Most consumers would prefer to shop locally, and those who know at least one owner by name are likely to spend more with small businesses, according to a recent study.
The research, conducted by Amex, found that one in three consumers spend more than $450 a month with small businesses, with 12 per cent spending more than $1000 per month.
More than half of those consumers (57 per cent) own a small business of their own and 42 per cent have a family member who works for one. Many say theyre more likely to buy from a new small business thats trying to get off the ground (66 per cent) or if they know its struggling.
A majority also said they would pay more within reason if they know the goods and services are from the local community or that spend will stay locally.
The Amex report found that those who love where they live are likely to spend more with small businesses, especially older residents.
One-third of respondents said small businesses were a big factor in attracting them to the area, and while this was more likely in metro communities (36 per cent) than rural (23 per cent), the personal bonds are stronger in rural communities, with 70 per cent of consumers saying they know the name of at least one small business owner compared to 52 per cent in metro areas.
A large majority of respondents said that they cared about the longevity of local small businesses; 81 per cent said the businesses help create a sense of community. However they are also more likely to prefer a big business for competitive pricing (47 per cent) and a broader product range (32 per cent).
The report quoted Lindsay Carroll, Deputy CEO, National Retail Association, who said that strong customer service is critical for the success and survival of any small business.
Outlets such as coffee shops, cafes or local corner stores rely heavily on loyal customers who come back again and again," she said.
A key way to maximise the standard of customer service is to get to know your customers. This includes things such as their name, their usual order and taking the time to have a conversation that extends beyond simply their purchase.
If customers feel that they actually know the people behind the business, theyre more likely to become regulars and not take their money elsewhere.
The research also showed that small business owners make big sacrifices. Almost half hadnt had seven consecutive days off in the past year and 34 per cent have dipped into personal savings to fund their business.
While most small business owners say theyre happy running a small business, the report concluded that they need more support. Two in five said its difficult to make a financial success and more than two thirds wish customers knew just how hard it is to run a small business.
- The Economy of Shopping Small: Back Your Backyard research was commissioned by Amex and done by RFi Group.