61% of SMBs run hybrid models, and digital channels generate 57% of sales. The PYMNTS Intelligence report finds that tracking customer origin is the key to outperforming competitors.
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Most small businesses don't choose between physical and digital. They run both. A new PYMNTS Intelligence report, "The SMB Growth Gap: What Leaders Track That Others Miss," puts 61% of U.S. SMBs in the hybrid category. Digital channels generate 57% of average sales. Physical locations account for 41%.
The report's central finding is that the gap between high-growth SMBs and laggards comes down to one thing: knowing where customers come from. Companies that systematically track acquisition channels – whether from a mobile app, a social media post, a walk-in, or a referral – significantly outperform those that don't, the report said.
For a small retailer, tracking customer origin means knowing whether a sale came from an Instagram ad, a Google search, or a repeat visit. That data shapes where the owner spends the next marketing dollar. Without it, the business risks throwing money at channels that don't convert.
Mobile apps and social media are drawing the most new investment. These channels extend a business beyond its physical footprint, the report said. A storefront can only serve one neighborhood during business hours. A mobile app can reach customers anywhere, any time, often at a lower cost. Social media has evolved beyond brand awareness into a discovery engine. Shoppers encounter new businesses before searching for them, then access personalized offers and loyalty programs through the same platform.
That doesn't mean physical stores are disappearing. The hybrid model is the norm. The highest-performing SMBs are those that understand where customers are coming from and keep investing in whichever channel shows the greatest momentum, the report said. The customer journey itself has become the map that guides investment decisions.
Digital channels generate a steady stream of data, the report found. Owners can analyze which campaigns, products, and customer segments produce the strongest returns. For SMBs, the growth gap is not about adopting every new technology. It is about following customer behavior and measuring the result.
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