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2017 Small Business Marketing Report

An original research project from Drip, a proud bronze sponsor of National Small Business Week.

Are Today's Small Businesses Prepared to Succeed with Conversion Marketing?

Do you associate small business with rapid growth?

If not, there's evidence you should. According to the U.S. Small Business Administration, two out of three new jobs in the U.S. this year will be created by small businesses.

In honor of National Small Business Week 2017, the Drip team decided to investigate exactly how the nation's small businesses are creating that growth.

Are they just doing what they do best and hoping the money follows? Or are they taking strategic, measurable actions to ensure that they're able to grow their customer base and their business?

At Drip, it's been our conviction and our experience that the best way for small businesses to achieve rapid, sustainable growth is conversion marketing.

Conversion marketing isn't just designed to raise awareness and get your message out. It's marketing engineered to move people from one point to another—from strangers to prospective customers to known contacts to customers to advocates.

It's marketing you can track and measure, so you know where to increase your small business's (frequently limited) time and budget.

Conversion marketing is transformative. So we wondered: are America's small businesses using the tools of conversion marketing? If so, are they succeeding? If not, are they making gains with other tactics?

Building on the insights of our 2017 Entrepreneurship Report (launched last fall), we reached out to a panel of 1,011 self-identified small-business owners and managers across the U.S. using the Google Surveys platform. We received at least 1,003 responses for each question.

Read on to find out where today's small businesses are focusing their marketing efforts and where they have the most room to grow. We'll cover:

  • Marketing sophistication: Some small business owners are digital natives and reach for digital marketing tools first. Others find them intimidating or just don't see the need. But where do most stand today?
  • Marketing goals and challenges: We'll assess which parts of the conversion marketing journey give small business owners the most trouble.
  • Hidden barriers to success: Our survey data points at a couple of areas where small businesses may be undermining their chances of seeing positive marketing and business-growth results.
  • Marketing opportunities for small businesses: Finally, we'll make a few recommendations for the average small business marketer in 2017, based on the gaps and quick wins our survey has uncovered.

The Life of a Small Business Marketer, Circa 2017

Key Insight: Today's small business owners are hungry for marketing knowledge and inspiration—but also pressed for time.

Small business owners have a lot on their minds. When we asked entrepreneurs what inspired them to keep going with their business in our 2017 Entrepreneurship Report survey, the most popular answer was “building a better life for my family.”

When your family's future depends on your business's success, you're likely to take growth seriously. But where do small business owners turn when they need to enhance their marketing knowledge and get inspired with new directions?

What's your favorite way to get ideas to grow your business?

Graph showing the results of the preceeding question, with 'Talking to other business owners' as the top answer with 29.8%.
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Small business owners are about equally likely to turn to their peers and the internet when they're looking for inspiration. If you're a company or consultant serving the small-business market, take note: you'll want to reach out to this audience via both online media and through robust word-of-mouth marketing efforts.

When they turn to online resources, what kind of marketing information and vocabulary do small business owners expect to find there? As a marketing technology company, we're immersed in the language of conversion marketing at Drip. But it doesn't come naturally to every small business owner. We asked our panel whether the following common online marketing terms meant anything to them:

Which of the following terms would you be able to define?

Graph showing the results of the preceeding question, with 'landing page' as the top answer with 58%.
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A small majority are familiar with basic conversion marketing concepts (landing pages and conversion rates). But much of the vocabulary of modern digital marketing is just jargon to small business marketers, and 21.9% of respondents didn't recognize any of the terms on our list.

That's not surprising when you consider this: half of small business owners and managers do all their marketing in less than two hours a week.

About how many hours per week do you or your team spend on marketing?

Graph showing the results of the preceeding question, with 'Under 2 hours' as the top answer with 49.7%.
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And they're probably not getting much help. Leadpages' 2016 Small Business Marketing Report found that nearly half of small businesses were handling all their marketing alone.

These two statistics explain a great deal about the answers that follow. Small businesses must make smart decisions quickly if they're fitting all their marketing into two hours a week—there simply isn't time for long learning curves or extensive trial and error.

