For many small businesses, revenue growth starts with a tap on a smartphone screen, because that’s where most customers already are.
This finding comes from “The SMB Growth Gap: What Leaders Track That Others Miss,” a new PYMNTS Intelligence report examining the various means by which U.S. small and medium-sized businesses (SMBs) are pursuing growth. The report says companies that track where customers come from significantly outperform those that do not, and also tracks broader change in how business owners think about reaching customers.
Mobile apps and social media are drawing future investment because they extend a business beyond its physical footprint, allowing owners to stay connected with customers wherever they are. Rather than replacing stores, these digital channels increasingly serve as the first point of contact, helping SMBs attract new shoppers, encourage repeat purchases and gather data that can shape future decisions.
The trend reflects a practical reality: A physical storefront can only serve one neighborhood at a time during business hours, but a mobile app or social platform can reach customers anywhere, any time throughout the day, often at a much lower cost.
Key Findings:
- 48% of SMBs expect digital marketing to become their top source of new customers next year, up from 34% today.
- 73% of SMBs that already use a mobile app plan to expand that channel, making it the most popular area for future investment.
- 69% of SMBs using social media intend to increase their presence there, while only 40% of businesses with physical stores plan to expand that channel. Just 6% of all SMBs expect to add a new brick-and-mortar location.
The findings suggest SMBs are following customer behavior rather than chasing the newest technology. Social media has evolved beyond brand awareness into a discovery engine where shoppers not only encounter new businesses before ever searching for them, but also access personalized offers, loyalty programs and convenient ordering. At the same time, digital channels generate a steady stream of information that owners can analyze to see which campaigns, products and customer segments produce the strongest returns.
The report also offers a reminder that digital expansion does not mean physical stores are disappearing, however. While mobile sales channels are widely used, physical locations still account for a substantial share of revenue. Most SMBs operate with a hybrid model, combining digital and in-person experiences. Overall, 61% of SMBs fall into the hybrid category, while digital channels generate 57% of average sales compared with 41% from physical channels. This indicates that the highest performing SMBs are those that understand where customers are coming from, and continue investing in whichever channel, physical or digital, that shows the greatest momentum.
