Successfully marketing to small business owners demands a data-driven approach that uses open rates and clickthrough rates to optimize messaging. Having sent 5.3 million emails to small business owners in the past 18 months, the analysts at The Value Builder System™ sat down to understand what drives business owners to open email and engage with content. In this comprehensive guide, we’ll share seven proven strategies to optimize your marketing efforts and achieve remarkable results when targeting small business owners. You’ll gain access to our 2023 benchmarks for email open rates and click-through rates so you can compare your results with best-in-class organizations also marketing to small business owners.
Marketing To Small Business Owners Case Study: The Inc. Magazine Origin Story
If you want to understand how to market to small business owners, start with the story of Bernie Goldhirsh. Goldhirsh was an MIT graduate who enjoyed sailing in the Boston harbor. He bought himself a second-hand vessel and set about teaching himself to sail it.
It wasn’t long before Goldhirsh became frustrated. As a first-time sailboat owner, he didn’t know how to properly care for his vessel, let alone sail it properly. Goldhirsh searched for resources but found little to help him master his new rig. That’s when he decided there must be other novice sailors like him in need of practical guidance. In 1970, he decided to start a magazine called SAIL, with a vision of becoming a user manual for a novice sailor’s boat.
SAIL connected with readers, but Goldhirsh found himself overwhelmed. He didn’t know how to run a business, let alone a magazine. Again, he used his personal situation as inspiration and realized there was a growing group of first-time company owners who were out of their depth running a business.
In 1979, Goldhirsh launched Inc. Magazine to be the growing company’s user manual. He focused on practical content that every business owner needed to know. The first issue offered owners practical tips on buying their first computer and how to delegate tasks to employees.
Inc. became a hit among subscribers who looked forward to getting the latest issue in their mailbox each month. Advertisers jumped on board wanting to reach small business owners who had a wide range of needs without the buying power corporate giants used to grind down the advertiser’s margins.
By 2000, Inc. magazine had grown into one of the most profitable business publications in history. Goldhirsh sold Inc. to Gruner + Jahr (G+J), the magazine division of the giant publishing house Bertelsmann, for a reported $200 million.
Marketing To Small Business Owners: How Inc. Magazine Lost 80% of its Value
What happened next is one of the greatest destructions in value in the history of the publishing industry and provides important lessons for any company looking to market to small business owners.
Upon taking over Inc. in 2000, Bertelsmann’s first move was to try and offset the slowdown from a cyclical slowdown in adverting to focus on newsstand sales. After all, newsstand sales had helped grow their other consumer offerings, so they assumed it would do the trick for a small business magazine. To make the magazine’s cover more attractive to the store browsing public, Bertelsmann shifted the editorial focus from practical information for real-life business owners to inspirational stories for aspiring entrepreneurs.
Wannabe entrepreneurs prefer inspiring rags-to-riches stories. They find practical content boring or irrelevant — after all, who needs to read a story about effective delegation when you have no employees?
The strategy to focus on newsstand sales seemed to make sense on the surface. For every established business with employees, there are hundreds of dreamers browsing newsstands imaging what it would be like to own their own business. However, Bertelsmann failed to understand that their growing appetite for newsstand sales was undermining their position with the actual people Inc. advertisers wanted to reach.
The more the magazine started to cater to wannabe entrepreneurs, the more frustrated Inc.’s loyal subscribers became, and they began to cancel in droves. As business owners left, so too did the advertisers trying to reach them. The magazine started to struggle financially.
In 2005, Bertelsmann unloaded Inc. to Joe Mansueto, the founder of Morningstar for a reported $35 million.
Marketing To Small Business Owners: Email Open Rate Benchmarks for 2023
Fast forward to 2023 and small business owners continue to prefer practical, actionable information. At The Value Builder System™, we recently conducted an analysis of emails sent to small business owners by advisors using our system. We examined the content of 58 unique emails, totalling 5.3 million messages sent between January 1, 2022, and March 31, 2023. The average open rate across all messages sent by Value Builder advisors was 39%, which is almost double the 21.9% open rate Mailchimp reported as the average benchmark for messages sent by their customers in 2022. Some of the highest-performing email messages featured the following headlines:
The success of these headlines is a testament to their practicality. Each one focuses on actionable steps that real business owners can take to improve their companies.
