4 min read

How SMB Owners Can Grow Sales With Neighborhood Marketing

Did you know that most businesses earn over 80% of profit from within a 5km radius of their premises? You can use this insight to optimize your marketing efforts if this applies to your business.
How SMB Owners Can Grow Sales With Neighborhood Marketing

Imagine a circle around your store with a radius of 5km. Now, imagine that every person outside that ring disappears. Turns out, you would hardly notice any impact on your business.

Research shows that nearly 80% of local business sales, whether an independent retailer or the outlet of a major chain, come from within the five kilometre radius around your premises. Your local neighborhood.

Are you directing 80% of your marketing efforts toward that critical area? For most businesses the percentage is less than 50%. That means there are likely to be significant gains to be made by redesigning your marketing efforts.

What is Neighborhood Marketing?

Neighborhood marketing is the discipline of focusing on a plan to build sales in a small geographical area without using mass media. In order to be effective, your program must create a coordinated marketing plan that is specific, measurable and actionable. The goal is to help you develop lasting relationships within your community in order to build your brand, mindshare and sales.

The trick is to target your sales and marketing efforts in specific, well-defined and understood neighborhoods. By making sure your message and offers are delivered only to the people most likely to be your customers, you can save time, money and effort on marketing. Turns out, it’s those within 1-3-5 miles or 15 minutes of your front door.

Why is Neighborhood Marketing important?

The mass marketing myth that the more people you reach, the more business you will attract just does not work for neighborhood businesses like coffee shops, butchers, bakeries, restaurants and laundromats.

The battle for the heart, mind (and pocketbook) of the local patron must be won block-by-block, store-by-store and purchase-by- purchase through neighborhood marketing.

Don’t get sucked in by the big advertising companies. If you make 80% of your profit from your local catchment, then make sure you align your product, sales and marketing efforts as such. The rest could be wasted money.

Who is Neighborhood Marketing for?

This is for businesses that have a physical presence like a store, warehouse, yard, or any other physical area where customers interact with your staff and your business. Includes restaurants, cafes, coffee shops, bistros, hardware stores, building supplies, nurseries, boutiques, etc.

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How can I use Neighborhood Marketing to grow my business?

The neighborhood marketing process begins with five key activities which will provide the data you need to target your local customers:

Step 1: Define your customers

Find out who your customers are and where they live and work. Over a two-week period, ask all guests for their home zip or postcode and business address. Record the information by time of day and analyze the data you collect on a map (e.g. what percentage of customers come from 1km, 5km and 10km concentric circles around your business?). You may be surprised at what you find.

Step 2: Identify potential promotion partners

These are retailers, groups, fundraisers or facilities you can partner with to share customers through cross-promotion. For example, if you’re a local bar you might distribute a ticket discount that drives diners to the local restaurant. They in turn share a discount for after meal drinks from you.

Step 3: Identify community events

It is also critical to include a local community program. At the heart of its success is a commitment to build relationships, give back to the community, and create a venue for social activity or entertainment that serves the needs of local customers.

Whether you are an independent retailer or the outlet of a major chain, a focus on local involvement in your small radius reinforces your best chance to build sales. Certain community events are effective sales and business-building opportunities, for example:

  • Host a local wine or book club.
  • Sponsor a local school event.
  • Give a matching donation to a local charity.
  • Participate in local athletic programs.
  • Sponsor local parades, concerts, fairs or walk-a-thons.

Check with your local Chamber of Commerce or Business Center for a list of activities.

Step 4: Engage hyper local media outlets

Gather data about hyper local media outlets which will allow you to reach potential customers in and around your immediate trading area. This could be local papers, TV stations or billboard companies. Ask for rate cards as well as information on scheduling and required ad materials. Utilize your zip and postcode research to help identify your best targets.

Step 5: Design a plan to target local customers

Bring it all together by executing your local marketing campaigns. Do a local letter drop with personal hand written notes, drop already punched loyalty cards into local letterboxes. It’s likely that 80% of your current and potential customers like inside that 5km circle, draw three circles, plan and execute in this local area. Reconsider all marketing spend outside this area (if your research confirms the 5km circle theory).

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Key takeaway

Completing these five functions will arm you with important knowledge to help develop successful neighborhood marketing programs and target your most likely and valuable customers. It will align your marketing efforts to their best use and set your business up for even more success in the future.

Before you go...

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