4 Reasons Why Small Biz Should Stop Trying To Be Big (SXSW 2012)

(See all of Ramon’s SXSW Interactive 2012 coverage here)

At SXSW 2012 Kat Mandelstein (IBM) and Jason Stoddard (Stagira Inc) spoke about the benefits and challenges of being a small business and what big businesses can learn.

REASON ONE: The 5th Era of IT is social and technology enabled businesses have transformed over five years, thanks to technology and social media

3 key forces – people, process, proximity

Stop acting bigger than you are. If you are a small business owner, be proud of your smallness. Being “big” takes away your personal
touch.

Customer or stake holder  steps flow from (bottom to top)

I > You > It > Me & You > I and It > You and IT > It and It

and

Awareness > Prospect > Customer > Loyalist or Disgruntled > Unknown > Awareness

REASON TWO: Huge rise in the personal brands.

Competition is not always obvious – don’t assume you know your competition as well as you should.

REASON THREE: Going Global vs Acting Local – the rise of social mobile applications (SOLOMO)

Social Business Characteristics – bringing social into your business processes is important – to customers and
internally. Social business enables three things:

  • Engaged – deeply connects peeople by shifting from transactions to interactions
  • Transparent – builds trust by elmianting barriers and aligning actions to needs
  • Nimble – speeds up business with insight to rapidly address evolving market opportunities

What are the advantages to being a small business.

  • Agility
  • Personalization
  • Specialization
  • Proximity
  • Extra – legal

Small business challenges

  • Handshake problem (how many hand shakes can you really make?)
  • Retention (customer and employee)
  • Cash strapped; capital constraints
  • Continuity (brand 9association transference), knowledge, service, product, deliverability)
  • Scale (the accordian effect)
  • Accountability

REASON FOUR: Case study:

Local TX business spent lots of money on social advertising, direct mail and etc. But he was getting no
results. After a survey of customers it was found that word of mouth was the most effective way to get new customers. So the the business (Kat’s idea) created a customer birthday campaign – so customers could gift a cleaning service to someone else.

They used email to spread the word and it performed every sharing channel from 2.5 to 1 . Email is great at sending a message that is one to one and often beats social media.

Campaign results: Incentivized customer to customer vs direct mail ( $1,500 and 18 conversions vs $12,000 and 19 conversions

The more trusted and personal a campaign it is the more sticky it is.

Big Business Advantage:

  • Global reach
  • Diversification of work force
  • Business process optimization
  • Deep pockets (reserve capital, 360 degree marketing programs, diversification of offerings, innovation R&D)

Big business challenges

  • geographically dispersed workforce
  • challenge to act quickly
  • high visibility of mistakes
  • commoditization of offerings
  • expense pressure to reduce E:R ratio
  • public company return to shareholders

Key Measures for Both large and small businesses

  • Revenue for expense
  • Customer acquisition
  • CPM/CPC
  • Lifetime value

 

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Ramon Ray, Editor & Technology Evangelist, Smallbiztechnology.com . Editor and Founder, Smart Hustle Magazine Full bio at http://www.ramonray.com . Check him out on Google Plus, Twitter or Facebook

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