Study: Small business owners rely
on advice from peers more than ads
A new Warrillow & Co. research study provides a glimpse into the world of how small business owners make buying decisions. Unlike consumers who may be more influenced by traditional advertising, small business owners prefer to rely on recommendations from fellow business owners before making a buying decision.
"The Warrillow Trust Index" research study asked small business owners with fewer than one hundred employees to rate their key suppliers on how likely they would be to recommend them to a fellow small business owner. Using the methodology made famous by Bain consultant Frederick Reichheld, Warrillow then calculated each company's "Net Promoter Score", which is the percentage of a company's customers who would be very willing to recommend them subtracted by the percentage of the company's customers who would be unlikely to recommend them. The Index identifies companies that are being successful at tapping into the word-of-mouth discussions that take place among business owners.
"With the advent of TiVo and satellite radio, small business owners are flying underneath the radar of traditional advertising. Fuelled by popular blogs and social networks like Linkedin, small business owners are learning about new products and services through word of mouth," said John Warrillow, founder of Warrillow & Co.
Topping the list of most-recommended industries surveyed for the Warrillow Trust Index, the shipping companies received a Net Promoter Score of 30% (Reichheld's research shows a Net Promoter Score of 5% - 10% is average).
"At FedEx, we believe the ultimate endorsement is when a small business owner is willing to recommend our company to one of their peers. Word of mouth truly is the most powerful form of advertising," said Becky Huling, managing director of FedEx segment marketing.
The second-highest-ranking category on the Index is the business credit card with an overall Net Promoter Score of 29%. Bruno Perreault, SVP/Commercial Solutions at MasterCard International, understands why the card industry is focused on generating positive word of mouth: "The media is getting more and more fragmented, so you need a virtual sales force of customers recommending you."
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