Higher Growth Businesses Spend More on Marketing and Shift Marketing Online

Earlier this year we partnered with research firm Hurwitz & Associates on an online survey of small businesses with 1 to 20 employees. (You may remember taking the survey here on this site, back in July.)

As one of the survey partners we were able to get access to the survey results — and I thought you might find some of the key points to be interesting.  The subject of the survey was the recession and online marketing efforts by small businesses.  Here are three key points from the survey:

First of all, let’s look at the revenue levels by size of small business — it’s an eye-opening benchmark for your business.  The median revenue by employee size is $50,000 for one employee.  (Remember, median means half were above and half below.)  If you are wondering how small businesses compare with large corporations, I know from my corporate days that the revenue-per-employee target in large corporations is often $100,000 to $200,000 per employee — or higher — depending on the industry.  Here is the chart from the survey:hurwitz-employee-revenues

Second key point: 46% of those of you surveyed said you expected revenue growth even during the recession.  Those of you expecting to grow revenues are much more likely to invest in marketing – 65% are spending or planning to spend more. I find it encouraging that even though expense budgets may be tight, still — one area that growing small businesses are spending on is marketing. You recognize that marketing = opportunity to grow.

Third key point: how are growing small businesses doing their marketing?  Answer: many of you are shifting marketing online to take advantage of new business opportunities — from traditional media to Web-based tools such as social media (blogs, social networking, online communities/forums) and email marketing.  Now, for many of you it’s a no-brainer that marketing dollars have shifted online.  Here’s the interesting part — from the survey you get to see exactly what others are doing.  Social media, email newsletters and search engine marketing are the top 3 approaches in that order, as this chart shows:

hurwitz-marketing“The survey clearly reveals that the use of low-cost Web-based marketing tools is playing a strategic role in helping businesses succeed,” said Laurie McCabe, partner, Hurwitz & Associates. “Making a few changes to incorporate more online tools into the marketing mix seems to be a key ingredient to small business success.”

The survey also revealed that small businesses anticipating growth are more likely to be using or planning to use email marketing.

  • 82 percent of small businesses that currently use/plan to use email marketing expect revenue growth
  • 18 percent of small businesses that do not use/have no plans to use email marketing expect revenue growth

“Email marketing is one of the best ways for small businesses to attract and retain customers while also growing revenue, which were two of the top business challenges identified by small businesses in the survey,” said Steve Adams, vice president of marketing for Protus, the provider of Campaigner.  “The survey also showed the growing importance of email marketing and other Web-based tools in driving business growth.”

Campaigner sponsored the Hurwitz survey and there were a number of questions in it about email marketing.  But I think one of the reasons that email newsletters stand out is that it’s a cost-effective technique for small businesses. Plus, a newsletter serves a number of purposes (among them:  develops customer loyalty, is a vehicle for communicating  sales promotions, and can be used hand-in-hand with social media such as blogs).  And with today’s tools, an email newsletter is relatively easy for a small business to pull off.

The entire survey results include much more than the flavor I gave in this article — so read the entire thing.

Download the full report: “Small Business Marketing Health Check”.

Get the latest headlines from Small Business Trends. Follow us on Google News.

More in: , 12 Comments ▼

Anita Campbell Anita Campbell is the Founder, CEO and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses.

12 Reactions
  1. It’s challenging to get insight into small business so thanks to Laurie and the Hurwitz team for embarking on what is always a tough research project.

    This summary suggests that small businesses are gravitating toward venues that deliver reach and leverage without much cost.

    Some other services to explore that provide this leverage at low cost and are especially effective for local businesses include:
    – Yelp (http://www.yelp.com) – it’s an online review site that is fueled by customers who can comment on that particular business or service. Its roots are on restaurants and shopping, but it is rapidly adding great content in many other small business area.
    – Craigslist (http://www.craigslist.org) – the big online classified service or Kijji (http://www.kijiji.com/) a newer service for online local classified ads. These services are so much more effective (and free) then running classified ads in newspapers
    – Press releases via PRWeb (http://www.prweb.com) – great way to post regular press releases and get online reach, branding and attention with nominal cost

    Thanks for posting the summary Anita!
    Cheers, Grant

  2. Very eye opening Anita. What’s interesting is that now social media marketing, or inbound marketing, has gotten into the forefront of the SMB markters’ mindset. Are we approaching a time now where it will be so hard to compete using these methods that SMBs will have to find something else? Also, did the survey look at what types of technology tools small businesses were using to keep track of growth?

  3. Small business owners are always trying to squeeze as much benefit as possible out of their budgets, so I’m not surprised at all by their propensity toward online marketing channels. Many of these areas have less competition and, with a little training, even a small business can compete with the big dogs.

    @Grant – Great resource sites.

  4. Anita,

    Is this the first time that research firm Hurwitz & Associates is doing a survey on small businesses?

  5. I’d like to see that “Social Media” stat at the top broken down so we could see how many businesses are using YouTube or a similar service.

    It is amazing how many people you can connect with by using the power of video on the web. Videos become “shareable” advertising that can be passed on from your friends to their friends and so on.

    It is so easy and so affordable for a small business to look like a big deal by creating a TV-style commercial for the web.

    Nate Hanson
    Pilothouse Films

  6. The problem with services such as Craigslist, Yelp and others is that they are in fact local in nature, and small business needs to be national and many times international. Small business owners need to think in terms of reaching as many customers as possible and the internet allows us to have a world wide market. If a business makes something, then why not sell it everywhere.

  7. I would agree email marketing is one of thew most powerful tools a small business can do to help grow it’s customer base and revenues. There’s a ton of strategy that can be used with email marketing as well, that also help drive business strategy and direction based on how your users are interacting with your email campaigns. Email is powerful, very powerful, but it takes some proven email strategies to take full advantage of the powerful tool.

  8. Thanks for the information! This trends confirms how the internet is changing the way to do business.

  9. This is just normal development to direct more efforts to web marketing.

  10. Spending a high % of income on marketing is particularly true for online businesses, link building, social media marketing and all the usual SEO stuff drives traffic but costs loads also. But unless you have a really appealing and original idea that goes viral there is no alternative, and it also works!