How does storytelling strengthen brand identity and customer loyalty in SMEs?

“People don’t buy products, they buy stories.” Often quoted and so true! Because we are all inundated with advertising messages. Even small and medium-sized companies need to stand out from the crowd if they want to be heard and seen! But how? Quite simple: With authentic, emotional and well thought-out stories.

From third-generation family businesses to young mechanical engineering companies that are shaping their industry with creative solutions. Such stories not only offer an insight behind the scenes, but also create trust, arouse curiosity and are memorable. However, very few SMEs make use of this potential. Storytelling is not a luxury for big brands, but an opportunity for every company – especially SMEs that can use their own voice to make themselves heard.

“Storytelling is not a nice-to-have for small and medium-sized businesses, but a competitive advantage: telling authentic stories about values, people, and impact strengthens brand identity, customer loyalty, and employer branding—even without a corporate budget,” emphasizes Manja Rehfeld, PR expert at Mashup Communications.

Why does storytelling work particularly well in small and medium-sized businesses?

Stories are a universal tool for communication. For medium-sized companies, which often have fewer resources than large corporations, storytelling is an effective means of building a strong brand identity – but without having to unpack the big budget. A good example of this is Vaude, a manufacturer of outdoor equipment. The family-run company, now in its second generation, is committed to sustainability and places this and its general history at the heart of its own communication. With the “Green Shape” campaign, Vaude tells the story behind its products – from material selection to production. In this way, the company not only conveys transparency, but also its values. Customers feel emotionally connected and consciously choose a brand that is credible and committed.

You can read their story on their blog at VAUDE Story.

What makes storytelling credible, and why is authenticity crucial?uthenticity as a success factor

Authenticity is crucial for successful storytelling. It is not enough to tell just any story – it has to be real. This is where the Lammsbräu family brewery has taken a remarkable approach. Their communication around organic farming and the production of their beers tells an honest story about tradition and innovation. Customers appreciate the openness with which the company talks about challenges such as climate change and trust the brand. Authenticity is no coincidence, but a strategic tool that companies should use in a targeted manner to build long-term customer loyalty.

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How do stories create emotional customer loyalty?

Emotions are at the heart of every good story. They make content tangible and leave a lasting impression. The Schwarzwaldmilch campaign is an impressive example: with authentic insights into the lives of regional dairy farmers, the company tells how closely connected it is to its home region. These stories not only show where the products come from, but also the people and values behind them. Customers feel connected to the farmers and their stories – an effect that has a direct impact on brand loyalty.

How does storytelling help generate attention on a small budget?

Medium-sized companies often have to find creative approaches to generate attention with limited budgets. A prime example is the company myboshi, which sells crocheted hats and DIY kits. With its story about two friends who discovered their passion for crocheting during a trip to Japan, myboshi has created an authentic brand that appeals to younger target groups in particular.

This creative narrative sets the company apart from the competition and shows how storytelling can make a big impact even in a small niche. Also smart: the company cleverly involves its community via Instagram and encourages people to share their own projects using the hashtag #myboshi. This not only strengthens the sense of community, but also creates direct inspiration within the target group with few resources.

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A post shared by Manuela Beyroth * Crochet patterns * Crochet courses (@maschenherz)

Why is multimedia storytelling key to success today?

In the digital world, words alone are often not enough. Multimedia storytelling, which combines text, images and videos, makes it possible to tell stories in different ways and reach a wide audience. The medium-sized family business Faber-Castell – now in its ninth generation and known for its high-quality stationery – uses this approach masterfully. The company creates a lively, interactive brand story with videos that show, among other things, how its products are made by hand, and social media channels that customers can use to share their creative work. Anyone who wants to take a look behind the scenes of production can even book this via the website or visit the company’s own museum. Multimedia with a difference!

How do you use storytelling internally to turn employees into ambassadors?

Storytelling not only works externally, but also internally. After all, employees are the best brand ambassadors when they can identify with their company’s story. Upstalsboom, a hotel and tourism company, has proven this impressively. After an intensive examination of their corporate culture, Upstalsboom developed a concept based on appreciation and a sense of purpose. This transformation was documented in the book “The Silent Revolution” by CEO Bodo Janssen and numerous media reports and led to the founding of a separate association, which generated enormous attention not only internally but also externally.

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A post shared by Upstalsboom (@upstalsboom.de)

How do you make storytelling measurable, and which KPIs are suitable for small and medium-sized businesses?

Very important: storytelling is not an end in itself. It must deliver measurable results, be it through increased brand awareness, higher sales or stronger customer loyalty. Hansgrohe, a manufacturer of mixers and showers, illustrates how storytelling can be directly linked to business objectives. With the “Life is waterful” campaign, Hansgrohe celebrates water in all its facets and shows how its own products make everyday life more beautiful. These stories have not only strengthened the brand image, but also increased product sales.

Conclusion: What is the most important storytelling rule for SMEs?

Storytelling in the SME sector is far more than just a trend. It offers SMEs an opportunity to stand out from the competition in an authentic and sustainable way. Whether through their own founding story, a focus on values or the success stories of customers – with targeted storytelling, small and medium-sized companies can also strengthen their brand, build trust and strengthen long-term customer relationships. SMEs that understand the power of storytelling and use it in a targeted manner are laying the foundations for a successful future. Because in the end, it’s the stories that count.

FAQ: Storytelling in SMEs

1) What is storytelling in small and medium-sized businesses – in practical terms?
Storytelling means using real examples to show who you are, what you stand for, and what impact you have. Instead of saying “We are innovative,” you describe a situation in which you solved a problem – including the people involved, the context, and the result.

2) Which stories work best for small and medium-sized businesses?
The following work particularly well:

• Founder and family stories (origins, attitude, turning points)
• Customer cases (problem → solution → result)
• Behind the scenes (production, quality, decisions)
• Employee stories (everyday life, pride, meaning)
  

3) How does storytelling remain authentic?
It becomes authentic when you get specific: real voices, real details, even friction sometimes. Name challenges and show what you’ve learned from them. Rule of thumb: less slogan, more scene.

4) How do you measure the success of storytelling in PR and marketing?
Depending on your goal, you can measure:

• Reach & visibility (mentions, media hits, social shares)
• Engagement (comments, saves, dwell time)
• Leads & inquiries (contact forms, demo requests)
• Employer branding (applications, quality of applications, referral rate)
  

5) Which channels are suitable for multimedia storytelling in medium-sized businesses?
A strong mix is: website/blog (hub) + LinkedIn/Instagram (distribution) + video (proof & proximity). It’s not important to “be everywhere,” but to tell stories in a recognizable way.

But storytelling is not only an obvious tool for SMEs. In her blog post, Luisa shows how sustainable brands can make full use of their storytelling potential.