By Daniel Hunter
AXA Business Insurance research reveals that three times as many consumers would choose a small business for goods or services than a large business if price and convenience were equal.
AXA Business Insurance, part of one of the UK’s largest insurers, carried out research among UK consumers to establish the motivators when it comes to a choice between buying goods or services from small or big businesses.
Opening hours are cited as the biggest reason that consumers shop from big rather than small businesses, with price the second biggest reason. Although when it comes to paying more, consumers on average are happy to pay about five per cent more when buying from a small business. For more expensive items this rises marginally to six per cent.
But in many other areas consumers believe that small businesses are winning hands down over their bigger competitors. Customer service is considered to be a key area of benefit when using a small business — three quarters of consumers considered that small businesses do this better than big businesses. And providing a “real person” to deal with tops the list of things small businesses do better than their bigger counterparts.
Small businesses were also viewed by consumers as nearly three times as likely to provide quality services or products and nearly four times as likely to treat their staff well. In terms of being accountable if something goes wrong, small and large businesses were viewed similarly by consumers.
“While much of this may come as no surprise to SMEs, we do think that there are some real positives for small business that come out of this research and also some areas where many small businesses could make themselves more competitive," Darrell Sansom, Managing Director at AXA Business Insurance said.
But despite the positives, currently over half of consumers do either “none” or a “very small amount” of their shopping from small businesses.
Over the last year, nearly one in five (18 per cent) have increased the amount they buy from small businesses but a similar number (17 per cent) have decreased the amount. However, over the longer term (five years) the number of those who have decreased the amount they buy from small businesses is greater than those who have increased their shopping with small providers.
Despite the added benefit of convenience, only 15 per cent say the internet has positively influenced how much they buy from small businesses compared with five years ago.
When asked what would motivate them to switch to a small business for something they had traditionally bought elsewhere, “special offers” were top of the consumers’ list followed by a friends’ recommendation. One in five would be swayed by good marketing.
“We know that the last few years’ have been a tough environment for pretty much all businesses and it seems that possibly consumers have turned to bigger providers during this time. However, we know that SMEs are much more optimistic about the future than they were a year ago and we hope that this will be reflected in the growth of their businesses," Darrell Sansom concludes.
“As an insurer who specialises in providing cover for SMEs we are keen to see them thrive and we hope that taking on board some of these findings will put them on the road to a successful future.”
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