• by Ray Schultz , Columnist, September 17, 2024

Inflation is still prompting caution in both consumers and small and medium-sized businesses, judging by Small Business Now: How SMBs are navigating the economy ahead of the busy holiday season, a study from Constant Contact, conducted by Ascend2. 

Asked whether inflation has affected their spending with small businesses this year, consumers answered:

• No, I still spend the same amount with them — 34%
• Yes, I’ve had to reduce my spending slightly — 31%
• Yes, I’ve significantly cut back on my spending compared to what I planned — 21%
• Yes, I’ve increased my spending to help support them — 10%
• No, I still don’t spend at small businesses — 4%

For their part, SMBs have also been affected by inflation. To mitigate it, they have:

• Cut back on expenses —46%
• Increased prices — 39%
• Improved operational efficiency (finding new suppliers, investing in technology) — 24%
• Focused on customer retention and loyalty programs — 22%
• Diversified with new products or services — 19%
• Expanded into new markets or customer segments — 17%
• Offered fewer promotions/discounts — 12%
• Have not been impacted by inflation — 11%

The study notes that only 17% of SMBs start their holiday preparations from June to August, and that a mere 12% do so prior to that period —  leading to great urgency toward the end of the year. 

“As a result of this urgency, most SMBs dial up their marketing efforts in an attempt to market themselves to customers and boost sales,” the study notes. “On the surface, that makes sense, but it could also represent a potential pitfall — trying to do more during their busiest season could leave SMBs stretched too thin and unable to make the most of the season.”

SMBs also face multiple barriers heading into the holiday season. Retail brands face budget limitations (45%), coming up with new content or ideas (38%), getting customers to engage (37%), being too busy/not having enough time (25%), trying new tactics/channels (19%) and measuring results (16%). And 12% say they lack a marketing strategy for the holiday season. 

The study shows that email, while it comes in second, is substantially outranked by social media as an effective holiday channel. The respondents say these channels have the biggest impact on their business goals at the end of the holiday season. 

• Social media marketing — 32% 
• Email marketing — 19% 
• Event marketing (in-person or virtual) — 10% 
• Paid media (running ads) — 10% 
• SMS/text marketing — 5% 
• Other — 4%  
• I’m not sure/don’t have a way to measure marketing impact — 20%

How do SMBs gauge success? With these metrics:

• Increase in sales — 46%
• Gaining new customers — 36%
• Repeat buyers, or existing customers coming back — 30%
• Word-of-mouth feedback from customers — 24%
• Social media follower growth — 20%
• How quickly/well our inventory is selling — 19%
• Tracking website visits and online activity — 18%
• In-store customer traffic — 15%

Ascend2 surveyed 1,600 small business owners and marketers from companies with 250 employees or fewer throughout the United States, Canada, the United Kingdom, Australia, and New Zealand. It also surveyed over 3,000 consumers in the same regions.