The takeaway for anyone aiming to market to small business owners is straightforward: entrepreneurs are drawn to practical information that addresses immediate challenges. With their time stretched thin by the demands of running a business, they have little interest in aspirational stories. They’re grounded in the realities of their day-to-day operations and seek out pragmatic advice.
Marketing To Small Business Owners: Guideline 1 Practical Trumps Aspirational
Bernie Goldhirsh’s enduring legacy is how Inc. Magazine fueled the entrepreneurial revolution of the 1980s and 1990s. Dissatisfied with working for large corporations, many ambitious young managers began starting their own businesses. This surge in new companies led to a corresponding increase in advisors offering their services to business owners.
Accountants, financial advisors, coaches, consultants, and more recently, exit planners, all set up operations to help owners optimize their businesses. Given the extensive advisor community catering to owners, one might assume that owners regularly turn to these professionals for help.
While many founders do rely on advisors, a small business owner’s most likely source of advice is still a fellow entrepreneur.
Marketing To Small Business Owners: Who They Turn to For Advice
One of the most revealing queries on the Value Builder questionnaire — an assessment our advisors use to evaluate a small business across eight value drivers — is “who would you turn to for advice on building the value of your company?”. The most common answer is “a fellow entrepreneur” (41.5%). Only 14.6% would turn to an exit planner, and 14.7% would seek help from an M&A advisor — arguably the professionals best suited to provide value-building advice.
The 2023 Value Builder study of 58 messages totaling 5.3 million messages found that the best-performing email — with almost three times the open rate of Mailchimp’s benchmarking study average — promises a real-life story of an entrepreneur most small business owners can identify with:
The headline above shows the owner’s tendency to gravitate to advice from other founders. If you own an advisory firm, emphasize your credentials as a fellow business owner when marketing to small business owners. Your status as a founder lends credibility in the eyes of fellow entrepreneurs. If you don’t own your firm, focus on sharing real-life stories that illustrate the advice you provide to business owners.
Marketing To Small Business Owners: Guideline #2 Use Real Life Examples
The best way to lean into your credentials as a fellow owner is to share your experiences, rather than give advice. This may seem counterintuitive for an advisor who makes a living selling advice, but founders, by the nature of their career choice, have demonstrated an aversion to following advice.
A founder has chosen to start a business, which means they are not inclined to follow the well-trodden path to corporate success. They are individualists, skeptical of outside help, and prefer to do things their way. This insight is the basis for the founding of Entrepreneurs’ Organization (EO). Started in 1987, EO is arguably the most successful peer advisory group globally, with over 14,000 members across a network of 196 chapters. Each chapter hosts a series of forums made up of 8-10 entrepreneurs who act as each other’s peer advisory board.
Before joining an EO forum meeting, each owner is trained to follow something known as the Gestalt Language Protocol. This protocol is based on the idea that our opinions are shaped by life experiences. Since no two lives are the same, none of us can profess to know the right answer to a given entrepreneur’s problem. Therefore, EO members are forbidden from giving advice to their peers. Instead, EO members are encouraged to share their own personal experiences, allowing fellow members to take what they want from a peer’s experience.
The Gestalt Language Protocol has been enforced at EO forum meetings since its inception and is a significant reason many founders consider their EO board their most trusted source of advice and support.
Marketing To Small Business Owners: 6 Tips for Being Gestalt:
- Speak from experience
- Do not give advice
- Use “I” instead of “You”
- Speak in past tense
- Avoid the “Should”, “Would”, “Could”
- Avoid generalities, be specific.
Marketing to Small Business Owners: Guideline #3 Be Gestalt
Marketing to small business owners effectively is not only about how you talk to them, it’s also matters what you say. If you want your marketing messages to resonate, the key is to talk about the asset that likely makes up the largest portion of their wealth: the value of the business they own.
Most marketing messages directed at small business owners make the mistake of treating founders like managers — rather than owners — of their business.
