Micromarketing to Microbusiness
Owners — Experian hits the target
Bring your customers into sharper focus
An Experian white paper
Micromarketing to Microbusiness Owners
Small businesses represent more than 50 percent of the nation’s gross domestic
product. Many marketers have begun targeting this lucrative segment. As this
desired population is increasingly saturated with marketing solicitations, it is
becoming necessary to deliver relevant and targeted direct-marketing offers that
stand out from the crowd. However, the traditional approach to segmentation within
the business-to-business market has relied solely on business firmographics. While
important, these business attributes do not provide enough insight into the small
business to enable effective communication and targeting. So how should B2B
marketers differentiate themselves from the competition? An analysis of the smallbusiness owner can provide the answer.
The vast majority of businesses are small businesses, with approximately 75 percent
of them having no employees. We define these approximately 18 million businesses
as microbusinesses. Because of their size, these microbusinesses are as much
consumers as they are businesses — making it critical to understand the business
owner as well as his or her business. The key to making your marketing message
stand out rests with your understanding of the small-business owner. An effective
marketing strategy engages owners with a relevant, precisely tailored message that
motivates them to respond.
Of course, not all microbusiness owners are alike. They have widely varying
demographics, lifestyles and attitudes. Effectively reaching these microbusinesses
relies on the marketer’s ability to identify distinct characteristics, behaviors,
attitudes and triggers to engage them. This consumer information on the smallbusiness owner, blended with the attributes that describe the business, provides a
more thorough view of the needs, behaviors and attitudes that will drive response.
This white paper explores methods for understanding a microbusiness owner’s
personal demographics, lifestyles and attitudes and discusses the best way
to effectively implement that knowledge and reach the owner with the most
relevant messages.
Understanding the microbusiness owner
Let’s begin with understanding the microbusiness owner. There are approximately
27 million businesses in the United States, and 99.7 percent of them are considered
small businesses.*
Adding to the complexity of capturing this market, these businesses are in constant
flux, with more than 3 million new businesses started every year. On average, twothirds of new businesses survive just two years, with only half making it at least four
years. Of the microbusinesses, 54 percent are under two years old, and 71 percent are
under five years old.**
As supported by the findings above, this can be a lucrative but elusive target market.
The key is communicating to business owners in ways they find relevant.
*Source: U.S. Department of Commerce, Bureau of the Census and International Trade Administration; Advocacy-funded
research by Kathryn Kobe, 2007 (www.sba.gov/advo/research/rs299tot.pdf)
**Source: “Business Employment Dynamics Data: Survival and Longevity, II,” by Amy E. Knaup and Merissa C. Piazza, Monthly
Labor Review, Volume 30, Number 9 (September 2007), pages 3–10
An Experian white paper | Page 1
Micromarketing to Microbusiness Owners
Learning more about the business owner
In today’s business climate, marketers must have more information at their fingertips
in order to reach microbusiness owners.
Trends reveal that the value of mass media and mass marketing has diminished
dramatically. Competition for the microbusiness owner’s share of wallet is stronger
than ever. Marketing to these microbusinesses is increasing and will soon reach a
maturation point.
That’s why looking at business information alone does not give marketers the whole
picture — far from it. Having reliable information on the owner is especially critical in
evaluating microbusinesses and making sure your direct-marketing offer is targeted
and relevant.
To successfully penetrate the microbusiness category, marketers must have a
thorough view of their targets. The firmographic perspective is not sophisticated
enough for the current competitive marketplace. B2B marketing campaigns primarily
have been targeted based on some core firmographic criteria, such as Standard
Industrial Classification (SIC) code,*** employee size, sales size, geographic
region, business credit, years in business and contact title. These standard business
characteristics, while important to understand the business, are too superficial when
targeting the microbusiness segment. The business firmographics do not capture
information that truly delineates and personalizes small-business owners, such
as their lifestyles, tastes and habits. Having this perspective on the microbusiness
owner is necessary for marketing messages and product offerings to be accurately
targeted for maximum impact.
Remember that within this segment, business owners are the decision makers.
Therefore, their consumer influence on business purchases and decisions cannot
be overlooked. Consider the example of microbusiness owners who have primarily
financed their businesses on their consumer credit and then used the rewards points
from their consumer cards to finance their annual family vacations. Also consider
business owners who open a business relating to what they love to do, with the
growth of the business helping to further the work they love. Their attitudes and
interests are a direct reflection of their business.
