the “grit” of the american economy - experian microbusiness owners are the grit of the american...

Connect with the microbusiness owner

The “grit” of the American economy

An Experian white paper


An Experian white paper | Page 1

There are approximately 27.5 million businesses in the United States. The latest available census data shows that there were 5.9 million firms with employees and 21.4 million without employees. These statistics align with Experian’s data and research that affirms that most businesses are “microbusinesses” and that there are millions of them out there.

Although microbusinesses are the smallest types of businesses (typically five or fewer employees), they continue to be a vital part of the American economic landscape.1 In fact, The Association of Enterprise Opportunities (AEO) maintains: “In the United States, a microenterprise is usually defined as a business with five or fewer employees, with more than 24 million microenterprises in the U.S. One out of six U.S. private-sector employees works for a microenterprise. Historically, microenterprises have been considered the backbone of the U.S.”

2008 census statistics, small business

6,145,50023,131,300 Non employer firms

Employer firms

Source: U.S. Small Business Administration Office of Advocacy

The Office of Advocacy funded data and research showing that small businesses represent 99.7 percent of all firms,2 they create more than half of the private nonfarm gross domestic product, and they generate 60 percent to 80 percent of the net new jobs.

These microbusiness owners are the grit of the American economy Microbusiness owners are driving the American economy, and marketers are realizing that this segment has become the most valuable and sought-after group in the American market.

The findings affirm the necessity to wholly discern the “microbusiness owner” from both a professional and a personal assessment.

This white paper aims to explore the vital views that are necessary to capture the attention of these revered microbusiness owners and the proven business-to-business behavioral approach when marketing to this highly sought-after and regarded segment.

1 The Association of Enterprise Opportunities (AEO), http://www.aeoworks.org/index.php2 Office of Advocacy estimates based on data from the U.S. Dept. of Commerce, Census Bureau, and trends from the U.S. Dept. of Labor, Bureau of Labor Statistics, Business Employment Dynamics

http://www.aeoworks.org/index.php


Page 2 | Connect with the microbusiness owner: the “grit” of the American economy

Unprecedented transformationsMicrobusiness owners have endured the same challenges and trends as all Americans have over the past five years, yet this time period has had an austere impact on this revered group’s professional and personal lives. The combination of drastically changing economic times, enhanced technology usage, a housing market crash and a digital revolution has changed how consumers behave, share and relate on every level. That stated, understanding these microbusiness owners in this evolving environment is a crucial task for marketers.

Merely knowing the rudimentary firmographics of this group is no longer sufficient. In today’s ever-changing environment, it is imperative to have an all-encompassing understanding of not only the microbusiness, but also the business owner making decisions for that business.

Simply put, it is critical to have a complete view of that microbusiness owner’s decisioning process, personal life stage, household composition and mindset.

Marketers are challenged not only to acquire new microbusinesses, but also to retain and maximize current relationships. To be successful, they must know how to reach and influence microbusiness owners in today’s radically changing environment.

This compels marketers to be able to communicate effectively, making sure they are soliciting the right type of offer, through the right channel and at the right time.

Deep dive into the microbusiness owners To gain this type of knowledge requires a true business-to-business behavioral offering. Though many in the industry try a “Scotch tape” approach, only Experian® has the data assets and proprietary tools to truly provide the motivations and triggers of a consumer and link them to that microbusiness owner.



For this exercise, Experian’s first observations were to systematically review the microbusiness as a whole. What was discerned was that en masse, these businesses had fewer than six employees and a sales volume of $500,000 to $1,000,000. The industries extend from professional services to general contractors. When examining them from a personal standpoint, again, when appraised as a group, the following broad group profiles were discovered:

•Wealthiest households, prosperous, family-focused, global travelers, socially active, financial investments, influential, brand-conscious, sports activities, digitally savvy

•Baby boomers, upscale, experienced travelers, sports enthusiasts, physical fitness, financially responsible, accountable, brand-aware, loyal, diverse households

•Upper middle-class, baby boomers, cultured, stable, smart shoppers, fitness- minded, comfortable lifestyles, price-aware, Internet utilitarian’s, social activities

When communicating with these broad groups within the microbusiness owner segment, it is important to focus on quality and service aspects. They value customer service relationships, and trust is a key characteristic. They are committed to quality relationships.

Additionally, when viewed as a group, these microbusiness owners prefer traditional direct mail as a way for marketers to reach them.

Microbusiness owners are as assorted as the industries in which they work. The second phase of the project was to extend the research to a more refined level, examining these microbusiness owners by industry.

This next level of analysis illustrated that even in the same industry, the results confirmed significant variations in the distribution of types of consumers who owned them.



For the purpose of illustration, let’s examine Legal Services Standard Industry Code (SIC) 8111. When viewing these microbusinesses from the traditional firmographic perspective, the majority, 91 percent of these small businesses, from Experian’s Business Owner Link file, fall within the same employment size of fewer than two employees and have a sales volume of around $500,000 per year. Yet that is where the similarities end.

