NASE in the News

What Makes Customers Tick?

NASE Members Explain How The Recession Changed All Of The Answers

By Jan Norman

No one needs to tell micro-business owners that the past three years have been the toughest economically in decades. Even entrepreneurs who survived several previous recessions say this time has been more difficult.

And this recession’s impact on consumers appears to be long lasting.

Between December 2007 and June 2010, 8 million Americans lost their jobs, reports the Bureau of Labor Statistics. Annual U.S. business bankruptcies more than tripled to 61,000 from 2006 to 2009, states the American Bankruptcy Institute. The nation’s gross domestic product declined 18 percent from the end of 2007 through the end of 2009, the U.S. Bureau of Economic Analysis says.

Businesses of all sizes have been affected, and so have their customers.

To thrive as the economy recovers, micro-business owners need to figure out how their customers’ attitudes have changed. Then businesses need to adjust their marketing and ways of doing business to meet those new attitudes.

Understand The Impact

“The recession’s impact on customer experience is not going to fade quickly,” says Lior Arussy, president of Strativity Group, a New Jersey-based customer relationship consultancy. “Certain financial and emotional issues will endure for many years to come.”

Customers in virtually all industries are still uncertain about their futures, their jobs and their financial fortunes, Arussy notes. Therefore, they’re fearful, they demand greater value for the dollar, and they’re less likely to be loyal even to companies they like.

“Many organizations are hoping these factors are temporary . . . but the more responsible assumption is that these customer conditions are here to stay and that we need to adapt our products, services . . . and overall definition of value accordingly,” he adds.

Focus On Value

“The economy has definitely changed the way my industry works,” says NASE Member Mark Block, a former attorney who started The Block Agency, a talent agency in Nashville, Tenn., in 2006. “When the economy went down the drain, the first thing companies did was cut their marketing and ad budgets.”

Block says his agency had been growing so rapidly before the recession hit that he has been able to weather the storm better than some of his competitors. It helped that Nashville is a less expensive place to produce commercials and music videos than New York City, he says, so many companies looking for musical and acting talent shifted their projects to Tennessee.

However, “everyone wants more for less,” he says. “We have to focus more on each project to get them the best results within their budget. Clients may have to hire less experienced talent, but my company takes a lot of pride in the fact that we won’t send [actors, musicians or models] to a client whose work won’t turn out top notch.”

The price tag alone isn’t what clients are looking for, he adds. They want the best value for the money.

“The biggest concern is maximizing their return on investment.”

Cater To Customers

The recession hasn’t caused customers to abandon micro-businesses in favor of big chain discounters, reports a recent survey by WebVisible, a California company that specializes in local online marketing. The survey found that 83 percent of consumers choose to patronize small, local, independently-owned businesses over a large chain.

The top reasons for favoring the small firms:

• Service is more personal
• Local merchant is more conveniently located
• I want to support my community 
• Knowing or being known by the owner or employee
• Local merchant offers a higher quality product or service
• Prices at the local merchant are usually lower

Micro-business owners need to identify their core customer to determine which of these factors they should emphasize in the current economy.

For example, the survey found that men liked local businesses for their convenience, while women wanted to support their local communities. The youngest respondents liked low prices, and the oldest ones loved the personal touch.

So a business with mostly male customers should do everything possible to make it easy to shop and buy. One with a lot of elderly customers should lavish them when attention and service.

Even considering different types of customers, some categories of businesses have felt the recession less
than others.

“I find every recession my business goes up,” says NASE Member Paul Laubenstein, who started the
New England Senior Hockey League in Swampscott, Mass., during the 1992 recession. The league has grown from four adult teams to 325 in the greater Boston area through three recessions.

Consumers may have to cancel expensive vacation plans, shop at discount stores or eat out less often.

“But they don’t want to give up recreation. They still feel they deserve time to themselves,” Laubenstein says. “This recession was so deep, I expected numbers to go down this time around, but they didn’t.”

He and his wife, Lisa, have spent a great deal of time and effort listening to players and team managers. The couple wants to meet their expectations for recreation, competitiveness and social fun so that players stay in
the league.

“Trying to keep competitiveness for players at every level takes a lot of work,” Laubenstein says. “We have to make sure everyone gets a fair shake and at the same time no team is winning 10 to 1. That’s not what they want.”

Use Technology

Laubenstein was never good with technology, he says, but his wife is, so she has helped the league improve its website and e-mail communications.

“Today, everybody is Internet savvy; I wasn’t,” Laubenstein says. “This is a young crowd in which everybody has a cell phone and BlackBerry. So I had to change my marketing. Now I keep in touch over the Internet and e-mail. I know every team manager personally through the Internet even though some I have never met in person.”

While the Internet is increasingly important in reaching customers and finding out what they want, a new study of small-business owners by American City Business Journals points out how important it is for micro-business owners to understand how their particular customers use the Internet.

The study found that the heaviest Internet users—typically well-educated men who love technology—research online, use e-mail and social media to stay connected with colleagues and collect information about competitors, and 83 percent buy online. Those who use the Internet the least use e-mail, but only 21 percent buy online.

A micro-business that caters to Web savvy customers will have more success marketing online than one whose customers spend little time on their computers.

“Social media have been big for my business,” says talent agency owner Block. “I might need 100 extras for a music video within 48 hours. Faster than mail or calling is putting it on my Facebook page and tweeting it [on Twitter], and I get a great response.”

NASE Member Caren Williams and her husband, Brett, started Bear Paws Pottery about two years in Brownwood, Texas. She says the Internet has been a vital tool for building her recession-launched business of making and selling artwork.

Her pre-startup research told her that high-end pottery with a Texas flavor was in great demand. There were several magazines, art festivals and Indian powwows that targeted a wealthy audience. Her area of Texas boasted many ultra-rich ranchers whose wives “thought it was no big deal to go to New York on shopping trips,” she says.

However, in the time it took Williams to produce enough pottery to display at festivals and powwows, the economy and consumer attitudes changed.

“I talk to those wives, and they don’t make those trips to New York anymore,” she says.

She bought ads in the high-end magazines, but got no response. She paid for exhibit space at the festivals, but sold very little.

“I’m always talking to people who had been going to these events for many years, and they said in all of 2009 nothing was going on,” she explains. “So I started marketing heavily. I started networking. I signed up for GoTexan.com, a website run by the Texas Department of Agriculture for everything grown or made in Texas. I even tried a few of my not-great pots on eBay. I sold one out of six in eight weeks.”

She describes her pottery as “functional as well as beautiful in a definite southwestern style, but not a necessity.” And in this economy, many people aren’t buying nonessential products and services, she says.

“I had to get really creative and think outside the box to reach people,” Williams says.

Her website, bearpawspottery.com, has been vital to that strategy because she can reach a global audience of wealthy art lovers, even though “learning search engine optimization is a big learning curve,” she says.

For example, she found using the words “Texas pottery” and “made in Texas” brought traffic to her site. She moves items around on the website to keep it looking fresh and links them together to improve search results.

Listening to customers helped, too. Many said they were buying her pottery for wedding presents, so she signed up on Weddingdirectory.org and added a page on her own website where brides could send requests.

She signed up for Etsy.com, an online marketplace, where she discovered that blogging and networking on the site greatly increased traffic to her own website.

“I keep plugging away. You can’t get discouraged,” Williams says. “You just have to keep going.”


Jan Norman is a freelance writer who has found that even business readers’ story interests have changed since the recession started. They now seek how-to strategies for business survival more than philosophical topics.