Segmentation: appending behavioral and attitudinal profiles to
microbusiness owners
Traditionally, marketing decisions often have been based solely on the business
firmographic data. We often see marketing campaigns targeted on the business size,
geographic location and business type. The type of small business as defined by the
SIC codes often is heavily weighted within the campaign targeting. However, making
assumptions based solely on the SIC code may be too restrictive or even flawed.
***SIC codes are the numerical codes assigned by the U.S. government to business establishments to identify their
primary business.
Page 2 | Micromarketing to Microbusiness Owners — Experian hits the target
Micromarketing to Microbusiness Owners
Based on observations, we have concluded that there is significant delineation
within SIC code groups when looking beyond the business to understand the
business owners.
By appending behavioral and attitudinal profiles using a B2B behavioral
segmentation solution, the small-business owner is seen holistically and personally.
Let’s look at an example of the differences you can see within a small-business
segment when you examine the dominant profiles within similar SIC categories.
Experian® analyzed more than 6 million microbusinesses and their business owners
to look for consistency and differentiation within the business owners’ profiles.
If we look at the retail trade industry and then break it down into two similar business
types — Apparel & Accessory Stores (SIC 56) and Food Stores (SIC 54) — we can
see a difference in the predominant behavioral clusters.
Apparel & Accessory Stores are heavily weighted within the wealthiest segment
in the U.S. Members of this group tend to be educated and live luxurious lifestyles.
These small-business owners love to vacation abroad, belong to country clubs
and drive luxury vehicles. They are early adopters of technology and support
philanthropic and environmental causes. Even though they have business lifestyles,
they are socially active.
In contrast, Food Store owners fall predominantly within the Ethnic Urban Mix
segment. They are a classic portrait of young and diverse city dwellers, with high
disposable incomes. They engage in a variety of athletic activities. They also like to
buy the latest technology and fashion. They enjoy lively lifestyles and can’t sit still
for traditional media.
While the behavioral segmentation helps you better understand small-business
owners, this information also can be used to further classify the target market based
on the messages and positioning that will resonate with them. For example, the Food
Store owner (SIC 54) is more likely to act upon campaigns that deliver “no time like
the present” messaging. Convenience and instant gratification are key. Icons, logos
and celebrity testimonials are more appealing to their “it’s all in the name” mentality.
Again, the difference is clear when you consider the messaging that will appeal to
the Apparel & Accessory Store owners. They relate more to the “work hard, play
hard” message that shows the prestige of the products offered and can elevate
status based on the “premium” offer. They are motivated by image and social status.
They like creativity and culture. The message that leads with strong facts and
evidence will appeal to their interests.
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Micromarketing to Microbusiness Owners
Evaluations demonstrated other distinct differences across similar
industries. For example:
• Photographic Studios owners (SIC 7221) are college-educated baby boomer
families and couples that reside in homes for 15 or more years, with property
values between $200,000 and $299,000. Although married, they tend not to have
children. Considering themselves “brand loyal” shoppers, they pay their credit
cards in full and have little interest in technology. Here’s how to engage them:
– Make it easy to respond, reply or apply. Present multiple benefits, including whether the opportunity can elevate status or privileges. Offer immediate discounts, rebates, coupons and incentives.
• Commercial Art & Graphic Design owners (SIC 7336) typically are families with
school-age children who live in a suburban setting. These owners belong to
business clubs and always keep up with the latest technology trends. Here’s how
to engage them:
– Highlight new, cutting-edge and premium high-value offers. Reward them with new products and services to reward them and demonstrate the prestige that accompanies the product or service.
• Financial Services owners (SIC 738909) are some of the nation’s wealthiest
entrepreneurs, having expensive tastes and luxurious lifestyles. They are
financially savvy, active investors, early adopters and extreme “newshounds.”
Here’s how to engage them:
–
Communicate the strength, pride and quality of your brand. Relationships and customer service are important, and face-to-face contact is a real
plus. Promote quality and service aspects and reward them with trial offers to help establish products or services.
• Legal and Tax Services owners (SIC 738913) are mature singles and couples living
in middle-class urban neighborhoods. Conservative and adverse to risk, they prefer
traditional media, such as television, print and radio. Here’s how to engage them:
– Appeal to altruism, activism, and appreciation for ecology and the world around them. Stress the natural versus the man-made, ecofriendliness, and healthy, sustainable living. Describe benefits in detail.
