The Green Sheet Online Edition
February 27, 2012 • Issue 12:02:02
Insider's report on payments
Shop small, shop local
The elements have not been kind to the Northeast lately. A wicked hurricane last fall left a swath of devastation from upstate New York to Maine; major roads were washed out and businesses destroyed.
Making matters worse, as of Feb. 1, 2012, less than a foot of snow had fallen in the mountains of New England and New York, placing even greater hardship on local economies built around winter sports, like skiing. This was not lost on the 500 or so folks attending the Northeast Acquirers Association's winter event at Mt. Snow in Vermont, Jan. 31 to Feb. 2.
An annual event that typically culminates in a winter sports extravaganza, this year's event was punctuated by rain. "These folks are hurting," Jacques Breton, NEAA Treasurer, told a packed exhibit hall. "On your way out, stop by one of the local businesses and buy something, even if it's just a cup of coffee."
Many of the ISOs and merchant level salespeople (MLSs) in the room were acutely aware of how dire the situation is, having built their portfolios on small to midsize businesses - like Dot's Restaurant, an eatery in nearby Wilmington, Vt., that had been serving locals and tourists since the 1930s. The building was destroyed beyond repair last fall in the floods brought on by Hurricane Irene, and Dot's has closed.
Creating a national movement
The situation hasn't been lost on American Express Co. either. A card brand with the cachet of social status that is often shunned by smaller businesses because of its high discount rates, AmEx used the NEAA event to promote its new Shop Small marketing campaign.
An outgrowth of the company's Small Business Saturday campaign, Shop Small leverages the power of social media and viral marketing to help drive customers to small, local businesses participating in the program. "We wanted to create a national movement," said Bill DeSimone, AmEx Vice President for Business Development. He added that the campaign is really about making shopping at small businesses "an everyday occurrence."
If the success of Small Business Saturday is an indication, Shop Small has the potential to have a real impact on small business sales and local economic conditions. AmEx reported that on Nov. 26, 2011, the Saturday after Thanksgiving and most recent Small Business Saturday, 103 million U.S. consumers shopped at independently owned small businesses.
That tally surpassed an AmEx pre-Thanksgiving forecast of 89 million shoppers. Plus, AmEx reported a 23 percent lift in cardholder transactions at small businesses that day (aided, no doubt, by the offer of a $25 statement credit for cardholders spending at least $25 at independent businesses).
Additionally, small businesses featured on the Small Business Saturday Facebook page, set up by AmEx, received 2.8 million incremental likes on their own pages throughout November 2011, according to AmEx.
Small Business Saturday was a masterful idea. And AmEx is to be commended, especially for keeping a low profile - a fact that no doubt helped in garnering support from scores of retail chains, civic groups, local governments and even President Obama. Obama was photographed on Small Business Saturday shopping with his daughters at an independent bookstore in downtown Washington. I can't think of any other time when a sitting U.S. president was photographed shopping in response to a card company's marketing campaign.
Boosting local economies
Shop Small builds on growing consumer sentiment about the economic and social benefits of supporting Main Street businesses, as well as a string of "buy local" campaigns - more than 130 coast-to-coast at last count.
At the NEAA meeting, Florida-based Global eTelecom Inc. (GETI) showcased a Shop Local service it developed for ISOs and MLSs to offer merchants. The new service dovetails with GETI's gift and loyalty card offerings; it even supports Shop Local participants' in-house loyalty/gift card programs. "Shop Local merchants benefit from the combined marketing power of multiple businesses cross promoting each other," GETI said in a handout describing the program.
Research shows programs that promote shopping at local merchants can make a real economic difference. A 2004 study of small businesses on Chicago's North Side found that every $100 spent at a local, independent business leaves $68 in the Chicago economy.
The Institute for Local Self Reliance, a Minnesota think tank, reported that independent businesses in communities with active buy-local initiatives saw average revenue gains of 7.2 percent in 2011, compared with 2.6 percent for businesses in areas that lacked these programs.
Looking specifically at retail establishments, the institute reported holiday sales were up 8.5 percent in communities with strong buy-local programs, compared with 5.2 percent where no buy-local programs existed.
"Shoppers understand how important a strong foundation of healthy local businesses is to their communities - and they are voting in favor of independent retailers with their spending," said Oren Teicher, Chief Executive Officer of the American Booksellers Association.
An AmEx survey of owners of small businesses with storefronts, taken in early 2011, found 51 percent believe there is growing buy-local sentiment in the United States. A slightly greater majority (55 percent) believe buy-local campaigns can help small businesses compete in challenging economic times. And 58 percent said they buy from local, independent businesses.
Here's another insight from the January 2011 AmEx Open Retail Economic Pulse: about one in five retailers had plans in the works to use social media for local promotions (22 percent) and to support other local businesses (20 percent).
Involving social media
Look for those numbers to grow substantially this year. AmEx said it plans to leverage social media connectivity to drive customers to Shop Small businesses. The company is also running a "show and tell series" for members of a LinkedIn group it set up for small businesses.
Other card companies are bound to follow - acquirers and ISOs, too. Social media is a significant force because it's a cheap and effective marketing venue. Facebook alone claims more than 800 million active users.
Here are a couple of other pertinent data points from the business analytics firm comScore Inc.: 90 percent of U.S. consumers who use the Internet visit a social networking site at least once a month, and 69 percent of small business owners were using social media as a marketing tool in 2010.
Patti Murphy is Senior Editor of The Green Sheet and President of ProScribes Inc. She is also the founder of InsideMicrofinance.com. Email her at email@example.com.
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