Wells Fargo survey: optimism softens, but business owners look to marketing to attract new customers in 2020
The majority of business owners have a positive outlook on their financial situation and plan to use digital marketing to attract new customers.
SAN FRANCISCO, February, 6, 2020 – Small business owner optimism softened a bit for their businesses and future expectations in the latest Wells Fargo/Gallup Small Business Index. Respondents also indicated attracting new customers continues to be a key challenge, as many owners share plans of how they will garner more business this year.
Small Business optimism softens in Q1 2020
Conducted Jan. 3-10, the survey showed a 10-point decrease in overall optimism. One indicator underscoring this dip in optimism is the finding that fewer small business owners (24 percent) are planning on adding jobs or positions at their companies this year – lower than last quarter. However, more than 80 percent of owners said their current financial situation is somewhat good or very good, and 84 percent said the same would be the case 12 months from now. Additionally, 64 percent of business owners said they expect their revenues over the next 12 months to increase a lot or a little and 81 percent say their company’s cash flow will be very good or somewhat good over the next 12 months.
When asked about the current state of the U.S. economy, 67 percent rated it as either good or excellent (representing a 4-point increase from last quarter), yet only about a quarter of business owners say the U.S. economy affects their business a great deal.
“It’s promising to see that, in general, business owners remain optimistic,” said Elli Dai, head of Small Business and Personal Lending Group at Wells Fargo. “As we look ahead to the rest of the year, it’s helpful to know what’s impacting their businesses and the decisions they are looking to make. Only when we understand our customers can we better support their financial goals and continued growth.”
Attracting new business remains a key challenge
The survey also focused on owner sentiment pertaining to attracting customers and new business – a top challenge that has been highlighted consistently each quarter. When asked if business owners have more trouble attracting new customers or retaining existing customers, 82 percent said attracting new customers is the bigger problem. The biggest challenges business owners face when trying to attract new business included the basics of finding and then retaining new customers, creating the right mix of advertising and marketing, dealing with competition for customers, keeping prices low, customer service and staffing, and having enough money to run the business effectively.
When asked to think ahead to the next 12 months and what actions they would take in order to attract and retain customers, business owners highlighted increasing networking opportunities (65 percent), obtaining customer feedback (52 percent), increasing social media presence (51 percent), updating their website (49 percent), and increasing spending on advertising and marketing (38 percent).
The survey focused on the growing importance of online user reviews of their business. Over half of small business owners (53 percent) have access to online user reviews and 69 percent of those business owners say these user reviews are extremely or very important to their business. Two-thirds of owners with access to online reviews say they encourage their customers to post positive reviews, and about the same percentage say they post responses to online reviews where necessary.
“Digital marketing now can play a major role for small business success – allowing them to engage with customers directly through social media, get real-time customer feedback, and build their online reputation with customer reviews,” said Linda Soldatos, head of Wells Fargo’s Small Business Marketing. “Investment in managing their online presence can have a great payoff for small businesses in attracting and retaining customers.
Other top challenges
Technology was cited as the second highest-ranked challenge, at 10 percent this quarter, including cybersecurity issues and keeping up with the latest technology and computer updates. Taxes were also rated as a top challenge at 10 percent.
Wells Fargo/Gallup Small Business Index Scores: Q1 2019 – Q1 2020
|Overall Index Score||Present Situation||Future Expectations|
|Q1 2020 (surveyed January 2020)*||132||63||69|
|Q4 2019 (surveyed September 2019)*||142||67||75|
|Q3 2019 (surveyed July 2019)*||136||64||72|
|Q2 2019 (surveyed April 2019)*||129||62||67|
|Q1 2019 (surveyed January 2019)||106||46||70|
*Using updated web-based surveying methodology. Results from the web mode are not directly comparable to the prior phone survey.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a diversified, community-based financial services company with $1.9 trillion in assets. Wells Fargo’s vision is to satisfy our customers’ financial needs and help them succeed financially. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, investment and mortgage products and services, as well as consumer and commercial finance, through 7,400 locations, more than 13,000 ATMs, the internet (wellsfargo.com) and mobile banking, and has offices in 32 countries and territories to support customers who conduct business in the global economy. With approximately 260,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 29 on Fortune’s 2019 rankings of America’s largest corporations. News, insights and perspectives from Wells Fargo are also available at Wells Fargo Stories. Additional information may be found at www.wellsfargo.com | Twitter: @WellsFargo.
Results for Wells Fargo/Gallup Small Business survey are based on web interviews with 600 small business owners, conducted during the period January 3-10, 2020., Beginning in Q2, 2019, interviewing formally transitioned from outbound phone data collection to a national small business web opt-in panel provider.