Shelly Kramer / September 25, 2017
My colleague Daniel Newman once wrote that small and medium sized businesses (SMBs) are the driving forces of the economy-he was right then, and he’s still right today. A new report from Deloitte, in fact, calls SMBs “the backbone of the US economy” and “significant drivers of economic growth, job creation and new innovation in the US.” That same report goes on to explore precisely what digital aptitude means to the success of SMBs, and-not surprisingly-the results are clear: Digital engagement paves the way for growth. Let’s take a look…
To compile data for Connected Small Business US-a report commissioned by Google-Deloitte surveyed over 2,000 owners and managers of small businesses with 250 or fewer employees. To quantify responses, researchers first grouped businesses into four digital engagement levels: Basic (no website/no social media presence); Intermediate (simple website/basic digital marketing); High (advanced, mobile-ready website/multiple social channels); and Advanced (use of data analytics/mobile apps). Examine Figure 1 for a thorough breakdown, which will provide important context around the insights we’re about to discuss.
Figure 1. Source: Connected Small Business US
Based on the above distinctions, here are key insights from the report:
- Digital engagement grows revenue. Seventy-seven percent of businesses in the “advanced” category reported expecting revenue growth over the next year-almost double the percentage of SMBs with “basic” digital engagement. Similarly, 45 percent of “advanced” businesses experienced revenue growth over the past year, compared to only 12 percent of businesses with “basic” digital engagement and 32 percent of SMBs in the “high” category. Why? Leveraging technology means businesses can reach more customers and speed time-to-market for products and services-all leading to higher revenue.
- Digital engagement grows employment. SMBs in the “advanced” category reported being almost three times as likely as those in the “basic” category to expect employment growth over the next year-and over six times as likely to have experienced employment growth over the past year. Why? As a company grows, so do its needs-and, as the report states, digitally-engaged employees don’t disappoint. Deloitte says employees at digitally savvy companies “tend to be relatively more productive, with the average revenue per employee at digitally advanced businesses being two times as high as small businesses with a basic level of engagement.”
- Digital engagement grows innovation. Over the past 12 months, SMBs in the “basic” category had a mere seven percent likelihood of innovating a new product or service. Conversely, those likelihoods rose by five and nearly ten-fold when compared with “basic” and “advanced” SMBs, respectively. Why? It’s simple: Leveraging tech opens doors for unmatched collaboration potential and operational efficiency-cornerstones of innovation. I found it especially interesting to see the types of innovation pursued, too. Digital channels topped the list-see Figure 2 for a complete breakdown.
Figure 2. Source: Connected Small Business US
- Digital engagement grows the customer base. “Advanced” SMBs were more than three times as likely to export over the past year, an important indicator of reach. Why? As the report mentions, online communication tools now allow businesses to connect with customers who would have been otherwise geographically inaccessible-growing the potential audience and thus the potential for sales. Figure 3 provides a fascinating breakdown of how new customers, new products and services, and existing customers fared as sources of revenue for businesses in each of the four categories over the past year.
Figure 3. Source: Connected Small Business US
The fact that SMBs with higher digital engagement reap the benefits at every stage of the sales funnel is far from “breaking news.” It has long been clear that embracing digital strategies is a business imperative. For companies that want to remain competitive in a changing marketplace, leveraging cloud-based technology like marketing automation, email marketing, collaboration tools, streamlining e-commerce operations, integrating artificial intelligence and data into operations, embracing social media and connecting with customers where they are and in the channels they prefer is not really an option, it’s a survival strategy.
We know because we’re no strangers to examining how digital tools benefit businesses of all sizes, including SMBs. For further reading, check out The SMB Step-by-Step Guide to Facebook Retargeting and Six Digital Transformation Opportunities for SMBs. Our friends at OnRamp have also explored the value SMBs can gain by embracing digital. For more on this topic, don’t miss Five Reasons Colocation Should be Part of Your IT Strategy and How Cloud Technology is Changing the Playing the Field for Small Business.
If you own or lead a small business, how would you rate your digital engagement? What digital tools have helped your business grow so far, and which ones are next on your list? I’d love to hear your thoughts.
Additional Resources on This Topic:
Productivity: The Secret to a Small Business Competitive Advantage
Why Successful SMB CFOs Are Endorsing a Digital Strategy
Photo Credit: jeffpulvino Flickr via Compfight cc
This article was first published on V3Broadsuite.
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