Marketing to Small Business: A Mix of BTB and BTC
Small businesses share aspects of consumers and businesses, but shouldn't be lumped in with either market, said Kohn, who spoke at the Direct Marketing Club of New York's monthly luncheon here at The Yale Club.
What qualifies as a small business can vary, so marketers need to determine what they mean by "small business" when planning their strategy, he said. The U.S. Small Business Administration considers any company with fewer than 500 employees a small business. But for marketing purposes Pitney Bowes' definition includes only outfits with fewer than 20.
One can classify small businesses by products and behavior as well, Kohn said. Pitney Bowes also includes any customer that rents low-end postage meters in the small-business classification.
Even by Pitney Bowes' narrower definition, small businesses are a huge market, Kohn said. Companies with fewer than 20 employees include 23 million U.S. businesses with 38 million employees and $4 trillion in revenue.
Because small businesses often are run by one person, it's tempting to think of them as consumers, Kohn said. It's better to think of them as "pro-sumers," professionals like lawyers and dentists.
They differ in key ways from consumers, he said. Instead of making spontaneous, emotional purchases based on wants, they make contemplative, rational buying decisions based on need.
Unlike big companies, small businesses usually lack a procurement officer, Kohn said. Determining who makes buying decisions can be difficult, as it might be the owner, or the owner's spouse, kids or a manager.
"The key here is, you have to figure that into your marketing," he said.
Small businesses have "life stages" that are predictable and affect their needs, Kohn said. From the time the business starts to when the owner sells, shuts down or retires, marketers should be aware of where the small business is in its life cycle and market accordingly.
Also remember that small-business owners are busy, Kohn said. Marketers should respect their schedules and let them buy at the time and place of their choosing.
"You've got to make it easy," he said. "They've got other things to do."
After a small-business prospect becomes a customer, follow-up and after-care are crucial, Kohn said. The small-business market is much smaller than the consumer market, so customer loyalty and retention are key.
"Very often, direct marketing is about getting in there, getting someone to respond and getting out," he said. "The small-business marketing process is not the same."
Scott Hovanyetz covers telemarketing, production and printing and direct response TV marketing for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters