Naumi Haque (pictured) of Toronto, Ontario, gets inside the heads of small business owners across North America.
That’s what he and his team do for a living at CEB, where he is a Research Director in CEB’s small business program.
CEB is a best practice insight and technology company serving over 10,000 client companies. Haque’s team conducts research and advises clients about how to market to small business owners.
Sometimes what Haque’s team learns flies in the face of conventional wisdom.
Take, for instance, the perception that small business owners always go for the lowest priced products and services.
“Not true,” Haque states flatly.
“Small business owners are not cheap,” he adds.
“They just have smaller budgets than bigger companies. In general, they are going to buy the best thing they can afford. If they can’t afford it, then they just can’t afford it, but it’s not because they want to buy the cheapest thing. They want value. They shop carefully. They want something that’s going to endure.”
In fact, when deciding which supplier to go with, price tends to account for only a quarter of the decision, as the accompanying slide shows.
One of the reasons business owners seek value and want their purchases to endure is that owners tend to be inert, says Haque.
If you are a small business owner reading this, and you cringe at hearing yourself and your peers being described as inert — have no fear.
Haque doesn’t mean to be unflattering.
As a researcher, he is using scientific research terms.
In this context he simply means that small business owners tend not to switch vendors.
After all, switching to a new product or service takes time — and time is something most small business owners have little of. Small business owners wear many hats. We don’t have big staffs. Researching new vendors steals precious hours we could be spending elsewhere in our businesses or with our families.
“Small business owners don’t want to revisit decisions. They don’t want to have to think about it again. They want to buy once. They want it to last. They understand the lifetime value of products,” says Haque.
He adds that ‘value’ rather than ‘lowest price’ is a particularly strong driver in the Baby Boomer generation of small business owners. “If you look at Baby Boomers versus younger owners, Baby Boomers are even more inclined to buy the best they can afford. A lot of them tend to come from corporate careers, and they understand the lifetime value concept. So they focus more on long-term value versus something that’s cheap that they could get right away.”
Who Really Influences Small Businesses?
Haque and his team are full of surprising insights.
Some of those insights were revealed at the recent 2015 Marketing to Small Business Summit, an annual event produced by CEB for its members. (The Summit is where we caught up with Haque for this interview.)
One eye-opening set of information was about who really wields influence in the world of small business.
That’s a complicated question, Haque points out, because, “Everybody defines influence differently.”
“As we were preparing for this year’s conference, we polled our members about what they wanted to learn. Every year we try to bring out different insights. When we asked about their biggest challenges, they kept saying, ‘We need a better influencer marketing strategy’,” said Haque.
“The words they all used were the same. But when we started to peel back the onion, we realized our members were all over the board.”
Some were tasked with running events and wanted to know who they should partner with.
“Others would tell us, ‘Well it’s really about social media. We want to know who those social media influencers are for small business, the Anita Campbells and Ramon Rays of the world. Who are those people that we should be focusing on?’,” adds Haque.
“Some define influence in terms of working with channel partners, such as brokers, attorneys, CPAs and IT resellers. For their influencer marketing strategy, they wanted to know how to get more business through channel partners,” notes Haque.
Still others interpret influence as driving referrals from existing customers.
“You have to read between the lines. When you do that, the sub-text you get from marketers is that ‘our traditional marketing isn’t working as well as it should and we need new avenues to get into our customers’ heads. We need to find new ways to be top of mind with our customers’,” he added.
3 Surprises About Influencer Marketing
Haque’s team’s research on influence revealed some surprises — three big ones, to be exact.
“The first thing that stood out was the degree to which other business owners influence their peers in purchase decisions. In general we already knew that business owners influence their peers. We’ve studied this before. But this year we took a much more rigorous approach. We looked at the magnitude of that influence relative to, say, channel partners or associations,” says Haque.
‘Another small business owner’ turned out to be the most influential group, when it comes to small business purchase decisions.
In fact, business peers turned out to be even more influential than the supplier’s own sales rep.
Here’s another surprise: advisors and channel partners such as IT consultants, accountants and attorneys turned out to be less influential on purchase decisions than commonly assumed.
Thats because, while those groups tend to be highly trusted, they often suggest two or three alternative vendors. They are trying to stay impartial. They’re not just recommending one vendor.
“If every time you talk to them they’re providing three recommendations, then they’re not really great brand advocates,” observes Haque.
Ivana Taylor, herself a small business owner who interacts with thousands of small business owners through her work with DIYMarketers.com, says the CEB research on influencers (see accompanying graphic) rings true.
“Whenever other business owners ask me about the products or services I use and recommend, it’s because they know that I’m dealing with all the same issues they deal with: time, money, sales and marketing. There is a sharing and contributing culture inside of the small business community. We know the other person is going through the same thing.“
“You are either ‘one of us’ or you’re not,” adds Taylor.
The third surprise that Haque pointed out had to do with social media. “At CEB we’ve always been a bit stand-offish about recommending social media, from a B-to-small-b marketing perspective. I’ve always told marketers that when it comes to social media, owners don’t want to interact with you. Eighty percent of the owners are on social media, but the vast majority use it to promote their own businesses. They don’t necessarily use it to interact with suppliers nor do they want to interact directly with suppliers,” said Haque.
“Before this year, we never really looked at that owner-to-owner conversation on social media. I was surprised to see really high numbers, higher than 30 percent of business owners who were saying, ‘Oh yeah, I post questions to other owners on social media.’ Similar percentages of owners reported saying, ‘Oh yeah, I replied to other owners in social media’,” adds Haque.
In fact, 29 percent of business owners said they responded to questions from complete strangers online. They do it out of a sincere desire to help a peer.
“What we found is there’s all this activity amongst influencers that we just didn’t have visibility into, because we’d always looked at it from a supplier lens not in an owner-to-owner lens.”
The upshot when it comes to social media, observes Haque, is that brands can’t control the social media conversation.
But large brands can find occasions to initiate and participate in conversations related to a topic or area they are focused on.
That way, the brand has a presence when there are conversations around its product category. The brand is being discussed — rather than being invisible in those conversations.
Another Surprise: Small Businesses Are Not Growth Oriented
“Most small business owners are not growth oriented,” Haque declares.
“That’s not surprising to me anymore, but it was surprising when I was new in this space. And it’s surprising to many of our clients to learn that,” he said.
Corporate executives often have a disconnect on this point because they themselves tend to be externally goal oriented, he says.
If corporate executives make assumptions based on their own values, they may misinterpret what drives business owners. And consequently they may miss the mark in their messages in marketing-to-small-business campaigns.
“Corporate executives tend to be driven by a need to achieve a specific goal. A lot of times that’s tied to their business goals of growth,” says Haque.
Small business owners, on the other hand, tend to be more motivated by internal satisfaction. According to CEB research:
- Only about 30 percent of small business owners are growth oriented.
- Another 10 percent are motivated by control. They have a need to be in charge.
- The remaining 60 percent or more are motivated by internal satisfaction and flexibility.
“The majority of business owners do things because they love doing them, not out of a need to grow. They do what they do because it makes them happier,” Haque adds.
“In fact, growth stresses a lot of small business owners out, because a business owner will look at growth as, ‘Now I have to do more. I have to work more. I have to hire more employees.’,” he observes.
A Non-Traditional Approach to Marketing Research
Haque’s eyes light up as he talks about the mission of CEB’s small business program.
“We’re not doing marketing research in a traditional sense. We are doing disagreement research.”
According to Haque, CEB drills down into research that disagrees with conventional wisdom. “We are looking for research that is disruptive and is going to change your mind. It’s exciting,” adds Haque.
Heather Harmon of Manta, one of CEB’s member clients, adds, “There’s nothing like CEB out there that we’ve found. At the recent Marketing to Small Business Summit, I asked other attendees whether they knew of anything similar. No one did.”
Even though Manta uses its millions of small business members to conduct its own surveys and research, she says CEB’s research is extremely valuable. “The CEB research is extremely helpful in providing new points of view and helping us bring our strategy into focus.”
One example of how CEB research is disruptive and changes strategies, involves getting small businesses to switch products.
According to Haque, “Our research at CEB shows that in any given year only 7 percent of small business owners switch vendors. You can’t sell on product features and expect large numbers of small businesses to switch.”
“If you’re selling a payroll product, you can’t focus on all the amazing things your product does. Instead, focus on addressing the pain. As a marketer, your job changes from convincing small business owners that your product is great, to emphasizing how your product relieves their pain.”
“Remember the inertia. Small business owners tend to operate under break-fix priorities. If the current method is working, they’re not even thinking about your product. Unless they think something is broken, they are not compelled to fix it,” adds Haque.
Marketing to Small Business – Rewarding
CEB, founded in 1999 and headquartered in Arlington, Virginia, is itself is a large company. It has a market cap of $3 billion, with 4,300 employees. CEB counts 90 percent of the Fortune 500 in its client roster. The small business program team is largely based in Toronto.
Clients pay an annual membership fee that entitles to them to get access to CEB research, as well as insights from client advisors.
CEB member clients traditionally have been very large corporations like FedEx, Citrix and Sage.
“Our sweet spot of members has been any large company that has a B2B division specifically focused on small business,” says Haque.
He says that advising CEB’s small business marketers is rewarding. There’s an element of supporting the underdog in it.
“The big money’s in consumer marketing. Small business marketing is frequently the forgotten team … the redheaded stepchild of marketing … in many corporations. These teams are passionate about small businesses, but often have small budgets and are forced to become entrepreneurial to achieve their objectives. So by helping them, I feel the CEB team is also helping small businesses.”
Image credits: Small Business Trends; CEB; Remix of Shutterstock Influence image
Great article Naumi any plans for CEB to expand into ME where 95% of businesses are Small Business ?