Report: Small businesses in a digital race for customers

- November 9, 2016 3 MIN READ

According to a report released in March 2016 by Salesforce and Deloitte, small businesses embracing the digital age are reaping the benefits of increased customers and boosted revenue, while those not investing in digital tools are at risk of being left behind.

The report, based on a survey of more than 500 small businesses in Australia and New Zealand, found that small businesses which add two extra customer communication channels can boost revenue by 4.8 per cent (an average of almost $160,000 a year) while each one per cent increase in spending in online services can lead to an average $100,000 increase in revenue.

Unsurprisingly, small businesses which use social media in a variety of ways – from advertising and customer service to target offers – are really at an advantage, generating increased revenue of more than $30,000 a year. There are a wealth of opportunities for small businesses to communicate and sell via social media, and with half of all Australians using social media weekly, 24 per cent of Australians using social media to find out information about a particular business, it makes sense for businesses to use these channels to connect with their customers.

For current customers, social media expectations of businesses are also on the rise. More than half the businesses surveyed believe the ideal response time to customer enquiries is less than an hour, while 20 per cent think the ideal time is less than 10 minutes. While active customer service via social media includes faster and personalised responses, less than 20 per cent of small businesses are actively engaging with customers over social media.


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When it comes to investment, the average SMB in Australia and New Zealand spent six per cent of their average total revenue – $144,000 out of $2.5 million – on IT. Small businesses plan to increase spending across hardware, software and online services at 30 per cent, 34 per cent and 14 per cent respectively. Planned growth in online services globally is 19 per cent, putting Australia and New Zealand below the world average.

“This could be a missed opportunity for SMBs,” the report says. “After controlling for business size and industry, each additional one per cent increase in online services spending leads to a 2.6 per cent increase in the proportion of sales conducted via digital channels, and a 2.2 per cent increase in digital lead generation.”


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Twenty-three per cent of small businesses identified online competition as their biggest threat, with another 17 per cent ranked it in their top three. Local competition (30 per cent) was the biggest concern for small businesses. Over the next five years, businesses expect international competition and new technology to replace some concerns about online competition.


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Retaining existing customer relationships is also a top priority for small businesses, with 29 per cent stating “finding new customers” as their primary goal when acquiring new digital technology. “Digital technology has a real role to play in helping SMBs retain, engage and build loyalty with their customers. Digital technologies such as social media and online CRM platforms can help SMBs monitor relationships closely, stay connected with customers and better service their needs, and upsell through existing relationships,” the report says.

While most small businesses understand the importance of digital engagement, there are 22 per cent of respondents that have no digital sales or leads capabilities. These “digital laggards” have on average, been in operation longer and are less likely to view online competition as a threat.

There’s also a message about the danger of complacency for small businesses:

“SMBs operate in an environment where competitors are trying to improve, and to approach customers in new ways. The view that the business is already perfect is an invitation to competitors to win customers with bette, faster and more tailored services.”

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