New Research highlights referrals and networking as best strategy – and finds cold-calling and advertising aren’t effective
New research by Brighton-based PR consultancy Vada Media has identified the methods of business development most likely to be successful for small businesses offering professional or business services. Over 100 businesses took part in the study, and results offer a helping hand to SMEs unsure of where and how to invest time and money in the all-important quest for new business.
The key findings:
69% of business is likely to come from recommendations and referrals by existing clients and contacts.
94% of respondents cited recommendations from existing clients as one of the most important source of new work, with informal networking being mentioned by at least 88% of businesses.
Websites were the third most important method for finding new clients, being mentioned by 82% of businesses surveyed.
These were followed by professional bodies (47%), Facilitated networking (via groups such as BNI, 41%) and trade associations (35%)
The more traditional ‘cold’ contact methods were far less popular, with email approaches being cited by only 31%, postal approaches by only 28% and telephone cold-calling by only 17% of businesses as an effective business development tool.
Traditional advertising is successful for only 11%, with direct mail and online advertising effective for only 6% of businesses each.
When asked for the least effective business development method, 36% of respondents said advertising (citing high cost and lack of targeting), 22% said cold calling on the telephone (time consuming and low success rate), 20% said direct marketing (high production costs and lack of targeting) and 9% said email (due to the likelihood of being considered as spam). Other methods listed as unsuccessful were professional organisations (too expensive for SMEs, 7%) and online advertising (6%, not targeted enough).
The research was carried out by PR consultancy Vada Media, originally as part of an internal business planning exercise. 103 businesses took part in the research, representing the whole gamut of professional services including PR, fundraising, advertising, photography, copywriting, event management, web development, accountancy and marketing. 41% of businesses surveyed were sole traders, 53% were Limited Companies and 6% were PLCs.
How big business choose who to work with
A further piece of linked research surveyed 30 high-level managers in UK businesses about their attitudes to external or freelance business service providers. 87% of those surveyed felt that external providers were either important or very important to the modern business.
When asked for the primary method used by their companies to find external business service providers, the results corresponded to the findings of the survey above:
68% use personal contacts and networking to find recommendations
18% use professional bodies or trade associations
8% will advertise in trade or specialist media
6% use recruitment agencies
Respondents were asked whether they had ever employed someone as a result of a ‘cold’ contact. Only 38% said they had, citing testimonials, reputation and good timing or luck as the successful factors for those contractors.
When asked for the most important factor in making a final decision on employing a freelance/external business service provider, respondents cited:
Niche services/Expertise: 30%
Personal Recommendation: 23%
Price: 22%
Relevant Experience: 9%
Breadth of Services: 8%
Size of business (sole trader, agency etc): 4%
CV: 3%
Company branding, image etc: 1%
Steve Bustin of Vada Media said the results held useful pointers for other businesses offering professional services.
“This research was designed as part of an internal business development exercise, but as the results were collated it became obvious that the findings would be of use to many other businesses. The results prove that the best way to find those all important new clients is to canvass current clients and do a lot of networking. So get out there and meet people: as the research shows, there’s no substitute for talking to people face to face,” said Bustin.