Marketing to Small Business Owners: Manager vs. Owner Metrics
Manager metrics are found on a Profit & Loss statement. Things like revenue, gross margin, expenses, EBITDA are all examples of key performance indicators managers track. Managers are often hired to optimize these metrics. For example, a General Manager may be hired to maximize EBITDA, a Sales Manager may be hired to grow sales, an Accounting Manager may be hired to control expenses etc.
When you’re marketing to small business owners, if you position yourself to be able to help an owner improve a manager metric like the size of their business or its profitability, you will be prompting an owner to think about their Profit & Loss statement. In this context, your advisory fee is an expense of their business which needs to be minimized. Every dollar they spend with you is a dollar that doesn’t flow to the bottom line.
However, emphasize the value of their business in marketing to small business owners, and you’re prompting the owner to think of their company as an asset they own, rather than a business they manage.
Once an owner is wearing their “asset manager hat,” outside advice is easier to sell because the potential for an owner to get a return on your counsel is much larger than if they were wearing their “business manager hat.”
Marketing To Small Business Owners: Show Investment With You in Context of Other Investments
For example, imagine a $10 million business generating $2 million in EBITDA with a market value of $12 million (6 times EBITDA). A 20% improvement in profitability generates an incremental $400,000. Not bad, but a 20% bump in value would garner an incremental $2.4 million.
As a professional advisor, getting an owner to wear their asset manager hat also enables your client to see the outsized impact investing in their business has when compared to other assets they own.
For example, if you can show an owner a pathway to a 20% improvement in the value of their business, they may compare a 20% return with what they could expect from other assets in their portfolio. In most cases, investing time and money to improve the value of their business will offer a much more attractive potential return when compared to the potential increase in the value of other assets they own.
Over the past three decades, between 1992 and 2022, the average annual return on residential real estate in the United States was 5.3%. In comparison, stocks gained an average of just under 10% per year during the same period. Therefore, an active investment with an advisor that can help an owner improve the value of their business by 20% would allow the owner to double the long-term gains they could reasonably expect from their stock portfolio and quadruple the potential growth of residential real estate.
Marketing To Small Business Owners: Guideline #4 Focus Your Message on The Owner’s Metric
Once an entrepreneur starts to think of themselves as the owner of an asset (rather than manager of a business), it’s natural to start thinking about protecting the asset they’ve built.
Loss aversion is a concept in behavioral economics and decision-making that describes the tendency for people to prefer avoiding losses over acquiring equivalent gains. Simply put, the pain of losing something is felt more intensely than the pleasure of gaining something of the same value. This psychological bias can lead individuals to make decisions based on the desire to prevent losses, even at the expense of potentially beneficial opportunities.
Warren Buffett, the legendary American investor and entrepreneur, is famous for his aversion to losing money. He has said — only half-jokingly — that he has two rules that guide his investing philosophy:
- Rule Number One: Never Lose Money.
- Rule Number Two: Never Forget Rule Number One
An owner focused on protecting what they have built focuses on cultivating a diverse set of customers and ensures they do not become dependent on a key employee. Asset managers in “protect” mode keep a close eye on cash flow, obsess over their company’s reputation, and ensure they don’t expose themselves to legal risks.
Marketing To Small Business Owners: Benchmarks for Email Click Through Rates
Looking again at the data from the 2023 small business owner email marketing benchmarks from The Value Builder System™, we can see a small business owners open emails that promise to show them how to avoid risk. We conducted an analysis of emails sent to small business owners by advisors using our system. We examined the content of 58 unique emails, totalling 5.3 million messages sent between January 1, 2022, and March 31, 2023. The average Click Through Rates (the % of owners who clicked on an email they opened) across all messages sent by Value Builder servers was 6.9%. However, emails that promised strategies for protecting the value of a company outperformed. In fact, the highest performing email, with a Click Through Rate more than twice the average rate spoke directly to an owner’s fear of loss:
Marketing To Small Business Owners: Guideline #5 Show Them How To Protect Their Largest Asset
Once an asset manager feels they have done what they can to protect what they have built, their gaze turns to the future, where they consider ways to grow the value of their asset. They calculate the potential value of their company in the future and forge a plan for making that a reality.