Page 4 | Micromarketing to Microbusiness Owners — Experian hits the target
Micromarketing to Microbusiness Owners
Result: improving contact strategies for great success
With this information in hand, marketers can begin to learn much more about the
business segment they are targeting. They can target these microbusiness owners
either at their homes or business addresses — positively and effectively reaching
the primary decision makers with messages tailored to their business needs.
All aspects of a contact strategy should work together to generate truly effective
connections with microbusiness owners.
As your marketing strategies become more sophisticated, additional challenges
must be addressed:
• Are you addressing the most responsive audience with your offers?
• Are you communicating the right messages and offers?
• If you’re marketing through multiple media channels, is the audience more
receptive to direct mail, e-mail, telemarketing or mobile communications?
• Are you reaching your prospects at the appropriate time of day?
Again, the B2B behavioral solution can address these pain points. Knowing the
appropriate channel and timing completes the 360-degree view, arming marketers
with the knowledge that gives them the greatest potential for success.
Conclusion
In this aggressive market, understanding the small-business and microbusiness
owners’ attitudes and preferences becomes a necessity for delivering on the
promise of communications effectiveness.
To be profitable during these challenging economic times, marketers must capitalize
on new ways to make their messages stand out. They must devise and implement
an effective marketing strategy that moves beyond traditional firmographic
segmentation to reflect their understanding of microbusiness owners and engages
them with relevant messages precisely tailored to motivate response.
A winning formula for reaching the microbusiness segment incorporates a
sophisticated household segmentation system and a comprehensive contact
strategy, along with firmographic targeting. By using behavioral segmentation of
microbusiness owners along with the B2B targeted marketing lists, marketers can
match their offers to owners’ needs, making campaigns more relevant.
With nearly pinpoint accuracy, marketers now can determine who their best
prospects are by knowing how they will likely respond to an offer, exactly where they
live, and the best method and time to contact them.
These critical key characteristics differentiate business owners, allowing marketers
to understand their customers to increase lifetime value, retain profitable customers
by reducing churn, identify cross-sell and up-sell opportunities, and efficiently
acquire new prospects.
An Experian white paper | Page 5
Micromarketing to Microbusiness Owners
Find out more
To learn more about this B2B behavioral segmentation solution, contact your
Experian account executive or call 1 800 850 4389.
About the authors
Denise Hopkins is Vice President of Marketing and Product Development
for Experian Marketing Services. With nearly 20 years of experience in direct
marketing and data management, she is responsible for the planning and strategic
development of B2B and B2C marketing for Experian, as well as the development of
new data products to assist clients in better targeting prospects.
Kelly Jo Crantas is a Solutions Specialist with Experian’s Marketing Information
Services. Her focus is specific to solutions that draw upon analytics and data. Before
joining Experian eight years ago, she worked in the direct-marketing industry for
more than 25 years. In addition to having B2C experience, she has worked extensively
in the B2B, business credit application and automotive fields.
National Business Database
The National Business Database is Experian’s premier B2B marketing database
that features demographic and credit information updated monthly on more than
18 million businesses. The National Business Database covers the largest
companies found in the Fortune 1000 and provides extensive coverage on millions
of hard-to-find small-business owners. Directly target new prospects and gain
intelligence on your current customer base. Experian’s unique and proprietary
sources supply data on millions of small businesses not found in other B2B
databases. These unique and often undermarketed records help drive product
campaign results. Sources for the National Business Database include Experian’s
proprietary business credit contributors, yellow pages, state and federal public
records, marketing data suppliers and compilers, and Experian’s televerification
phone surveys.
Mosaic® USA
Mosaic® USA is Experian’s premier consumer lifestyle segmentation system
that classifies and describes American consumers. It is a household-based
segmentation system that categorizes all U.S. households into one of 60 unique
Mosaic segments and 12 groups that share similar household composition,
behaviors, demographics, and cultural and socioeconomic conditions. The result is
a classification system that paints a rich picture in terms of household lifestyles to
provide marketers with an accurate and comprehensive view of U.S. consumers.
Business Owner Link
Business Owner Link identifies small businesses within Experian’s National
Business Database and links small-business owners to their consumer home
address information. From there, users have access to demographic and credit
data on owners to enhance the business information. This creates the best tool in
the industry for assessing both risk and opportunity for small businesses. It’s also
excellent for identifying the best customers within consumer portfolios for crossselling and up-selling.
Page 6 | Micromarketing to Microbusiness Owners — Experian hits the target
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