Why small is better than big

By Anastasia Chernoivanova, Consultant, ReputationInc

I am a voracious filmgoer. After booking the usual weekend treat at my cute local cinema I realised that I bought tickets for the wrong date. ‘No need to worry’ I thought. They are a small business and therefore will probably be quite flexible about these things, I am sure there will be no problem in exchanging tickets - So I told myself.

How naïve I was! Three days, four phone calls, and five pounds of expense later, what should have been a simple process of changing my ticket was finally completed in accordance with “the company’s policy”.
The whole episode reminded me of my three-year-old nephew who is rushing to ‘grow up’ by foregoing the benefits of being young and nimble, and wants to wake up the next morning as a grown-up so that his parents could not tell him what to do. In the mean time he acted the part by copying his parents’ actions.
The question of why small businesses voluntarily forego their potentially ‘natural’ advantages, such as better and more personalised customer service, over their much bigger competitors is puzzling to me.

There are several reasons why small businesses are likely to deliver better customer service than a large company.

Being small means better customer knowledge.  A small company is closer to its customers and requires fewer resources to learn what people want to meet their expectations.  There is simply no need for complicated CRM systems that holds millions of customer records, nor in-depth knowledge of Mosaic classification to identify your customer segments to ‘unlock’ their hidden desires.

Being small also often encourages flexibility. For small businesses, the costs of adapting to volatile market demand and changing consumer preferences are much lower. They could spot a new trend earlier and have the rare luxury of applying common sense over standardised operating procedures.

Last but not the least, being small can facilitate trust. Trust is probably the most valuable asset that a business can possess. At the times of large businesses’ failures and corporate governance scandals, customers lose their faith in huge conglomerates and instead tend to empathise with local companies that have a stake in their community.

While small companies may have ‘natural’ advantages in these customer service areas, it doesn’t mean that they are not facing customer-related reputational risks. In recent years, small businesses have been confronted –most of them unprepared- with the imperative of reputation management. And some have already paid a heavy price for it. Think about small restaurant owners who have seen their bottom line directly impacted by a few bad Tripadvisor reviews.

On the other hand, larger corporations that have more insight on their own reputation might benefit from reconnecting with the strengths of small businesses. Some big companies, such as First Direct, O2, Dell and John Lewis have already successfully managed to cultivate and preserve a ‘small company mindset’ when it comes to customer service. They win consumer trust through understanding their needs and staying flexible.

The lesson for big and small businesses is clear. From the vantage point of customer service, try to preserve and consolidate the advantages of being small, however think big when it comes to your reputation.