In growth mode, the asset manager considers new markets they could enter, new products and services they could launch, partnerships they could forge, and new channels and ways of doing business.
Turning again to the 2023 email marketing benchmarks from The Value Builder System™, we can see a small business owner’s tendency to open emails that promise strategies for growing the value of their business. As a reminder, the average open rates of the 5.3 million emails sent to small business owners through the Value Builder servers was 39% which is already double the average open rate of 21.9% Mailchimp reported in their 2022 benchmarks. Many of the best-performing headlines spoke directly to owner’s desire to grow the value of their largest asset including:
Marketing To Small Business Owners: Guideline #6 Show Them How To Protect Their Largest Asset
If an owner has done a good job protecting and growing the value of their business, there comes a time when an asset manager realizes their portfolio of assets is out of balance. If the value of their operating business rises to a point where it makes up the lion’s share of their wealth, the asset manager actively starts looking for ways to diversify by selling all or part of their business.
When asset managers are in “realization mode,” they consider a variety of options, from instigating an internal transition or selling shares to an Employee Stock Ownership Plan (ESOP) or selling all or part of their business externally in a majority recapitalization.
Marketing To Small Business Owners: Don’t Hesitate to Talk About Selling
As an advisor, you may be squeamish about the notion of your client selling their business. Afterall, if an owner sells their company, they may not need your services anymore. While you are right to be cautious, not talking about how an owner can realize the value of their business is a mistake. According to analysis of more than 70,000 business owners who have completed the Value Builder questionnaire, most owners plan to sell their business:
Given their appetite to sell their business, business owners will seek out advice from advisors who seem knowledgeable about the topic. By not talking about how owners can harvest the value of their business, you may accelerate the process of losing a client.
In addition, once an owner makes the mental shift to sell their business, they see an immediate return on dollars invested to get their business ready for sale so positioning yourself as an expert can open up a new wallet in the business owner’s mind.
Referring back to the 2023 email marketing benchmarks provided by The Value Builder System™, it becomes evident that small business owners are inclined to open emails offering techniques to realize the value of their business. To reiterate, the mean open rates for the 5.3 million emails sent to small business owners via Value Builder’s servers stood at 39%, which is twice the 21.9% average open rate reported by Mailchimp in their 2022 benchmarks. Several top-performing subject lines directly addressed the owners’ aspirations to harvest the value of their most significant asset, such as:
Marketing To Small Business Owners: Guideline #7 Show Them How To Protect Their Largest Asset
In conclusion, marketing to small business owners requires a strategic and data-driven approach that focuses on practical, actionable information rather than aspirational content. By understanding the unique mindset of small business owners, you can tailor your marketing efforts to resonate with their needs and priorities.
Remember to emphasize your credibility as a fellow entrepreneur or showcase real-life examples to establish trust and rapport. Adopt the Gestalt Language Protocol, prioritizing personal experiences over direct advice. Lastly, focus on owner metrics rather than manager metrics, highlighting the potential return on investment in their business.
By following these proven strategies and leveraging the insights from our comprehensive guide, you can optimize your marketing efforts and achieve remarkable results when targeting small business owners. Keep in mind the 2023 benchmarks for email open rates and click-through rates to measure your progress and success against industry standards. With the right approach, you’ll be well-positioned to forge lasting relationships with small business owners and help them grow and succeed in their entrepreneurial journey.
About The Author
John Warrillow is the founder of The Value Builder System™, sales and marketing software for business advisors that includes tools and ready-made content for accountants, brokers, consultants and financial advisors who focus on helping owners protect grow and realize the value of their business. Prior to launching Value Builder, John established Warrillow & Co., a market intelligence firm dedicated to helping organizations excel in marketing to small business owners. John has been recognized by B2B Marketing Magazine as one of the top 10 business-to-business marketers. His expertise has been sought by some of the world’s most successful B2B marketers, including American Express, Bank of America Merrill Lynch, Dell, FedEx, TD Bank, and Wells Fargo, among others. John’s first book, Drilling For Gold: How Corporations Can Successfully Market to Small Businesses, has been a critical success and a go-to resource for numerous companies aiming to master marketing strategies targeting small business owners.