Recently, small business network Alignable released its SMB Trust Index for Q1 2017. Using a methodology based on the Net Promoter Score (NPS), the index highlights the most trusted brands across business owners.
Here, trust equates to the likelihood that a small business would refer another business owner to a given brand.
The data is telling. Only 44 percent of brands serving SMBs scored favorably (i.e. positively) this time around. It’s a bit unexpected, but certainly telling about the space today. Here’s why.
There’s doubt that quality referrals are a critical element across consumer, professional and business landscapes. This is certainly the case, said Eric Groves, Alignable CEO and co-founder, when it comes to SMBs — especially for new entrants and organizations eyeing growth.
LinkedIn, Facebook and others have transformed the means by which professionals and consumers get referrals, creating frictionless access to valuable insight and information regarding opportunities, products and services.
While social media has enabled these sorts of connections on the individual level, the SMB market has historically been underserved when it came to digitizing the process.
For SMBs, referrals aren’t just about customers, Groves said. It’s about introductions to people, products and services that business owners rely on for success.
“So much of local business success comes from access to quality referrals,” he said. “Answers to their questions could be 10 feet away through drywall, but if you don’t have a relationship with that other business, getting access to that knowledge can be tough.”
Alignable was created to fill this gap, to enable businesses to connect digitally on a local level.
When businesses first join, Groves said, they’re typically looking for three types of referrals — customers, employees and capital. As the user base grew, Alignable saw a desire grow for small business owners to leverage others’ experience to gain insight on third-party products, brands and services.
This data feeds the Index, which in turn shows that while SMBs rely on third-party services, their overall experience has been less than stellar.
But it also depends somewhat on which segments you view.
In this quarter’s index, for instance, brands that managed SMB online presence and reputation collectively received a -61, and services managing loyalty and rewards for SMBs averaged a -39.
On the other hand, payment providers took four of the top 13 spots, and the money, payments and banking category had one of the highest average trust ratings overall.
The breadth of scores per category varied widely. No category saw all of its composite brands score positively.
While Groves noted that it will take a few more index releases to amass enough data to draw reliable conclusions as to why different categories see such disparities in SMB sentiment, he has a few working hypotheses.
One idea is that the scores may come down to which brands and segments best address typical SMB pain points. If a number of SMBs experience issues driving revenue, then they’ll more critically or favorably score brands and services based on their ability to meet that need.
Likewise, if SMBs feel trapped or captive to the service rather than enabled by it, the resulting scores will be lower — which Groves attributes to the less-than-stellar rankings of the loyalty and rewards and presence and reputation management categories.
“NPS should also give you a leading indicator of churn,” Groves said. “If a brand has a highly negative NPS, it likely sees significant churn, which calls into question its economic viability over others in their segment.”
He noted that it could be interesting to track stock performance for the publicly traded companies in future indexes alongside changes to their overall scores.
As Alignable continues to compile user data for future indexes, as well as enabling connections via its small business network, Groves hopes to be able to provide SMBs with information and insight to help beat the odds.
“We would love to be able to say — 10 years down the line — that we have been able to significantly reduce the failure rate of small business by enabling them to make connections and informed decisions,” he said.
Likewise, Groves noted that the index isn’t just for SMBs. Brands serving the space can also benefit by getting a sense of how they’re perceived outside of internally produced NPS scores — and, if their performance is less than stellar, to be able to understand why and change accordingly.
“When marketplaces shift to the point where they have a social platform, the control of your brands really shifts into the hands of your customers,” Groves said. “When a bad or good thing happens to a brand, it spreads incredibly quickly. It’s important to understand how you’re being perceived by your customers and what actions you can take to improve as the walls come down.”
In truth, brand sentiment has never been more important — especially when targeting a group that makes up 46 percent of the GDP. Given that 66 percent of brands scored in the negative this time around, it appears there’s still a good deal of work to be done.
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