The rise of Internet commerce sounded a death knell for small businesses. Large e-tailers could wield massive buying power, had less overhead than brick-and-mortar stores, and could appeal to customers in new ways.
They could collect customer data in the course of doing business, and turn around and use that data to better market to their customers.
How could a small retailer compete?
While there have been plenty of small businesses that have failed since the likes of Amazon have come on the scene, the retail apocalypse some predicted hasn’t arrived. Online retailers and their brick-and-mortar kin, big box discount stores, have absorbed a big share of the market — but not all of it.
The secret to survival for smaller businesses was not to emulate their massive competitors. Instead of trying to behave as if they were giant companies, many have succeeded by acting smaller.
Good Things Come in Small Businesses
The discipline of CRM is really about an attempt to capture the familiarity small businesses have with their customers and scale it up. Big businesses are trying to capture the advantage small businesses possess. Smart small businesses are identifying their strengths and building on them.
Here’s an example: A store in my town catering to parents with young children, Tot Tank, contends with competition from Amazon, Babies ‘R’ Us and other online sources, plus the local Target and other large retail stores. Yet it thrives. Why? Because it offers things that online stores and big-box retailers can’t.
First, it emphasizes training for its staff, giving it a genuine service edge. If you have a question, call the store — someone can give you an answer. Second, it exploits the fact that it is a brick-and-mortar store. If parents want to try out things like baby slings or strollers, the staff will assist them until the right fit is found.
Third, the store gets to know customers — not just personally, but also as customers in the store’s marketing system. That gives them the benefit of small-business customer familiarity combined with the same technology larger businesses use to maintain customer relationships.
Know What Customers Need to Know
There’s a hobby shop nearby that takes a similar approach. Hobby shops are a dying breed — at least, brick-and-mortar shops. Online hobby retailers are proliferating and prospering. How do local shops buck the trend?
There are some business elements to their survival — finding retail space at an affordable rate is key, because this is a notoriously low-margin business most of the year. Again, the secret to survival and success is service and product knowledge.
I’ll use Hobbies Unlimited near Oakland, Calif., as an example. Many customers come in not knowing what they need to build a model or fly a remote-controlled airplane. For those customers, a retailer’s website isn’t much use.
However, a few minutes with the staff — who have helped many neophytes in the past and know what questions to ask — can make a confusing purchase much easier. It also paves the way the customer to continue in their hobby and make return visits to the hobby shop.
It’s tough to build an online knowledge base that encompasses what the guys at the hobby shop know. Questions can range from trains to balsa wood models to plastic kits to paints and beyond.
It’s even tougher to make it easily searchable by people who may not be familiar with the terminology of the hobby. This knowledge of products gives the hobby shop a secret weapon and provides a good customer experience.
Bring Back That Small-Biz Feeling
The point here should not be that mom-and-pop businesses should be the model for all businesses. It’s that the successful small businesses succeed on their own terms — and often those terms center on service and product knowledge. Every business can do this, but it requires a commitment to some ideas that become tough as businesses scale. In order to deliver that small-business experience, a company must do the following:
- Emphasize staff training — not just when personnel start, but ongoing, so they know as much as possible about current products.
- Make sure employees spend time with customers. Too many businesses consider time spent interacting with customers as something that reduces employee productivity. In reality, it builds customer loyalty, helps them find the products that will make them most satisfied, and results in more sales over the long term.
- Stop overemphasizing price as the key to sales. If your customers can’t learn what they need to buy, price is a moot point.
None of these ideas are revolutionary, and they will have less applicability in fields where products are commodities. Still, in any market where customer confusion is common, service and product knowledge makes the difference between success and failure.