Within this one industry code, Legal Services, there are seven distinct, different segments confirmed from this analysis. Let’s take a deeper dive into two of these distinct segments.

Segment 1This is a segment of upscale boomer-aged couples living in a city and in close-in suburbs. These microbusiness owners are the vanguard of the baby-boom generation. These consumers are now empty-nesting couples between 50 and 65 years old who are finally enjoying the kick-back-and-relax stage of their lives. They are mostly married couples, and more than 80 percent of them have no children at home. Virtually all own older single-family homes in established neighborhoods. Scattered throughout the nation, they are found in both large metros and midsize cities. One sign of their stability is the high percentages that have lived at the same address for more than 15 years.

They enjoy active leisure lives. They like to exercise at fitness clubs and do nonaerobic sports such as golf, yoga and sailing. They have a cultured streak and enjoy going to plays, museums and antique shows. They also have enough time and money to travel frequently, both domestically and internationally. With their parenting years behind them, these couples relish the opportunity to take cruises, go to casinos and frequent gourmet restaurants.

As shoppers, they are both brand- and bargain-sensitive. They patronize all kinds of brick-and-mortar stores, from high-end retailers to discount clubs, and also buy products through catalogs, direct mail and the Internet. Although they buy luxury cars, they’re not known as early adopters when it comes to consumer electronics, nor are they fashion-forward. Now approaching retirement age, they’re increasingly health-conscious and look for high-fiber foods while avoiding the fast food their kids grew up on. When they shop, they take along coupons clipped from newspapers or downloaded from the Internet.

They tend to have eclectic media tastes. They’re print fans who read daily newspapers from cover to cover and subscribe to magazines that specialize in business, news and travel. They go online often to track down news, book travel and research medical subjects.



Although they dislike commercials, they like watching television news, medical dramas, crime procedurals and sitcoms. They still maintain their love of music, though these one-time rock ‘n’ rollers now listen to jazz, classical and easy-listening music.

No longer the radicals of their youth, they appear to have become their conformist parents. They describe their politics as conservative and align themselves with the Republican Party. They’re more liberal regarding environmental issues, however, and worry about pollution. Green products and hybrid cars are popular in this segment.

The evolution of the countercultural generation evident in them reflects an economic system that has rewarded these members handsomely. Thanks to their high incomes, they’ve accumulated large portfolios of investments to fund their retirement. With homes they’ve owned for many years, they’re creditworthy risks for home-equity loans, insurance and lines of credit. They carry multiple credit cards and pay off their balances each month — charge card-carrying members of the system they once railed against.

It is imperative to communicate in a way that will resonate with this segment. To do this, make sure to communicate the strength, pride and quality of your brand. Relationships and customer service are important, and face-to-face contact is a real plus. Promote quality and service aspects and reward them with a trial offer to help establish confidence in your products and services.

Remember these consumers are level-headed, elite financial consumers who remain well-informed and easily identify providers for their financial needs. They are also keen rate shoppers and understand that sound judgment and informed risk-taking will secure them the good life.

Their preferred channels of communication are direct mail and email.



Segment 2This younger segment is considered up-and-coming singles living big-city lifestyles within the top Core Based Statistical Area. This segment is a collection of unmarried singles living in the funky neighborhoods of the nation’s big cities. Found in iconic neighborhoods like Greenwich Village in New York City and Haight-Ashbury in San Francisco, these city dwellers thrive in settings known for their cafés, nightclubs and arts. Most are college-educated, in their 20s and 30s, and living in rental apartments filled with other young transients. They care less about their residences’ location “status” and more that their locations are near to great ethnic restaurants, chi-chi boutiques, hot music clubs and other unattached singles attracted to this urban meet market.

They like to be on the cutting edge of culture and enjoy the energy that only city life can bring. They head out to plays, movies and concerts. They like to read books and take continuing education courses. To keep looking their best, they devote hours each week to keeping fit. They’re not just denizens of local health clubs; they also like to escape the stress of their jobs by challenging themselves to rock climbing and scuba diving. During the week, they’ll show up for drinks or dinner toting a gym bag and a briefcase.

They are liberal in their outlook. They vote Democratic and proudly support a left-wing agenda. Many do not attend church services every week. Despite their decent incomes and liberal tendencies, they don’t appear to be fashion-forward shoppers. True, they prefer local boutiques to the national chains, and they’re not likely to drive an hour to an outlet mall, but that’s because most don’t own a car and instead take public transportation. Those who do own cars tend to drive small sedans and sports cars not suitable for hauling palettes of goods from warehouse clubs. Despite living in some of the nation’s most expensive cities, they still like to keep within a budget. Many are financially savvy and have set aside cash for their IRAs and 401(k)s. These young households have already acquired a variety of investments in stocks, bonds, mutual funds and CDs.

