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Ambitious SMEs say marketing is ‘crucial’ to growth, but measuring ROI holds them back

Royal Mail MarketReach today releases new research revealing that the majority (81 per cent) of UK SMEs believe marketing is ‘critical’ or ‘essential’ to their business growth, with 37 per cent believing it is the primary driver of their business.

The research demonstrates that SMEs are ambitious and focused on growth, with nearly nine out of ten (89 per cent) looking to grow their business this year.

The research findings are published in a new guide from SMEs Smart Marketing for Small Businesses which can be downloaded here and looks at the business ambitions and marketing challenges of UK SMEs in 2016.

Marketing for growth

The research found that nearly three quarters (72 per cent) of SMEs invest up to 20 per cent of their turnover on marketing, a significant investment. This is not surprising given that two thirds (66 per cent) of SMEs said they are looking to acquire new customers and 46 per cent want to build stronger relationships with their existing customer base. This is higher than the number of SMEs currently looking to expand internationally (24 per cent) or sell through more channels, such as marketplaces (31 per cent).

SMEs embrace a multi-channel approach

SMEs also reported that they understand multi-channel marketing and apply it regularly, with an average of 3.5 media channels used in their marketing. Many are choosing to ‘do it for themselves’, with 69 per cent preferring to develop and manage all marketing in-house.

The most popular channels for SME marketing are email (82 per cent), social media (62 per cent), online advertising (50 per cent) and direct mail (46 per cent). Only 16 per cent of SMEs currently use search marketing and seven per cent use telemarketing.

Barriers to marketing

While SMEs recognise the benefits of marketing, the research also highlights barriers: 68 per cent of SMEs said it can be difficult to get customers to take action as a result of marketing activity.

Furthermore, SMEs are held back from using new channels by a range of concerns. The most commonly cited barrier to using a new marketing channel was a concern about measuring the commercial return on their investment. The second greatest barrier was the cost associated with using the new marketing channel. Capacity to handle customer responses as a result of marketing activity was third, with SMEs saying that a lack of knowledge about who to contact to set up marketing in a new channel was the fourth greatest barrier.

Direct mail offers good ROI, say SMEs

Among users of direct mail, confidence in its commercial value is strong: 75 per cent of SMEs using direct mail said it delivers a good return on their investment. Furthermore, 75 per cent of SMEs using direct mail said that consumers were more likely to keep a piece of marketing mail than an email. This could be good news for the 71 per cent of all SMEs which said they wanted to create marketing that customers can keep hold of for future reference.

The SME report is published following the launch of Royal Mail’s new online tool MailshotMaker,, which enables companies to create professional, cost-effective mailshots in minutes, with prices from just 49p per item. Royal Mail created MailshotMaker specifically for SMEs that want to grow their business and remain in control of their marketing. The online tool will guide users through the design process, helping them to create professional, engaging mailshots which deliver results for their business, whether they are reconnecting with existing customers or finding new ones.

Jonathan Harman, Managing Director of Royal Mail MarketReach said: “Our research shows how important marketing is for UK SMEs. It helps them grow by acquiring new customers and building better relationships with their existing ones.

But it is clear that lack of knowledge, fears about cost and concerns about measuring their returns could be holding them back. Our SME guide offers solutions to help SMEs overcome some of their concerns and gives them insights from industry experts that they can put into action right now.”