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Nov 09, 2000

Analyst Stuart Feil Reveals Four Key Trends in Marketing to Small Businesses Online

SUMMARY: No summary available.
We took the opportunity recently to chat with Stuart Feil, senior editorial director of Bredin Business Information (BBI), about the current trends in marketing to small biz.

BBI tracks the business to small business market, looking for websites that are doing the most successful job of communicating to the small business community. BBI also publishes The Bredin Report, a free newsletter thatís jam-packed with good information (If you donít have a subscription, get one!) Looking ahead, BBI will be publishing Bredin Insights, a series of reports on the top B2SB websites and trends, which will be out early next year. Those should be fascinating reading. And now for Stuartís insights about marketing trends:

Q: What are the trends that you see in terms of companies marketing to small business?

Feil: We are beginning to see that some of the established brands, which have previously been taking a wait-and-see approach to the market, are now going hard after the small business customer. Weíve seen some powerful marketing from these established brands. These companies are getting the blessing of their senior management to really go ahead and pursue this market. They are seeing whatís working and whatís not working, taking those lessons and moving ahead.

One of the things that is proving difficult for a lot of the newer small business marketers is establishing a brand identity to the small business customer. For a while, we were seeing two to three new ventures every week or so, all targeting the small business environment. Now, they are finding out it costs a lot of money to actually get a brand identity.

Established marketers Ė the ones with a significant offline brand presence -- are stepping up a little bit more. They are saying, ďWe already have small business customers and we know where these customers are. What can we do now to extend our brand and serve these customers online?Ē

Q: When you think about these established brands, are you thinking along the lines of a Staples, a FedEx?

Feil: Yes, those are some names. By established brands, weíre talking about companies that have established themselves in the offline sphere, like banks, financial services companies, technology companies.

Another of the things we are seeing is the concept of ingredient marketing. Rather than position itself as a brand name to the small business customer, the companyís business model calls for it to be an ingredient to a larger brand.

An example might be Rivio, which was formerly known as Biztro. In Rivioís case, itís not looking very hard to get people to come to because itís not a portal play. Rather what Rivio is looking to do is to use established brands to reach the small business customer. Rivio has struck alliances with Bank of America and Fleet. There you have two financial services companies with significant small business practices. Not only do they have the brand name, but they have regular communications with the small business customer. Rivio doesnít have to spend its budget on building that brand name. It is able to leverage the strengths of the financial services companies. So, we are starting to see a lot of these new ventures pursuing an ingredient strategy.

We are also seeing some of the established brands doing some new things. We just saw Office Depot revamp its website, adding more services. Itís similar to what Staples is doing. Again, you are seeing a powerful marketer extending a brand to areas where the brand name is a trusted name to small businesses.

Another example is Microsoft and bCentral and the subscription-based services being added there. Itís another established, powerful brand coming out with a suite of
offerings directly.

Q: Content is so important to a website. How are companies using content to reach small business?

Feil: One of the things that we like are sites that are creating tools that are designed to help a small business determine its needs and what it needs to buy. Those sites are beginning to take advantage of the interactivity online. Something based around a small business need tends to be very successful. Thatís the way to go in terms of content.

Q: What do you think about TV? Banners?

Feil: We are seeing people use all of them. We track a lot of the ad campaigns. We are seeing a lot of print ads and some broadcast, radio and TV. AllBusiness, Onvia, -- certainly they are going in that area. I wonder whether these are successful outreach campaigns or whether itís also to build legitimacy. With a lot of start-ups, itís a matter of doing both.

Q: What makes a successful campaign?

Feil: Those that are going to be successful are those that address a small business need. Itís obviously not easy to get your hands around the entire small business community. So itís meeting the need of whoeverís out there that you are trying to reach.

Thereís a lot of advertising going on right now around small business. The other night I saw Chase and Fleet with ads on TV targeted to small business. American Express, too.

Q: A lot of people say that small businesses are slow to get online. Do you think so?

Feil: I just saw a statistic that said 82% of small businesses are online. Are they slow to be online? I donít think so. Are they moving their business processes online as opposed to just doing business research and email? I think thatís the goal. I donít think they are going there as quickly as some people may have anticipated, but I donít know if those were logical anticipations.

Small businesses are conservative by nature when it comes to change. They want to let someone else be the tester. For the most part, small businesses are not early adopters. There are a lot of offerings out there right now that are just looking to get some sort of an anchor online. They understand that they have to be there right now even though there might not be the customer base. So that when the customer base really does get there, these companies have a good toehold. This applies to Internet business solution or application companies. The enormous market might not be there now for these services. But you need to be there when the market catches up.

Q: Many companies offer something for free online Ė a book, a newsletter, the capability to build a website. Does that work?

Feil: The free website certainly makes sense for a lot of brands targeting small business. If you want to sell to small businesses online, you have to have an Internet enabled, Internet friendly customer. So it makes sense to give away a free website, because itís more likely that small business will see the compelling benefit of the Internet. They begin to understand how using the Internet can be a strategic benefit to the business as opposed to a necessary expense.

Q: Do you have any advice for companies who are marketing to small business?

Feil: Have a solid understand of your customer, of your market, of who you are trying to reach. A lot of marketers, even though they proclaim it, still donít have a thorough understanding of the small business environment, of what a small business owner is looking for from a supplier.

Another thing is to look at whatís been done before, and learn from what hasnít worked online. We see a lot of companies trying to do a strategy that was done a year ago by someone else and failed. Youíve got to learn from the mistakes of others.

Q: Do companies need to do more market research?

Feil: Iíd say better market research rather than more. Part of it is defining a segment in the marketplace. The home-based business is not going to be the same as the five-person business and thatís not going to be the same as the 80-person business. And the five person 10-year-old business is very different from the five person 10-month-old business.

You also need to give small businesses the level of service that they really want as opposed to giving them lip service. The other thing that small businesses want is help. They want help that doesnít talk down to them.

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