Living in typically cramped apartments, these urban hipsters like to go out, and that makes for a relatively weak media audience. They’re not big television fans, except for a favorite sitcom, an old movie or an inflammatory documentary. Many are into the music scene, and have an affinity towards modern rock and jazz radio stations. While they read a lot of books, they rarely subscribe to newspapers or most magazines.

Most have adopted the Internet as their main source for news and entertainment. Today, the Internet is often the first media channel they visit in the morning and the last one they use at night. They go online to watch videos, shop, telecommute and visit dating sites. One of their favorite pastimes is finding new Websites.

When communicating with this segment, it is important to highlight if your offer is new or cutting-edge. Launching new products and services catches their attention.



Reward them and compliment early adopters for being the first to take advantage. This will help your communications pique their interest. Showcase cutting-edge technology and premium high-value offers. Progressive, financially savvy and energetic risk takers, these consumers respond to your best financial offers. Highly informed and confident in their reasoning and opinions, these proactive researchers move quickly in their financial decisions.

The channels they feel are most effective to extend communications are direct mail and then email.

Implement a winning strategyPrepared with categorical, effective insight, marketers can positively influence these priceless microbusiness owners with the right offer in the right channel, and with communications that will resonate with them. These offers can be sent to their places of business or to their homes, providing the opportunity for a multichannel marketing strategy. This approach will enable marketers to reach these decision makers in multiple locations, where they can truly capture their attention.



ConclusionMore than ever within today’s challenging environment, it is imperative to effectively reach profitable prospects. Yet perhaps even more crucial is to retain existing valuable microbusiness owners, who are the grit of the American economy. To positively affect the bottom line, marketers must be able to make their offers stand out from the rest. The only way to truly motivate these microbusiness owners is to understand what they value and the triggers that will influence their decisioning process.

To define what the Microbusiness owner’s trigger and behaviors are necessitates the need for a true behavioral solution. To gain that precise intelligence, and be able to accurately link these microbusiness owners to their consumer information requires an expertise that only Experian is able to offer, from inception to implementation.

Find out moreTo learn more about this business-to-business behavioral solution, contact your Experian Marketing sales executive or call 1 888 776 2895 to request more information

About the authorKelly Jo Crantas is a Solutions Expert for Experian Marketing Services. With more than 30 years’ experience in direct marketing and data management, she is responsible for helping clients understand Experian’s unique data assets and proprietary solutions, as well as how to successfully implement them into clients’ direct-marketing strategies.

Business Owner LinkBusiness Owner Link from Experian links small-business owners to their home addresses. Only Experian can provide this powerful marketing link between small businesses and their owners through our proprietary linkage technology.

Business Owner Link — Corporate File uses the same linkage technology as Business Owner Link, but it links the small businesses that are set up as corporations, limited liability companies and limited liability partnerships to the principals’ home addresses.

Business Owner Link — Corporate File can be used to identify small- business owners whom business-to-business marketers already may have as consumer customers.



Mosaic®

Mosaic® USA is a household-based consumer lifestyle segmentation system that classifies all U.S. households and neighborhoods into 71 unique segments and 19 overarching groups, providing a 360-degree view of consumers’ choices, preferences and habits.

The new Mosaic® system is the first segmentation tool built in the U.S. market in the past five to 10 years and reflects critical new data presented in the 2010 census. This groundbreaking classification system paints a rich picture of U.S. consumers and their sociodemographics, lifestyles, behaviors and culture, providing marketers with the most accurate and comprehensive view of their customers, prospects and markets.

Mosaic® offers a common customer language to define, describe and engage target audiences through accurate segment definitions that enable more strategic and sophisticated conversations with consumers. Using Mosaic USA lifestyle segmentation, marketers can anticipate the behavior, attitudes and preferences of their best customers and reach them in the most effective traditional and digital channels with the best messages.

TrueTouchSM Touch-points Touch-points are customer-centric behavioral message themes that stimulate transactions. These themes help marketers comprehend how to communicate and motivate consumer response through messages that resonate, optimizing consumers’ attention.

TrueTouchSM channel optimization Through channel optimization, marketers are able to identify where consumers are most receptive to receiving an offer — what channel(s) to communicate through to these customers. These indicators assist with strategic or tactical channel management. They were designed and constructed from research on consumers’ level of receptiveness to being contacted by direct- and mass-advertising channels. Consumers are scored on all channel types.

Experian Marketing Services955 American LaneSchaumburg, IL 601731 877 870 5663www.experian.com/marketingservices

©2011ExperianInformationSolutions,Inc.•Allrightsreserved Experian and the Experian marks used herein are service marks or registered trademarks of Experian Information Solutions, Inc.

Other product and company names mentioned herein are the property of their respective owners.

December 2011

the “grit” of the american economy - experian microbusiness owners are the grit of the american...

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