How small businesses can prosper in a more engaged world

In a recent article some McKinsey consultants considered what businesses should do to prosper as the need to improve customer engagement becomes more important.  Their conclusions were, of course, pitched in the context of large corporations.  The main ones were that businesses will need to do four things.

Four ways in which businesses should prepare for a more engaged world

Firstly, distribute more ‘conventional’ marketing activities through out the organisation, to get ‘closer to the customer’ and facilitate engagement.  For many small businesses this will be pretty much business at usual.  So this requirement could even act to provide small businesses with a potential advantage over large ones.

Secondly, make greater use of internal councils and partnerships to improve co-ordination.  This will also be a straightforward matter for small businesses.  Such co-ordination already occurs naturally, albeit sometimes chaotically.

Thirdly, elevate the role of customer insights.  The McKinsey consultants say that ‘generating rich customer insights, always central to effective marketing efforts, is more challenging and important in today’s environment. Companies must listen constantly to consumers across all touch points, analyze and deduce patterns from their behaviour, and respond quickly to signs of changing needs.

One implication is that the types of talent required to derive such insights will change. A premium will be placed on problem-solving and strategic-marketing skills, rather than on traditional market research capabilities such as designing surveys and commissioning focus groups. Some organizations also may need help from external partners, a pattern that’s already apparent at several insurers and health care payers that have neither the time nor the budgets to build the necessary data-gathering and -analysis capabilities in-house and at scale.’

The value of ‘many small fires’

In my view this poses both challenges and opportunities for small businesses.  The decision takers within small businesses are naturally closer to customers, and therefore better placed to see what is happening in their markets and respond to this.  However what is more questionable is the degree to which they will have the ability to analyse and interpret this.  In addition many do not have the kind of long term focus into which this more abstract type of research and analysis comfortably sits.  One way round this would be to use the ‘light many small fires’ approach that people such as Mark Earls are promulgating.  In other words, ‘don’t try to work out what will or won’t work, try the various options on a small scale and let the market tell you what it wants’.

Fourthly, gather and analyse much greater volumes of data to identify trends and customer groupings that have differing needs.  “Marketing is going to become a much more science-driven activity,” says Duncan Watts of Yahoo! Research.  This is clearly an area where small businesses are at risk of losing out to large organisations; they won’t have either the resources or expertise to do this kind of thing.  However it could be argued that smaller businesses can by-pass this obstacle by using the same ‘learning by doing’ approach as above.  Running many small experiments, seeing who responds or not – and then asking them why, could arguably be just as effective.  So strategy will evolve, rather than being the result of analysis and planning.  It could be argued that, in a situation of uncertainty and experimentation, the greater flexibility and responsiveness that small businesses should have will confer an actual advantage over all but the very best managed large ones.

A different potential response would be to use external suppliers to provide a data crunching and analysis service.  But at present these are far too expensive for small businesses to contemplate using.  In addition, the suppliers are used to working with specialists within clients who talk the same language – which is not one that small business managers know.  So there are several barriers to what could be a new business services opportunity.  Overcoming these will require such suppliers to develop a mass customisation approach to slashing the cost of what are currently bespoke ‘craft’ products.

What small businesses should do

All this implies that small businesses should:

  • Engage more with customers and prospects, which the online world will facilitate.
  • Use this to gather ideas for potential new initiatives
  • Experiment with these in a low cost way – ‘light many small fires’
  • Ensure that they are set up to monitor what the outcome is
  • Learn from what happens and respond to it
  • Abort the failures and roll out the successes.

Overall, it appears that small businesses should have nothing to fear from a world in which customer engagement becomes more important.  In fact, coupled with the development of social media and marketing, this may strengthen their ability to prosper.

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