John Warrillow Reveals the Top 5 Reasons Small Business Owners Don't Shop Online

Marketing Communications firm Warrillow & Co. helps Fortune 500 companies, such as AT&T, British Airways, IBM and American Express get inside small business people's heads. What have big brand names like these learned from Warrillow? We spoke with President John Warrillow to find out.

Q: How did you become such a trusted advisor to big businesses on how they should market to small businesses?

Warrillow: I used to work in radio. Each day I'd do a program profiling a different entrepreneur. After I'd done 500 or so, we started getting calls from sponsors saying, "Could you help us market to them? We're having a hard time getting entrepreneurs to pay attention to us."

So I started the company Warrillow & Co in 1997 and now we have a team of 20 in Toronto.

Q: You just finished a research report on why small business owners aren't moving more of their buying online. Can you tell us some of the results?

Warrillow: We completed a series of qualitative interviews with folks who had all transacted online in the last 12 months -- so they were not neophytes who are still worried about security. We found there are five barriers stopping them from buying online:

1) The Expertise Factor -- Small business owners are generalists and rely on suppliers for advice and expertise. For example, they'll ask their account manager at the bank for information on cash flow management. If you make them do business on the Web with a Fortune 500 company, it takes away that one-on-one advice.

2) The See, Touch & Feel Factor -- Small business owners want to touch and feel the product just like consumers do. A good examples of a company getting past this is BankOne. They have sent out 500 business bank account managers to teach accounts how to use their Web site, sending real live bodies to the small business offices to give them 30 minutes of demo.

3) The Anonymity Syndrome -- Small business owners are used to using their relationship with sales reps to get great deals. They are afraid that by going online, they won't get those special offline deals. They think, "I'm nimble to find corners and cut deals, but the Web makes it a level playing field. I can no longer rely on my ability to negotiate deals."

4) The Cobweb Syndrome -- Small business owners think the very best deals aren't online. That there are cobwebs on companies' Web sites. For example, when they go to Staples store in person they go to the clearance aisle, but on the Web site they might just find the standard SKUs and not the really great deals.

5) The Relationship Security Blanket -- Small business owners frequently create relationships with suppliers because they're afraid one day they'll need to call in a favor. For example in banking I don't want to deal on the Internet because there's no one I can call when I need an extra $10,000 credit limit and because I have a relationship I can make that happen.

Q: What's the biggest mistake you see Fortune 500s making in regards to the small biz market online?

Warrillow: One of the biggest is approaching it horizontally. They are looking at small business sites and lists instead of going vertically online.

We encourage our clients to forget about the small business market. It doesn't exist! It's made up at a smaller submarket level. More often people will categorize themselves by vertical -- for example plumbers would go to plumbers.com for information to solve their problems before they'd go to Onvia or AllBusiness. These horizontal sites have a really tough time getting traffic.

Q: You're famous for dividing small business owners into different personality types. Can you tell us about them and what it means to marketing?

Warrillow: There are three --

1) Mountain Climbers -- They are motivated by a growth message which is very succinct and to the point. They are autocratic in the way they manage. They don't like flowery language.

2) Freedom Fighters -- They like independence and are traditional family businesses managed in a patriarchal fashion. Often different members of the family are making purchases online, a second or third generation member will be using the patriarch's card online to buy.

3) Craftspeople -- They want to be the best at what they do -- the best florist, the best writer. They don't think of themselves as entrepreneurs or small business owners. To reach them it's important to orientate your message vertically -- to reach the florist go to a professional florist Web site.

Q: You've done some on-site training for Fortune 500 execs where you get them to play your 'Entrepreneur Survival Game.' What do they learn from that exercise?

Warrillow: It's great fun! If the executives have been working in a big company for a long time, they've lost touch with the little frustrations and insights into market needs. So with the simulation game, Fortune 500 execs begin to identify small business owner's pain points.

These are things like marketing on a shoestring, not having the ability to recruit people in the same way, the fact that with financing you're totally at the mercy of your credit line, the little tech things that are huge....

Q: What's the most important thing Fortune 500 companies need to know about the small business market?

Warrillow: For the most part, we call the small business market the 'Invisible Market.' People have heard the stats that there are more businesses born each year in the USA than babies. 98% of businesses are small. On the front side it looks huge!

In reality it's a giant killer. If you look at Fortune 500 companies that have tried and failed, they've looked at the market in a generic sense. One of the first things you need to do is segment by whatever drives profit in your industry. Usually that's a combination of vertical things: employee numbers, psychographics, demographics, industry verticals. Then you need to figure out which channel they buy through.

If you try to reach the whole small business market, you'll find it's invisible and hit your head against a wall.