By Christopher Freeburn
Small businesses always face big challenges, but being located in a small town can make the usual obstacles even harder to surmount. Small town environments impose certain restrictions on a small business that similar businesses in suburban or large cities simply do not face.
“The battle for customers is much more aggressive in a small town compared to a large city,” says Tom C. Egelhoff, a Bozeman, Montana-based business consultant and author of How to Achieve Small Town Marketing and Advertising Success and The Small Town Advertising Handbook. The advantage of doing business in a large city, like New York, is that the sheer numbers of people passing outside your business every day is likely, simply by chance, to bring in many more casual customers in a week than a business in a small town of several thousand people will see in an entire year. “So you need to be much smarter, much savvier, and much more aggressive in small towns than in big cities,” Egelhoff says. The following three tips are critical to small-town success.
1. Small business, know thyself
The first step toward developing an effective strategy for competing in a small town is to understand what your business does, who its customers are, and what they want. “Think of it as creating a resume for your business, as if your business was applying for a job with your customers, who are the boss,” Egelhoff says. Making certain that you thoroughly understand your marketplace is critical when operating in a small town since the small population leaves you less room for error. “In a small town, with its limited population, you don’t have the luxury of a slight misjudgment.”
Additionally, in small towns, many people will decide whether to visit your business or not, based largely on what they hear other people say about it. The smaller the town, the greater this word-of-mouth effect will be. This is why creating a consistent image for your business is so important. Customers will rely on that image when making the decision where to shop. “Don’t confuse potential customers,” Egelhoff cautions.
2. Be careful with pricing and advertising
In difficult times, a small business might be tempted to reduce prices sharply or offer extensive discounts. While that can bring in more customers in the short run, it can also have a negative long-term effect on the business, Egelhoff warns. “What you don’t want to do in a small town is to disrupt the image of your business that you have worked so hard to create,” he says. If your business was perceived as a purveyor of quality merchandise or services, too many discounts and sales might suggest to customers that your products aren’t really as good as they thought, or that you were always overcharging. “Another problem with too many sales or discounts is that they tend to attract the ‘discount customer,’” Egelhoff says. “A regular customer will take advantage of discounted prices, but will also buy merchandise at a the normal price, whereas the ‘discount customer’ only buys at the discount price and will never go up to pay for quality,” Egelhoff explains. If your business becomes primarily associated with discount merchandise and customers, you won’t be able to make money when good times return.
When it comes to marketing your business, Egelhoff has two rules for advertising. “First, you never advertise in any medium that you don’t have at least a seventy-five percent expectation that the advertisement will bring in more business than it costs, because advertising should be looked at as an investment, not an expense. It must pay for itself,” he advises. “Second, when emotion comes in conflict with logic, emotion always wins. This means that people buy products or services because of how they make them feel, not because they really need them.”
3. Maximize the right kind of customer service
In a small town, most people know each other, and they generally talk to each other. That means that word-of-mouth advertising is simultaneously a small town business’s greatest asset as well as its greatest potential threat. So it is vitally important to provide courteous, responsive service.
Egelhoff says that the right level of customer service is “the best service you can provide day and night and remain profitable.” He warns small businesses not to try and take customer service too far. There is only so much you can do to be helpful to customers before you start incurring unacceptable costs. “I think good customer service will help retain existing customers; it probably won’t bring in new customers,” he says.
More important than being helpful during the sales process, Egelhoff says, is dealing with complaints. “In a tight-knit community, one person’s bad experience can really hurt your business,” he explains, “because that person will certainly tell friends about it, and word like that spreads quickly.” Egelhoff advises making it easy for customers to complain about products or service to you, the business owner (rather than friends and neighbors), and acting quickly to address those complaints when they are valid. “In a small community, one festering complaint can become poison to your business.