Plenty of small business marketing guides exist… covering strategies, ideas, and “best practices.”
Few, however, are based on original research with both small business owners and their customers to determine—by the numbers—what works and what doesn’t.
That’s why, in conjunction with LinkedIn, we surveyed 3,671 owners and customers to find out.
What follows is perhaps the most thorough and up-to-date examination of the budgets, marketing channels, and consumer preferences to guide your small business into profitable growth:
- What is a small business marketing strategy?
- Marketing budgets, goals, and results: Benchmarks
- Types of marketing channels and what customers want
- Creating your strategy: Three tips through the complexity 💡
- Small business marketing report: 2019-2020 (Download)
At risk of spoiling the surprise, it’s packed with good news: chiefly, of customers who show preference, more want to buy from small businesses than large companies.
Why? Because they want to support local employers and because SMBs provide better customer service as well as higher quality products and services.
Naturally, it’s not all good news: many owners still struggle to set goals, measure return on investment (ROI), and align their strategies with what customers really want.
But, before we get into the data and three big takeaways, let’s define some of the key terms that will guide us.
What is a small business marketing strategy?
Whether you’re starting a business starting or already running multiple campaigns across multiple channels, marketing can be a confusing and overwhelming maze.
Part of that confusion lies in three terms that owners and consultants use almost interchangeably. Especially when it comes to digital or online strategies:
Separating these approaches with clear definitions isn’t an exercise in wordplay. It’s the primary way we bring clarity and purpose to an otherwise murky world.
Marketing is the broadest term and refers to your overall strategy to raise awareness, generate demand, or drive sales. As such, it governs the other two categories as well as communications tactics, like PR.
Developing a profitable marketing strategy is best done within an overarching business plan. That way, your strategy is intimately connected to your business’ goals and growth.
Small business advertising, in contrast, is a subset of marketing. Here you develop and pay for persuasive messages—often called “direct response”—with the intention of driving customers to purchase your product or service.
Lastly, promotions are a subset of advertising. These are specific tactics designed to “to help you close a deal once you’ve got a customer’s attention.”
Common promotional tactics include offers like free products, free samples, special pricing, financing deals, and free shipping:
Now that we’ve got the lay of the land, let’s dig into the data…
Marketing budgets, goals, and results
“How much should I spend on marketing?” is easily the first question new business owners ask. And for existing businesses, it’s just as pressing.
According to the survey, small businesses typically spend 6-10% of their revenue on marketing.
To bring a bit more clarity to those stats, the majority (57%) spend between 1%-10% of gross annual revenue. Between 11%-20%, the number drops to 25% on marketing. And from 21% and beyond: 11%.
Despite this investment, less than a third of small businesses measure the impact of their marketing. A similar percentage (32.8%) say they cannot track how effective their ads are.
Of the ten channels included in the survey, only four received a majority “yes” response to the question: “Are you able to calculate the ROI (return on investment) for each of the following?”
Not surprisingly, the ability to measure ROI correlates with the top three areas of marketing small businesses want to invest in more heavily in the future:
- Word-of-mouth marketing
- Paid social media advertising
- Search advertising (e.g. Google ads)
What about their current marketing mix?
Types of marketing channels and what customers (really) want
When asked to rank the “most valuable” marketing channels, three clear winners emerge:
Digging a bit deeper into the tactics used on those channels, we see a reiteration of WoM in two forms: reviews and social proof.
For customers, while 32% say reviews “significantly” influence buying decisions and another 57% say “somewhat,” when asked simply to select among all the various options… quality and cost reign supreme.
Note: “Social media, political stance, and ‘what the company stands for’” have been combined from three separate choices in the study for ease of representation
Even more telling are the factors influencing the purchase of new products or services.
When buying something for the first time, the most intimate form of WoM—“Recommendation from a friend”—holds pride of place, followed by special offers, Google search, and then (only after a steep decline) any type of ad, social post, or content:
Despite the rise and attention of e-commerce, most shoppers still prefer to spend their money in-person. In fact, “making online purchases” was a distant third to in-person purchases and split purchases:
Still, don’t let those spending habits fool you. Particularly when it comes to the future of your business. 42% of consumers reported buying “more” online now than they did one year ago, and only 18% reported buying “less.”
Why? In a word: easy. In three words: easy, fast, and free. So, what does all that mean for small businesses?
Creating your strategy: Three tips to guide you through the complexity
With all that data before you—and more waiting within the full report—knowing how to take action can feel overwhelming.
That’s why we want to end with three practical applications to inform and shape your strategy.
