their need for new customers.

Marketing suppliers should note that new customer acquisition is the top priority for both types of local merchant, but that brand awareness is deemed very important by those with bigger budgets. Most local SMBs rate retention and customer service as more important. It’s not that the bigger budgets don’t value those objectives; it’s that they will appreciate branding services more, and probably try to connect it to customer acquisition more tightly.

We also asked about which marketing tactics local merchants found most effective. Over 60% of local merchants put social media in their top 3 list of most effective marketing tactics, and over 40% listed email. Those two topped the list by far, with tactics like direct mail, SEO, and local broadcast scoring twenty percentage points lower. Email is generally a retention or service medium, while social media may be the awareness vehicle of choice, as shown below.

Twice as many local merchants overall (40%) are buying Facebook ads as were doing so a couple of years ago. And they’re smarter about their expectations, as relatively few are using social media for transactions, service, or loyalty. I concede there might be a slight disconnect between their desire for new customers and their appreciation of social media’s effectiveness. Since fewer than half are buying Facebook ads, presumably they’re relying on existing customers actively sharing or recommending their products and services to their friends. While this has always been the ultimate promise of social media, it’s not one that has been delivered, at least in a consistent, measurable fashion. Most marketers have just used it as a vehicle for display advertising or as a replacement for their own website.

Most of our survey respondents said they had websites – likely many  consider their Facebook company page as a site. When we asked what they used it for, the top responses were to post photos (53%), product info (51%), and business location info (46%). Besides the fact that half weren’t posting product or location info, I’ll also point out that fewer than one-quarter were hosting reviews or ratings. 

Our SMB survey also asked local merchants where where they need help, with the result that search engine optimization, paid search marketing, reputation monitoring/review generation coming out on top. What does this collection of responses mean for suppliers of local marketing and advertising tech and services? Here are a few takeaways:

• With new customer acquisition continuing as their top priority, local merchants may be over reliant on social media, or not optimizing it for that task. Those with bigger budgets appreciate brand awareness more than their smaller counterparts, and are likely open to social media (and other media campaigns) that can demonstrate a path from awareness to warm or hot prospect.
• They likely regard email as a more effective tool for retention and service than for new customer acquisition. Suppliers and agencies should help local merchants pass along email content to their friends via affinity programs, and use email to encourage review generation on social pages, their own websites, and third party review sites.
• There’s a missing link between search, social media, and company sites. Since Facebook search is still pretty useless, social media advertising needs to be more highly tuned to driving site traffic via calls to action, product reviews, and viral pass-along. 

None of these takeaways are a silver bullet, but it can’t hurt to align your products and pitches to customer objectives, and to solving their top challenges. 

David Card is Street Fight’s director of research.

Click here for more on the Street Fight Insights report, Strategies for Selling Marketing & Technology Services: Local Merchant 2017.