Friday, September 27, 2013

Small Businesses Lose Big - Or Do They?

Why do you frequent small businesses? Why do you shop local?

Last month, the team at Software Advice published the findings of a six-month long research study, The Great Retail Experience Race: Local vs. National, in an article titled, "Small Businesses Lose Big to the Big Guys When it Comes to Presenting Offers." They compared five major national retail chains to five local shops on three experience metrics:

1. % Upsell/cross-sell
2. % Personal/emotional connection made
3. Time to make personal/emotional connection

The infographic to the left summarizes their findings. One of the conclusions noted:

Ironically, the local stores actually had more opportunities during the race to upsell customers because their employees talked to our site visitors more often (the second column in the graphic shows the percent of times where a personal, emotional connection was made with the customer). The small businesses simply didn’t take advantage of these opportunities to upsell at the same rate as the national stores.

This got me thinking. While the Software Advice team takes the retailers' point of view and provides advice for the small retailers to help them grow their businesses, I'm going to first consider this from the customer point of view.

Back to my original questions: Why do you frequent small businesses? Why do you shop local?

Is it because you know these businesses are going to push their marketing tactics and daily deals on you?

Or is it because they are close and convenient, and more importantly, you truly do have a personal and emotional connection? Is it because the shop owner is your neighbor or your uncle?

I think we shop small businesses and shop local for different reasons than we shop the big box/big brand retailers. Perhaps there are some things that the national retailers can learn from local retailers' customers:

We are your neighbors, family, and friends. Treat us that way. Know that we are the reason you are in business.

We don't want to be upsold or cross-sold every time we shop. Sometimes, I just want a cup of coffee.

And from the local retailers to the national brands:

We are building our businesses, one brick, one customer at time. In order to do that, we value each and every individual that walks into our stores.

We're in it for the long haul. If we constantly upsell and cross-sell, our customers will tire of that. We want them to come back and shop without fear of being sold to every time. If we can help them, yes, we will certainly do that.

We have to work a little harder. We don't have the marketing budget of the national brands, which means we take a different approach. We greet customers as they enter our stores. We engage in friendly chatter. We put our hearts and souls into our businesses. We focus on the experience, not the discounts.

As a result, we are building relationships. We are having conversations, learning about our customers, and helping them buy the right product to meet their needs. We are taking names, remembering faces, and looking forward to the day we see our customers again. This is our community.

We are unique. We can offer different products, change our menus, and create unique experiences for our customers without having to go through a corporate review process.

We know what "ownership" means. National brands can only hope that their employees are as committed to their businesses as we are to ours.

We stand on our reputation. If we come across as pushy or too focused on making a bigger sale, word gets out. All we have is experiences. We have one or two locations; big box retailers have 700 (or more). If a customer has a bad experience in one of their stores, they could potentially go to another location. We don't have that luxury.

I'd like to see this study done in other cities and with more representation. Perhaps Austin, and its Keep Austin Weird mantra and community, also adds to the lower upsell/cross-sell numbers and supports my tips to the national brands.

Stop selling. Start helping. -Zig Ziglar


  1. Annette,

    The other day I stopped for breakfast at a railway station.

    I ordered a coffee, fresh fruit and some yogurt. I was feeling healthy

    When I paid for them the girl behind the counter instinctively asked "would you like a cake with that?"

    Of course I didn't need a cake, being offered one was unhelpful (particularly to somebody of my low self control)

    The problem I have with up sell / cross sell is that they work on average.

    And because they work on average, they are pumped out without thinking.


    1. You're right - often it does work.

      I guess we should then tell customers like you to exercise better self control. ;-)

      Annette :-)

  2. I am maybe unaverage customer but I like I to go in local coffee shop where everybody knows me and in same time I don't like to go shopping in neighbourhood store where store owner and employees knows me good. That I find pushy sometimes, and I want just to get stuff I need, pay and get out. I coffee shop or restaurant I want to spend some time so maybe that's why it's more convinient when all is familiar.

    1. Aleksander, I understand your conflict. I think you're not alone with that perspective.

      Annette :-)

  3. Hi Annette,
    I've heard many big businesses adopt a mantra of 'Think Global, Act Local' as a way of doing business.

    They understand the advantages of the local connection and the things that local businesses tend to be better at. However, localising their businesses can come at the expense of the economies of scale that they also want to deliver via their purchasing, systems, people and culture etc etc

    Few are able to square the circle.

    Perhaps the bigger businesses would do better if they were clearer where they can and are willing to compete and what it is going to take rather than just being average.


    1. Adrian, I agree... I've heard about companies who march to that mantra, but it is challenging, no doubt. It's not scalable and is quite expensive.

      But does that mean that they can't deliver "human" service, i.e., friendly, helpful, not pushy, etc.?

      Annette :-)

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