This finding also sets a high bar for anyone serving small business marketers. Easy setup, hands-on support, and done-for-you concepts will be crucial for marketing services and products that work for independent entrepreneurs.

The #1 Challenge: Converting Contacts, Leads & Visitors into Customers

Key Insight: Most small businesses see customer conversion as their biggest challenge. But no part of the conversion-marketing cycle is exactly easy.

Which of the following is most challenging for your business?

Graph showing the results of the preceeding question, with 'Turning contacts or visitors into customers' as the top answer with 37.1%.
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It's not necessarily surprising that the most critical stage of the conversion-marketing cycle is also the biggest challenge for small businesses. Customer acquisition is what produces revenue, and it's top of mind for 37.1% of survey respondents.

But substantial numbers of small businesses also struggle with the other stages of the conversion journey, from getting traffic to customer retention. We'll see why as we dig deeper into the tools and tactics small-business marketers are using right now.

One interesting secondary insight: only 3.1% of business owners who say their biggest struggle is getting web traffic devote 24+ hours to their marketing per week, compared to 7.9% of business owners as a whole. It takes resources to develop an effective web presence, but time and money can indeed buy reliable web traffic.

The #1 Digital Marketing Goal: Simply Driving Sales

Key insight: Most small businesses will invest in digital marketing this year—and nearly half have conversion-focused marketing goals.

If your business is planning to use digital marketing in the next year, what will be your primary goal?

Graph showing the results of the preceeding question, with 'Driving more sales' as the top answer with 28.6%.
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Customer acquisition isn't just a top challenge for our survey panel—it's also the number-one goal.

83.8% of respondents said they planned to use some form of digital marketing in the year ahead. But when they set their digital marketing strategy for the year, small business owners tend to think about the payoff more than the strategies and tactics needed to get there.

Whether or not they're using conversion-marketing tools and tactics, small business owners are clearly a conversion-minded group: nearly half seek to directly convert site visitors into customers or leads. One in ten is just hoping to get digital campaigns off the ground this year, while only 3.6% see automating what's working as a top priority. (That's not necessarily due to lack of awareness, either: over a third of our respondents said they were familiar with marketing automation.)

And what about the businesses that don't plan to use digital marketing in the next year? They may simply not being doing much marketing at all. 82.1% of these respondents said they spend under 2 hours a week on marketing, compared to 49.7% of the survey population as a whole.

Conversion Journey Stage 1: Generating Traffic & Awareness

Key Insight: Most businesses have a basic web presence—which these days includes social media as well as a website. But only a minority is using any other marketing assets.

Which of the following marketing assets does your business currently use?

Graph showing the results of the preceeding question, with 'A website' as the top answer with 71.2%.
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The percentage of small business owners with a website has remained steady since Leadpages polled a similar group at the end of 2015. But they have increased their marketing sophistication in one area since then: social media. 57.8% of the earlier respondents said their company used social media; today, that number has jumped to 67.8%.

A website and social media accounts clearly make up the small business marketing starter pack. But small businesses have been slower to adopt the kind of digital assets that can help build email lists and generate high-quality traffic. Only about one in four maintains digital advertising campaigns, landing pages, or a blog.

Conversion Journey Stage 2: Converting Traffic into Leads

Key insight: Relatively few small businesses are succeeding with generating leads or building their email lists, although nearly half are making some kind of effort.

Does your business collect leads, subscribers, or contact information online?

Graph showing the results of the preceeding question, with 'Yes, but it does not bring much business' as the top answer with 30.9%.
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70.8% of small businesses see value in capturing site visitors' contact info, but only 13.6% say they're seeing a significant impact on their business. The rest are either trying it with mixed results or not quite ready to implement lead-capture efforts.

For those who are trying lead generation without success, why isn't it working? The previous question hints at one answer: most small businesses are using neither paid traffic sources nor dedicated list-building assets (such as landing pages and blog content). Without these things, they're unlikely to have either the traffic volume or the conversion opportunities needed for successful lead generation.

