While it is the rise and fall of big business that dominates the media, there are many signs that the next five years will be a period of great opportunity for small businesses.
A key driver of this opportunity is the reaction to the increasing globalisation of products and services and the pervasive feelings of homogenisation that are accompanying it. Big business is starting to realise it is suffering a crisis of trust and a reaction to this homogenisation. This crisis is pushing big business to muscle in on traditional small business territory with plays towards personalisation of products and service, and attempts to manage its relationships with customers as if we really were individuals.
But the good news is that as big businesses move into small business territory, small business operators can watch what big businesses are doing and borrow from it to add to our own success. And we can do this far more nimbly and quickly than a big business will ever be able to.
Small business can’t control mass-market designs or brands, but we are well-placed to do what big business can’t: Get inside the hearts and minds of our customers.
There are two catchphrases to watch over next five years – phrases that are driving big business approaches to marketing:
Authenticity
Loyalty
Authenticity is a counter to the loss of faith and trust in many big businesses. Long gone are the times when ‘What was good for Ford (Motor Company) was good for America’. High profile corporate scandals in the US, Australia and Europe have dented confidence that large companies can be trusted to do the right thing.
Authentic Marketing is a concept designed to address lack of trust by highlighting that the business has purpose as well as profit. Companies use the concept to project images as good corporate citizens, with roles in community support, or in employee wellbeing, or in reducing the environmental impact of their activities.
Loyalty is another counter to the loss of faith and trust in big business. Loyalty will be a key objective of big business marketing over the next five years. Loyalty means brand loyalty that makes ‘People love them because of what they (brands) are, not because of what they do’ in the words of Saatchi and Saatchi’s CEO. But loyalty also means a lot of number crunching, using information technology to analyse our purchasing patterns and using data to target marketing and give us incentives to stay loyal.
Two techniques are being used – one is data-driven and the other people-driven.
Data driven approaches gather information about customers – through mass ‘surveys’ about you and your buying patterns (like those often done by Australia Post) as well as through keeping databases of the patterns of purchases. The databases are readily seen on the internet – buy a song through iTunes, for example, and a window pops up that says ‘People who bought (your chosen song) also bought X, Y, Z’. This ‘recommendation’ is not based on any known characteristics about the purchaser, it is just based on mining the sales data to look for correlations.
People-driven approaches are more sophisticated, giving consumers the impression they can communicate with other people, just like them – rather than communicating with The Company. The internet is a great tool for connecting people who have never met. Call up a book on Amazon.com and you’ll find icons pop up with a about half a dozen peoples’ ‘favourite reading lists’. The book you called up is on the lists these people took the time to post on Amazon’s site, and so are a bunch of other books that they nominated. These lists tap into our inherent voyeurism as we can so easily click on the list provided by Fiona from Cincinatti and see what else she likes to read. We will probably never meet Fiona from Cincinatti, but her list is somehow intrinsically more interesting on a human-to-human level than a suggested purchase based solely on data mining.
Through tools like these and international hobby, friendship and relationship networks, the internet is enabling people to communicate directly with other like-minded souls – by passing the big business branding and hype to get ‘the real story’ from another human being.
The upside for small business is that a good referral can now take your name around the world in minutes. The downside is that a bad reputation can circulate just as far and just as fast.
Customer Relationship Management has a been a buzzword in big and medium business marketing in recent years. CRM uses information and data to track customers purchases and pre-empt advertising. Data-driven, the process builds on transactions rather than relationships and has been designed with big business applications in mind.
But CRM is also accessible for small business. One low-cost option enables real-time receipts to be issued through EFTPOS machines with personalised messages for your customers – including their accumulated ‘loyalty points’ and how close they are to their next special offer. Companies like Ebsquared, National POS Systems and Thompson Data Corporation offer these services in Australia.
Some automation of this data gathering makes it easy for a small business to tailor marketing to high value customers, and even to plug gaps. You might find, for example, that customers buying A and C are not as much into B as other customers, and you might offer them a special introduction. The challenge for small business is to gather and use the information without losing the personal touch.
In the next five years watch for the emergence of the concept of Customer Experience Management. CEM goes beyond data-driven CRM to enter the experiential world of the customer – who they are, what they want from you and how you enrich their life – to design business offerings to improve connections, relationships and outcomes.
In the Small Business Futures workshops participating businesses have the chance to take a critical look at their own systems for capturing and analysing information about customers. We use these activities to map out weaknesses and design cost-effective, tailored systems to overcome them.
Implications for small business
What do you know about your customers and how do you manage this information?
How do you predict their needs?
How can you get more of the customers you really want?