Growing Revenues by Adapting to New Consumer Behaviors

Given the number of changes to consumer behaviors and spending habits, small businesses need to adapt. The recently released American Express Entrepreneurial Spirit Survey found that:

• While 85% of consumers believe small and medium-sized businesses are vital to the country’s economic health, only 55% prioritize shopping local.
• Since the start of the pandemic, consumers have shifted 40% of spending, on average, to different priorities; 76% anticipated to continue doing so for the next six months.
• Personal health is the top spending priority, but those surveyed also increased focus on local community, racial inequality and the environment. Additionally, categories of travel and experiences/activities showed an uptick in interest.

Among the ways small-business owners are embracing their customers’ changing needs are to lean into being local, think about experiences over products, and communicate their commitments.

Being Proudly Local

Potomac River Running, a running specialty store founded in 2003, has nine locations in Virginia and employs a hundred people during peak times. In addition to brick-and-mortar storefronts, it offers an online store and training programs.

A family-owned business, Potomac River Running is a community fixture, organizing local races and providing outreach and education to promote healthy, active lifestyles.

“Community support goes both ways,” says co-owner Ray Pugsley. “We do what we can for the community and we hope that in return, when we need some help, they'll help us out.”

Pugsley believes that small businesses “need to not be afraid to toot their own horn a little and let people know how important they are.” The American Express survey supports this—showing that 74% of consumers felt it was important that a business they were spending money with was a local one. Yet, Pugsley notes, many people don’t realize that shopping locally is often just as easy and fast as shopping at giant e-commerce sites.

After the pandemic curbed store traffic, Potomac River shared videos with updates like new shopping options and safety measures.

“The message was, ‘If you like us and you want us to be around, we’d love to have your support.’ We think that resonated, and we certainly got through the worst of it and feel positive about the future,” Pugsley says.

To build customer loyalty, Potomac does much more than emphasizing its local roots.

“Even though we would be classified as retail, what makes us special is our service. We had to figure out, why would somebody buy from us rather than just going on Amazon,” Pugsley says.

Part of the answer lies in the shopping experience. When customers come into a Potomac store, staff offer education, along with free shoe fittings using video gait-analysis software. When the pandemic hit, the fitting went virtual—with video or phone calls for at-home appointments and calendar software for scheduling.

“Creating experiences for customers is paramount. Without that experience, we’d just be another transaction,” Pugsley says. “We don’t want to just be selling to people—we want to educate them on what products are out there that might make their life better.”

Turning Products into Experiences

Creating experiences takes experimentation, says Nicole Pomije, owner of The Cookie Cups, a bakery with two locations in the Twin Cities region of Minnesota. Pomije started her business baking out of her home five years ago, and launched her locations primarily by selling cookies at local farmers markets.

Like other retailers, The Cookie Cups had to temporarily shut down, then implement new protocols upon reopening. That included pausing in-store cooking classes and birthday parties, just as the busiest season approached. When Pomije’s husband shared a link to a virtual cooking class, the idea for an at-home experience was born.

“I wanted to get everyone excited and interested in our brand and make up revenue,” Pomije says. “But virtual cooking classes didn’t make sense for us.”

Instead, the entire team spent the next six months developing a cookie baking kit, brainstorming shelf-stable ingredients, sourcing manufacturers, creating branding and figuring nationwide shipping. The bakery began offering its Unicorn Cookie Cup Baking Kit, as well as a pizza making kit, in October.

Consumers crave experiences now even more than before the pandemic—the American Express survey found a 4-percentage point increase in spend on experiences/activities since the pandemic started. But turning products into experiences needs to be in alignment with your brand, notes Pomije, who has a decade of marketing experience.

“If you’re a Mexican restaurant, for example, and you’re known for your amazing guacamole, maybe you could teach people how to make it on Instagram Live,” she says. “You don’t have to be selling a kit or another product, but it can be something that you’re doing to keep customers excited and expand your reach.”

She acknowledges that new ideas like her cookie baking kit may succeed or may fail, and it may take months to know. But small businesses need to keep moving, and that means experimenting.

“You have to make a decision at some point and take an educated risk, and see if you can turn things around,” she says. “And that’s what we’re doing—trying to turn this train around and see if we can sell kits across America for the holidays.”

Owning and Communicating Commitments

As an African safari travel company, Stockton, California-based Metamo has been offering experiences in the true sense of the word since 1998. But the experience goes beyond the journey. The company focuses on sustainable travel and conservation, invests in its staff and the local guides, and supports a philanthropic project that provides education for children.

All these components tie together with Metamo's values, says Greg Traverso, CEO and co-founder with wife Susan.

Creating experiences for customers is paramount. Without that experience, we’d just be another transaction.

—Ray Pugsley, co-owner, Potomac River Running

“You have to know who you are and what your core purpose is, and not just a slogan on the wall but something you live and breathe and is your identity,” he says. “People will be attracted to it if it matches their own vision and mission.”

Part of Metamo’s vision is to put 5,000 African children through school over a 10-year period. The Traversos founded the Red Rhino Orphanage Project in 2005, building a children’s home on 5 acres in Kenya. Education opportunities are limited for those kids, and for every customer who books a safari, Metamo puts one child through school for a year.

With the entire travel industry coming to a halt in 2020, Metamo has shifted its focus to the 2021 season. Traverso says the pause was an opportunity to rebrand, as well as listen to customers to discover their needs.

Personal health is the top priority now, and 56% of those surveyed said they've increased focus on that compared to pre-COVID-19. And that's exactly why Metamo decided to offer a promotion: for any classic safari booked by June 30, 2021, customers can receive a free upgrade to a private journey. That way a family would feel more comfortable, for health and safety reasons, but without paying the typically higher price.

Making adjustments and being compassionate are part of recovery from difficult times, Traverso believes.

“The more you can focus on our values and sound business practices—following our budgets and programs that keep us highly focused—the more it helps you be resilient,” he says. “It’s not easy, so we have to help each other and be there in any capacity we can while still using good business practices.”

Photo: Getty Images