Being social media savvy and digitally driven are key to connecting with customers and driving business growth, according to research released by Suncorp.
The “Cost of Being Connected Report” reveals more than half of Australian small and medium sized businesses (SMEs) are spending half their time using digital tools to connect, collaborate and conduct their business.
The report also found while business owners are spending an average of $17,000 a year to remain connected to their business, from sole traders spending an average of just under $6,000 up to medium sized businesses spending an average of almost $175,000, more than half said the cost of providing their customers with the service they need and want continues to significantly increase.
Being ‘connected’ includes spending on technology-related products and services such as computer hardware and software, telecommunications and the internet, IT support and digital marketing, all to maintain engagement with customers, partners and staff members alike.
Suncorp Head of Business Customers John Debenham said despite one third confirming their technology costs are higher than expected, the findings highlight the value SMEs place on their digital connections.
“Small business owners have a business to build, finances to manage and customers to attract. Our research shows two thirds are using digital tools to keep pace a changing operating environment and reach new customers, while more than half measure the success of their business against their level of investment in technology and innovation,” said Debenham.
“Technology has the ability to drastically expand a business’s reach, but at the same time, customer expectations for them to be responsive have also increased.”
According to nearly two thirds of respondents, customer expectations on speed and timeliness have increased – a trend which small business owner Nandi Preller said had influenced the way she engages with her customers.
“We receive customer queries all day and night through social media and other digital channels – it isn’t unusual to reply to a Facebook enquiry at 2am,” said Preller. “The cost of connecting is not just financial, it’s time consuming. If we are not available to quickly reply to a customer, we run the risk of losing their trust and sale.”
Debenham said this around-the-clock service was not uncommon and highlighted some of the challenges they face.
“Our research tells us that attracting and retaining customers are two of the biggest concerns for SMEs. We also know that a business owner’s time is very valuable, yet is it the one thing they never have enough of. However, it’s important they allow enough time to work on the business, not just in their business.”
“It was pleasing to see a third of respondents using accounting and productivity software to manage their financials. Digital software programs and business dashboards can remove some of the complexities of running a business, and ultimately alleviate some time pressures.”
SMEs within the retail and hospitality sector were found to be the most active social media users with almost double the industry average (36 per cent vs 64 per cent) of businesses in this industry using unpaid social media to engage with customers. Social media is also a popular tool to engage employees.
SMEs in retail and hospitality equally ranked customer satisfaction and financial performance as top indicators of business success.
Interestingly, only a quarter of SMEs in professional and financial service industries use social media as a tool to attract and engage with customers, yet more than 30 percent said they use these channels as a tool to engage employees.
Given the limited usage of social media engagement, it was unsurprising that online expansion wasn’t a popular five-year business goal for SMEs. Domestic expansion was high on the list, equally followed by building partnerships and alliances, and investment in technology and innovation. 10 percent also ranked international expansion as a focus.
Perhaps unsurprisingly, 70 percent of SMEs within the education, health or arts industries measured business success against the impact their business has on the local community (70 percent). Nearly all (97 percent) also rated customer satisfaction as a success indictor. Interestingly, about one in six SMEs within this sector are users of paid social media advertising.