That hunch is confirmed when we do a bit of cross-tabulation: 27.2% of businesses using landing pages and 21.3% of businesses with blogs see distinctly positive lead-gen results. That's about double the success rate of the survey panel as a whole, though there's still plenty of room to grow.

To see that growth, small businesses need either more effective marketing tactics and possibly just more time: 27.7% of highly successful lead generators spend more than 24 hours a week on marketing compared with 7.3% of those who are unsuccessfully trying to capture leads.

Of course, we saw that lead generation is a secondary goal for U.S. small businesses right now: most are aiming for direct sales above all. Let's look at how they're doing making sales online.

Conversion Journey Stage 3: Converting Leads & Prospects into Customers

Key insight: Most small businesses lack the kind of truly interactive websites that can achieve the digital marketing goals they set.

Do you allow customers to make purchases, place orders, or book services on your website?

Graph showing the results of the preceeding question, with 'No and we are not planning to' as the top answer with 28.7%.
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Even though our respondents said making direct sales was their primary digital marketing goal, 28.7% aren't planning to enable their site visitors to make purchases, place orders, or book services online. This may partly reflect a diversity in business models: a neighborhood convenience store is far less likely to have use for an online payment or booking system than a retail or service-based business.

Overall, just 19% of small business owners say they're very successful at converting customers online (and just 7.4% can both capture leads and convert customers from their website). But that number changes considerably when we examine the specific tactics different businesses are using.

For instance, 33.8% of businesses using digital ads say they convert plenty of customers on their website, as do 29.4% of landing page users. That's compared with just 16.4% of all respondents.

Once customers are converted, do small businesses take strategic action to keep them coming back? Or does marketing end at the point of sale?

Let's take a look at a few indicators of how small businesses view retention fitting into their marketing.

Conversion Journey Stage 4: Retaining Customers

Key insight: Customer retention is on small business owners' minds—they just might not think of it as a marketing problem.

Conversion marketing after the sale can take several forms.

It might mean upselling or cross-selling. It might mean generating positive reviews, referrals, or other signs of brand advocacy. Or it might simply mean promoting repeat purchases and long-term customer loyalty.

While 17.6% of survey respondents named customer retention as their biggest challenge, only 10.1% said it was the top priority for their digital marketing. And relatively few retention-challenged small business marketers appear to be taking concrete steps to keep more customers. Of all respondents, those who said their biggest challenge was retention were most likely to have no plans to collect contact info online.

It's hard to nurture long-term relationships with customers you can't contact. And those who struggle with retention aren't alone in finding it difficult to manage customer and prospect contacts.

Hidden Barriers to Growth

Key insight: Small businesses desperately need more visibility into their marketing outcomes and their customers' journeys.

Earlier, we noted the mixed success of small businesses trying to capture leads and build their email lists. There are two places where lead-generation efforts might break down: the opt-in point and the follow-up process.

In other words, some businesses might not achieve growth through lead generation because too few people are opting in. Others might fall short because they don't have an effective way to reach out to the contacts they've captured.

Which is it for struggling small business marketers? A look into the tools they're using to manage contact information suggests an answer.

What does your business primarily use to store contact info and follow up with leads and customers?

Graph showing the results of the preceeding question, with 'Individual email accounts (such as Gmail)' as the top answer with 30.9%.
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If small businesses aren't converting more of their leads and subscribers, it might be because their tools don't make it easy. More than any other system, small business marketers are using their own email accounts to market to prospects and communicate with customers.

That route is fraught with unnecessary copying and pasting (if they're sending lots of one-to-one emails) or spam complaints (if they're substituting their BCC function for a true, permission-based mailing list). And yet far fewer small businesses are turning to software made to handle marketing and customer communications. CRMs and email marketing platforms each account for about 10% of small businesses' contact management efforts.

More than 30% use some kind of ad hoc system—half online, half off—and 16% don't keep any contact information on file. Only 1.6% rely on a marketing automation platform to connect with their customer base.

What does all this mean in practice? It means that for 77.5% of small businesses, communications to leads and customers are sent haphazardly—if they're sent at all. Their marketers are stuck with lots of manual emailing and data entry, or they're stuck broadcasting the same marketing messages to everyone on their list.

