From battling inflation to burnout and pivoting to adhere to new marketing policies, small business owners have faced several challenging moments in 2022. Looking ahead to 2023, the economic shift that we are experiencing will slow down in the new year. However, we can still expect some sort of impact on businesses of all sizes and industries, especially the smaller ones.
On a positive note, we’ve seen an increase of small businesses in the US in 2022 that has grown 2.2 percent from the previous year, with an overall growth of 12.2 percent from 2017 to 2022. A survey by Bank of America of more than 1,300 small business owners across the country finds that 66 percent expect their revenues to increase in 2023, while 52 percent have plans to expand their businesses. Business owners are recognizing the changes coming ahead and are prepared to face the challenges to continue their success.
Here are a few tips to help small businesses navigate changes in the market in the new year:
Navigating the Impact of Inflation and a Potential Recession
It’s not unfamiliar news that we are currently facing global inflation and a potential recession in our economy. 40 percent of small businesses have reported feeling a wave of impact from the economic changes. Businesses will need to pivot with their strategies and re-evaluate budgets and current spending. However, this isn’t necessarily a bad thing. Less resources challenges you as an organization to get smarter: successful businesses solve problems and problems still exist in slowdowns. Businesses that succeed have found their market and value proposition, and solved a real problem. If you solve such a problem, other companies or people will buy what you have to offer.
Consumers will be more conscious of their spending in 2023, which means small businesses will need to pivot from focusing on acquiring new customers and work on retaining existing customers, which is five times cheaper. Retained customers are more profitable in the long haul and will most likely engage in word-of-mouth marketing if they had a positive experience with your business. Almost 65 percent of a company’s business comes from repeat customers, while focusing on increasing customer retention by 5 percent can increase profits by 25 to 95 percent. We’re not saying to completely cut out acquiring new customers, but shift the percentage of focus to also include how to retain your existing customers by upselling to them with effective marketing and loyalty programs.
Adapting Your Marketing Strategies in Response to Economic Shifts
With the uncertainty of the economic shifts, focus on what you can control that can result in a positive impact for your business. Small businesses need to take a step back and understand their business model, acquisition channels, and unit economics. Look into how much you are spending to acquire a customer and track the entire user journey from first touchpoint to conversion. Once you understand the data, if there is ever an issue with cash flow, which small businesses can expect to struggle with, focus on the lower funnels, like automations and customer loyalty, where you can see immediate impact. In fact, 33 percent of small businesses plan to prioritize customer relations and strengthen customer loyalty amid inflation.
If you decide on cutting your budget next year, be strategic about how you approach it. For instance, start by looking into reducing or cutting spend on marketing campaigns that have not been driving the results you are looking for. Going back to the basics and focusing on channels that have proven to be successful can generate positive results to your business regardless of the reduced budget spent. Examples of marketing strategies that have been tried and true with positive engagement from customers are email marketing, marketing automation and campaigns via WhatsApp.
Leveraging Conversational Marketing for One-on-one Customer Engagement
Building meaningful relationships will be paramount as simple advertising doesn’t quite do it anymore for new and existing customers. Conversational marketing is a key way to open the dialogue between your business and customers that can potentially lead to conversion. According to a recent report, 42 percent of US shoppers expect websites to offer live chat, a sharp rise from 27% in 2019. This means that online presence has become the norm even for small businesses now. Create opportunities that allow your customers to directly interact with you with tools like live chat or directly booking meetings with your staff. Also consider setting up two-way communication channels like WhatsApp or ensuring your newsletters have a reply address.
One-to-one interactions can turn a website visitor into a paying customer. Small businesses can easily incorporate a tool like live chat on their website to provide faster and easier customer support. The ability to connect with website visitors in real-time can improve customer experience and build meaningful relationships that can lead to brand loyalty.
WhatsApp can be used to send targeted marketing campaigns that are relevant to your customers. Consumers are looking for one-to-one interactions and personalized marketing content before making a purchase. With open rates surpassing 98 percent, communicating on WhatsApp makes the customer experience feel like they are chatting with a friend. Conversational marketing can effectively increase conversions and revenue while building long term relationships with customers, resulting in sustainable growth for businesses.
In summary, economic shifts are out of our control, however we can prepare our businesses ahead of time to minimize the impact. Take the time to evaluate your overall business and focus on channels that are working for you. Consumers will be more mindful of where they are spending, which means businesses will need to prove why they are worth the investment. Leverage conversational marketing to build meaningful relationships with customers and share marketing content that is relevant and valuable to help drive conversions. The success of businesses in 2023 will depend on how they can navigate the changes coming ahead.
Steffen Schebesta is the CEO of North America and VP of Corporate Development at Sendinblue. He has over 15 years of experience as a business and digital marketing leader. Prior to joining Sendinblue, Steffen was the founder and co-CEO of Newsletter2Go, the leading email marketing provider in the German market. Under Steffen’s leadership, Newsletter2Go became one of the fastest-growing tech companies in Europe. In 2019, Newsletter2Go was acquired by Sendinblue and Steffen earned the title of co-CEO in Germany. Steffen holds a master’s degree in business and electrical engineering from The Technical University of Berlin.