This morning Yodle released its “first annual” SMB sentiment survey. The sample consisted of 306 US small businesses, covering a range of industries. It contains many findings that echo other SMB surveys.
For example Yodle found that 52% of SMBs don’t have a website and 90% don’t have a mobile site. It also found that 56% of SMBs don’t do any measurement or tracking of their marketing to determine effectiveness. (The remainder track calls, emails and check-ins/Likes in that order.)
Only 4% said that they had a “vendor” that helps them track the efficacy of their marketing efforts.
The survey also found a relatively low monthly marketing spend: 61% of SMB respondents were spending less than $250 per month and nearly 80% spent less than $500 per month (or $6K per year). This is consistent with surveys I’ve done and other data in the market.
Once again Word of Mouth was seen as the most effective “channel” for new business acquisition. That was followed by more WoM (business referrals) and websites. Other forms of digital marketing were seen as largely ineffective.
Many of the responses above may be attributable to misperception or a lack of empirical data. Recall most of these SMBs didn’t track their marketing. Some of these perceptions of effectiveness may also be attributable to poor execution. Look at where SEO is (#14) on the list. If these businesses were “better at SEO” or used agencies that helped them rank they would undoubtedly see SEO as more effective.
None of this is “radical.” What’s pretty radical are findings that most SMBs are very happy and not working excessive hours. These findings fly in the face of the image of the SMB owner as time-starved and overwhelmed by the demands of running the business.
Forty-five percent of these business owners took at least three weeks of vacation per year. And most of them said they less than 60 hours per week. More than half said they worked 40 hours per week or less.
I spoke to Yodle Chief Product/Marketingn Officer Louis Gagnon about the findings yesterday. He said he was most surprised by the data immediately above. He also referred me to a University of Chicago analysis of other SMB studies that found the majority of business owners were motivated by lifestyle considerations (desire to be own boss) rather than a desire to “get rich”:
We find that most small businesses have little desire to grow big or to innovate in any observable way. We show that such behavior is consistent with the industry characteristics of the majority of small businesses, which are concentrated among skilled craftsmen, lawyers, real estate agents, doctors, small shopkeepers, and restaurateurs. Lastly, we show non pecuniary benefits (being one’s own boss, having flexibility of hours, etc.) play a first-order role in the business formation decision.
The study found that only a minority of business owners wanted to grow or expected to grow.
Now here’s the radical part: we talk about X million SMBs (10, 15, 20?) but those numbers may not be relevant. The “addressable market” may only be those SMBs who express a desire to grow, which is certainly fewer than 10 million — and it may only be a few million, a fraction of the total number of SMBs.
The other “lifestyle” SMBs are not necessarily good prospects for local marketing vendors and tool providers because they just don’t care about growth. Why would I buy PPC advertising if I don’t care about increasing sales beyond a certain point.
The reason that 56% of SMBs in the Yodle survey don’t track their marketing spend may be that it’s not important to them. As long as they’re making their “nut” they’re OK. Anything more may be unnecessary. In fact, growth may represent a potential loss of the lifestyle benefits that motivated them in the first place.
What do you think about this conclusion and its implications for the larger local and SMB marketplace?