Small businesses say they want sales above all, but they're putting relatively little strategic effort into marketing to known contacts. Again, the eternal time crunch is likely in play—and yet these busy marketers might see serious performance and efficiency gains if they discovered a way to refine and automate their follow-up processes.

Doing so might also topple another serious barrier to success: 39.3% of small businesses have no insight into their marketing ROI.

How would you describe the return on investment (ROI) you get from your marketing?

Graph showing the results of the preceeding question, with 'I am not sure' as the top answer with 39.3%.
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Striking as that number is, it appears that it may be improving: in December 2015, 48.5% of respondents to Leadpages' Small Business Marketing Trends survey said they didn't know whether their marketing efforts were effective. For this survey, we got a bit more granular and also asked whether “effective” meant acceptable or excellent.

As with other signs of success we've examined, marketing ROI hinges on the marketing strategies small businesses are using. In particular, focusing on lead generation correlates strongly with improved ROI.

21.2% of respondents who succeed at lead generation say they get extremely positive marketing results overall, compared with just 5.5% of overall respondents. And 45.8% of businesses who say lead generation is simply their primary marketing goal saw an acceptable or excellent marketing ROI.

Marketing tools matter, too. 49.8% of marketers with a formal, software-based contact management system saw positive ROI, and only 22.7% reported uncertainty.

Finally, this question suggests that those businesses who are avoiding digital marketing aren't getting confirmed results from offline marketing tactics, either. 69.8% of digital non-adopters said they had no insight into their marketing ROI, and only 1% of businesses without a website reported extremely positive results.

How Can Small Businesses Use Conversion Marketing to Succeed?

Today's small business owners accomplish remarkable things—especially when you consider all the hats they wear and the responsibilities they juggle in the course of a given workweek.

They face significant challenges in sustaining a growth trajectory that matches their ambitions. But the good news is most small businesses have a deep toolbox of proven marketing tactics available to them—if they'll just reach into it.

Rather than continue to pour money into questionably effective marketing channels, we suggest small businesses invest their limited resources in platforms that offer clear results and minimal hands-on maintenance. Doing so will immediately put them into the top quartile of small business owners and very likely propel them past their competition.

Here are four quick marketing wins we see for small businesses right now:

  • Meaningfully interactive websites: Fewer than half of U.S. small businesses allow customers to take any conversion action on their websites. While not all small businesses might be equipped to process online purchases, most could benefit from at least building an email list. Developing compelling ways for site visitors to connect will support marketers' lead generation, revenue, and retention goals.

  • Conversion and revenue tracking: It's hard for your marketing to succeed when you don't know what success looks like. Small businesses may not have an analyst to crunch marketing metrics for them, but as long as they choose the right tools, they shouldn't need any special expertise. This should be a key consideration for small business marketers deciding among software or channels: does it offer clear conversion and revenue reporting? If not, it's likely to just add to the confusion.

  • Intuitive contact management: When it's a major effort just to track down a contact's information, you're not going to spend your time reaching out to promising prospective customers. Instead, you'll probably continue to devote your marketing resources to driving cold traffic—spending more money while losing visitors who could have easily become customers with the right follow-up.

    At minimum, small businesses need a way to capture leads or subscribers and a dedicated, easy-to-manage destination for those contacts. For some businesses, the best contact-management solution might indeed be a CRM. But for many others, a lightweight email automation tool will do the trick (and provide a better value).

  • Automation-powered lead nurturing: We've seen that businesses that succeed with lead generation succeed with marketing in general. We've also seen that the most effective marketers tend to spend more time on marketing. But it doesn't necessarily follow that small business owners must hire more marketing staff to achieve better results from their lead-generation efforts. If they can automate their lead-nurturing efforts, they may achieve ROI to rival businesses with larger teams.

We hope you've been just as fascinated as we are by the details of how small businesses grow—and just as awed by how they get things done. As marketers, marketing software creators, and cosponsors of National Small Business Week 2017, we hope this report helps America's small businesses excel in the year to come.

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