1. Define your goals and measure them
If you already have a goal-setting system, wonderful. If not, then OKRs (objectives and key results) should be your go-to.
Objectives are broad descriptions of your overarching goals. They should be qualitative, short, and inspirational. Key results, in contrast, are the deliverables, metrics, and KPIs (key performance indicators) you’ll use to track and measure objectives.
For marketing, start by identifying one-to-three objectives. Connect each to a specific stage of your sales funnel and align it with a marketing model known as AIDA: awareness, interest, desire, and action…
- Top of the funnel (ToFu)—Increase awareness
- Middle of the funnel (MoFu)—Generate interest and desire
- Bottom of the funnel (BoFu)—Drive action via sales or purchases
“Getting clear about the goals your business was created to achieve should act as a guiding light,” says Ally Simms, a Growth Guide at Common Thread Collective. “But even the brightest light won’t illuminate your path without equally clear metrics.
“If you use AIDA to define key results, here’s how to tie each stage directly to measurable results.
- Attention: Three-second video plays divided by impressions equals the percentage of people that stopped scrolling; 25% is a strong benchmark
- Interest: Video average play times above three seconds are a great indicator of whether or not consumers are genuinely attracted to your content
- Desire: Outbound click-through rate (CTR) above 1% mean the ad was interesting enough to get someone to take the first step toward action
- Action: Finally, for sales, it’s all about cost per purchase and purchases themselves—return on ad spend (ROAS)
That might sound overly detailed, but—as a growing business—overly detailed doesn’t exist. Plus, once you know the metrics that matter, you can set-up your dashboards to show you exactly what you want to see.
2. Invest in organic and then explore paid
Given that online ads were only the fourth most influential factor in buying decisions… don’t make the mistake of thinking that marketing equals advertising.
Instead, pride of place ought to be given to organic content: namely, (1) collecting social proof from existing customers—to create a repository of reviews and testimonials that you can use throughout your marketing—and (2) creating either written or video content that ranks via search engines and can be shared on social.
Of course, organic doesn’t mean free.
If you’re a service business with a small client pool, you may be able to collect social proof one-on-one with your best customers. Ask pointed questions:
- What problem were you facing when we began working together?
- Why did our solution help where others may have failed you in the past?
- How would you quantify our success together? Are there specific numbers?
If you’re a product business, picking an automated customer-review platform that integrates with your (1) regular email provider and (2) search-engine reviews—like Google Business—is crucial.
On the content front, regular beats exceptional. As with much else, this is good news for small businesses. Whether you prefer writing or making multimedia assets, pick whatever form of content fits you best and commit to a consistent schedule over time.
“Original content is an incredibly powerful vehicle,” says Goldie Chan, founder at Warm Robots. “In under two years, I was able to garner millions of views based solely off of daily video content primarily on LinkedIn. That led to a significant increase in warm customer leads.
“Written content can be equally powerful—one optimized article ranking on the front page of Google or any other search engines can send your brand hundreds of thousands of potential customers.”
3. Lean into the advantages of ‘small’
Going back to where we started, among those who show preference, customers want to buy from small over big. What does that mean for your marketing?
Embrace your size. Never try to hide it.
When it comes to buying decisions, we know that quality trumps all other considerations. We also know that customers choose small businesses because of better customer service and that word of mouth is a powerful influencer.
Keep these advantages at the forefront of your marketing efforts. Treat them like a must-follow checklist in everything you create, post, and promote:
☐ Quality of product or service
☐ Better customer service
☐ Word of mouth
The same small-over-big principle applies to your paid advertising, and it’s one of the reasons LinkedIn Advertising can be such a perfect fit for small businesses.
“LinkedIn campaigns typically appear more costly than Facebook and other self-service ad platforms,” notes AJ Wilcox, founder of B2Linked. “However, when you look at the quality of the leads it drives, it’s unmatched, and the higher costs usually become a non-issue.”
“What’s so helpful about LinkedIn is the ability to only target specific roles at very specific businesses. Filtering your ‘audience’ to show ads only to companies with 2-10 and 11-50 employees (as illustrated in the two screenshots below) dramatically reduces the audience size to just those businesses who would be a perfect fit for your product or service. You can narrow down even more based on things like job title, department, and seniority.
“Big companies can definitely outspend you, but they can’t move with the agility that you can when you’re small. You can also say things that their three rounds of legal review wouldn’t allow them to, so use that opportunity to test rapidly to find out what works optimally!”
Small Business Marketing Report: 2019-2020 (Download)
Lastly, don’t forget to grab the full report with all the above data, more insights, and even more takeaways.