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Is There Too Much Focus on the Top of the Funnel in SMB Solutions?

With the exception of marketing services providers that are focused on loyalty or CRM, there’s a heavey focus on acquiring traffic and new customers in SMB marketing programs. One sees this repeatedly in surveys and in the structure of SMB marketing programs being sold by local media publishers and others.

In contrast, there’s a widely circulated statistic (generally without attribution) that 80% of future revenue comes from existing customers. Whether it’s 80% or a somewhat smaller number, it’s the dominant share.

In a recent survey on behalf of Camilyo, discussed in the Customer Funnel report, we asked local businesses about which part of the “customer funnel” they were emphasizing in their marketing. While half of local businesses did indicate that retention was important, most emphasized new customer acquisition.

Camilyo survey

LSA survey Q2 2016, n=303 North American local businesses

At the recent SIINDA conference in Europe, I presented the results of this survey and moderated a discussion with Camilyo’s Ziv Koren. He argued that publishers and local media sellers (without their own consumer destinations) will forever be buying and selling Google and Facebook traffic if they don’t address the broader customer funnel. This approach offers lower margins for publishers according to many.

He also argued that a solution focused largely or exclusively on acquiring and sending traffic to SMB websites sees a great deal of “leakage,” because that traffic often fails to convert for one reason or another (e.g., SMBs don’t answer the phone or respond in a timely way).

What do you think about all this? Do you believe:

  • SMB marketing solutions and programs are too focused on driving new traffic and customer acquisition
  • Programs that don’t address or assist with conversion and retention deliver lower margins and ultimately under-perform for SMBs (causing churn)
  • That the industry needs to move toward a more holistic solution or approach for SMBs that address the customer journey/funnel more comprehensively

Or do you disagree with these ideas? Let us know your thoughts.

7 Responses to “Is There Too Much Focus on the Top of the Funnel in SMB Solutions?”

  1. Perry Evans says:

    Intellectually I agree with you but there’s one underlying problem. Most small businesses fundamentally believe that if they bring a new customer in the door they have them for life.

    We all know that that’s normally not true (down deep they would probably agree but it’s not the top-of-mind viewpoint); we also know that it’s very hard and expensive to change their mind on priorities.

    It’s very hard to sell to SMBs and selling them what they think they want is a hell of a lot easier and cheaper than selling them what they really need.

  2. Will Scott says:

    Greg,

    I think a lot of this has to do with the product-centricity, if you will, of many media companies.

    Traditional agencies had the luxury of working through a strategic marketing plan to get to all the touchpoints on a customer journey. Current day content marketers speak to this – in the most sophisticated cases – even talking about what kind of content will support retention / repurchase.

    The challenge is it’s hard to gain that level of trust and access to budget in the (S)MB space. It’s more likely in the S(M)B space, but those customers are more hotly contested and not easily sold in a two call close.

    If you try to walk into spend from revenue, then for an SMB to want to spend the couple thousand a month an agency needs they’d have to be making at least half a million in revenue if you presume 5% of revenue goes to online marketing.

    And, it’s a heck-of-a-lot easier to buy clicks and impressions than to influence actual sales and retention.

  3. Randy Hoffman says:

    I believe conversion, and the understanding of what that means to all parties involved is important. For example, if a campaign generates traffic to a SMB’s site, is that a conversion? Does the client believe it is? If the client is expecting a phone call, is that a result of the traffic from their website or a direct call from a quick local SERP? If the campaign is designed to target new customers, is the online experience that results from the campaign designed to nurture that flow?

  4. Greg Sterling says:

    I think you’re right Will. It’s taking a dozen calls to close some of these businesses. There’s little focus on LTV, just closes. There are tools out there that try and diagnose digital gaps and arm the rep with information so that a sales call can sort of operate like a planning meeting. But the sales process is messed up generally speaking.

  5. Ted Paff says:

    Interesting conversation. There is a lot of truth in the comments above regarding the expense (specifically the acquisition cost to lifetime value) of capturing a SMB customer driving lots of what is sold to them.

    In addition, products targeting the middle and bottom of the funnel (i.e. convert shopper to buyer and repeat customers) are inherently more complex than top-of-funnel-sales requiring some information about who the shopper is, where they are in the funnel and creation of messaging that is relevant to that stage. As a result, omni-vertical solutions (read most scaled SMB marketing vendors) struggle as they get further down the funnel.

  6. Greg Sterling says:

    So you agree with the recommendation but the execution “lower down” is a bigger challenge?

  7. Ted Paff says:

    Yes. Enough to build a company around the idea. 🙂

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