Stories of small, seemingly outmatched underdogs beating larger rivals date back centuries. Malcolm Gladwell's current book, appropriately titled David and Goliath, is the latest exploration of this perennial theme. The conflict continues to play out every day on Main Streets across America, where local businesses try to prevail against bigger or nationally known brand names. Although these outsized competitors may be better financed or give deep discounts to customers, many local merchants can leverage their position in the neighborhood to gain a decided edge.
Local businesses can gather key information about their customers by dealing with them regularly, seeing them in the neighborhood, and interacting with them in their personal and professional lives—and then use that knowledge to target those customers effectively. "A national brand would have to do a lot more legwork to really find that sort of data to give it a personal touch," says Christopher Tompkins, CEO of The GO! Agency, a Seminole, Florida-based full-service marketing company.
Event marketing can cement relationships between local vendors and the community, Tompkins says. For example, a sporting goods store could sponsor a school competition, sell equipment and apparel to the athletes, and also make a donation to a charity selected by the athletes and their families. In addition to school events, choosing an activity where the whole community participates also favors local merchants over bigger names.
"If you're a huge company, you'd have to figure out what these events were and hope that the information is correct because you could be putting $10,000 into a race that gets 100 people," Tompkins explains. "Whereas if you're in that neighborhood, you know that one of the most popular races is the one on Thanksgiving morning that gets 1,000 to 2,000 people. So you get the inside scoop. By getting involved in what your audience is involved with, it's almost like a simpatico relationship."
Social media channels are good for establishing credibility, driving traffic, and brand building, but often don't result in closing the sale on their own. Tompkins believes in using a mix of traditional and online advertising methods to reach customers, such as billboards, flyers, direct mail, and email campaigns. Local businesses also need to optimize their website for mobile devices, since their primary customers will often be within driving or walking distance. "All these work together to build a buzz about your business that can take you to the next level," Tompkins says.
Do what you're good at
Local businesses should play to their strengths and provide something that their bigger rivals don't or don't do as well, such as customer service.
"As soon as you start to compete on price, you have no emotional loyalty. [The customer then says,] 'Give me a number and I'll determine whether I'm loyal,'" says Shep Hyken, a St. Louis, Missouri-based customer service expert. "What you try to do is connect on another level—on the value you deliver. That value can be in the relationship you have or the service that you give." Hyken gives the following example:
There was a small family-owned hardware store that had been in a Boston strip mall for over 30 years, when a Home Depot and a Lowe's both opened up nearby—yet the owner says that he has never been more successful, even though he stays open fewer hours than the megastores. "The owner said that if he tried to do what they do, he'd lose," Hyken explains. "He does what he's best at—creating value for the customer in the form of service by asking the customer what they need a part for, and then making other suggestions for the project that the customer might not have thought about. There's a big difference between that and just taking the order, [like the big box stores do]."
Hyken says that every employee at a local business should conduct themselves as if they were the owner. For example, he spoke with an 18-year-old waiter at a pizza parlor, who was mistaken for the actual owner by a group of customers because of the attentiveness he displayed in his work—resulting in loyal patrons. "Everybody needs to take pride and make the good decisions necessary for either their internal or external customers as if they owned the place," Hyken explains.
Nurture your employees
Local business owners can usually develop personal relationships easier and faster than workers at megastores. "Every customer should know your name and you should call them by their name," says Tom Egelhoff, a Bozeman, Montana-based author of How To Market, Advertise & Promote Your Business Or Service In A Small Town. "Calling them by name reinforces that local feeling."
While it is crucial for owners to focus their attention on customers, nurturing employees can motivate them to say good things about your business, even when they're not working, to anyone they meet in the community. Egelhoff also says that employees should get their own business cards to hand out to customers so that the owner knows who provided good service when the sale was made—and then reward employees. When Egelhoff was a personnel manager for a retailer, "I would try to publicly recognize each employee for something at least once every six months. I would encourage the other employees and customers to let me know the good things they did."
Egelhoff encourages local businesses to have a grand re-opening once a year for the benefit of new people who just moved to the community, even if the business has been long established. Local businesses can also become the go-to source in their neighborhood if they take time to bond with their customers on a one-on-one level and put their priorities first. Colossal chain stores, such as Circuit City, are no longer around because "they didn't adapt to the customer. They tried to make the customer adapt to them," Egelhoff says. "People buy on emotion, not on logic. I don't know the guy or the manager at the big box store, whereas if I walk into a small business, the owner is probably the guy behind the counter."
That's a winning strategy every small business owner can build on.