Interviews

Being a small business brings advantages the big ones can only dream of

6 min read

27 October 2015

It’s the ambition of almost every successful small business to become a big company at some point. Who wouldn’t want to say that they’d founded one of the great brand names?

Michael Heppell, author of the latest edition of “5 Star Service”, a book on customer service, has interesting take on this development. “I’m often amazed that smaller businesses think that the secret of success is to be more like the big ones, when in fact the opposite is true,” he said.

He pointed to the very different stories of two fishmongers in his home town. Having served customers – including Heppell – for many years, the two were joined by a Tesco Extra, Waitrose and Marks & Spencer.

The first fishmonger began to complain about these newly-arrived chains to the local press, the other retailers and even his customers. He pointed out that he couldn’t compete with Tesco on price and finally closed down.

“Fishmonger two was different,” explained Heppell. “She got to work creating a local brand and local loyalty. She would love to tell you about the fish, when and where it was caught and offer some little extras if you spent a few pounds more. She must have felt the effects of the three new arrivals in town but she didn’t complain once. She survived, thrived and, of course, since her rival closed she’s never been busier.”

SMEs that want to grow should stop trying to emulate the big names, advised Heppell. “Flip it and find out what they don’t do that you can, and what you do that they can’t. The secret is by providing brilliant levels of service,” he went on to say.

They should also start thinking about speed, believes Heppell, and realise that this can differentiate them from larger competitors. “Smaller businesses can often change faster, adapt more easily and manage trends more quickly than the big boys. However, looking at many smaller businesses the opposite appears to be true. What can you do to get a first mover advantage?”

Too often smaller business leaders feel that they have to offer whatever the larger players are offering. They believe that having a narrower range is a disadvantage, but they need to realise that it actually offers them a competitive edge.

Why customisation and personalisation are the ultimate weapons for SMEs

“How can you apply your specialist knowledge to what you do?’ he asked. “How about the many years of experience you have that you currently don’t tell your customers about? I watched a small gent’s outfitter close down and blame £30 suits from ASDA as the problem. Do you really think that was the real reason? If you have a speciality to be proud of, shout about it and work hard to get even better.”

SMEs might like customers, but they don’t think enough about customer loyalty, according to Heppell. He quoted fellow customer service guru Jeffrey Gitomer, who commented: “Customer satisfaction is worthless. Customer loyalty is priceless,”. He argued that Gitomer was aiming this observation squarely in the face of the smaller business.

Small businesses should stop thinking about a customer in terms of a one-off transaction. Instead, each need to consider the whole lifetime value of a customer, in other words, their entire spend with that business over the next 50 years.

“Once you get that number lodged in your mind imagine a single new customer wanting to spend that amount with you today,” explained Heppell. “How would you treat them?”

It’s so much more powerful to think about lifetime value rather than individual transactions,” he stated, “and it incentivises you to create an amazing customer experience – now.”

Small traders and those running small businesses are too likely to see the whole world – suppliers, customers, the government, the media, the local council – as being against them. They need to change their attitude to become more positive and outward looking rather than meditating on their own misfortunes.

He pointed out that the customer is fighting back against bad service. “Websites such as Trustpilot are giving customers a new voice – a voice which reaches far beyond a few friends and now broadcasts to millions,” he said. “Some smaller businesses are scared, whereas others embrace the review revolution.”

The mindset of many smaller business owners must change. Instead of assuming that they’re at a disadvantage due their size they capitalise on this and turn it to their advantage. “Because we’re small we can offer x, y and z. It’s because we’re local that we excel at a, b and c,” should be the message, said Heppell.

“There’s a fantastic opportunity for the right small businesses to stop moaning to the people who could be their biggest advocates and instead to get creative. They need to give a bit more oomph to their businesses and focus on what their customers really want.”