Digitalization, digital transformation, automation and digital strategy are terms that are constantly thrown around in the business sphere. These are terms that are often used to denote the transformation of business processes, models and operations to more efficient systems through the adoption of digital technologies that provide both incremental and revolutionary improvements to the an SME’s status quo. This shift from a reliance on conventional and archaic practices, technologies and interfaces, such as relying solely on brick and mortar sales, to a more agile and digital approach to business has been driven by the proliferation of smartphone usage, faster internet speeds and the rise of the digital native customer- the millenial. These trends have created the current business environment that is widely considered as the beginning stages of the transition to the fourth industrial revolution characterized by the usage of technology to provide real time improvements on how you advertise to and engage with your customers, how you provide your services to your customers, how you carry out basic administrative tasks such as bookkeeping, accounting and human resources, how you monetize your services and collect your revenue and how the type of services and products you provide to your customers. For SMEs innovation running parallel to this transition ensures that the SME continues to offer products and services that continue to be differentiated, affordable and relevant solutions to their customers. This ensures the SME’s continued survival and profitability in an ever changing world.
One of the biggest barrier to the adoption of a comprehensive digital strategy for SMEs often boils down to misconceptions of the value created by digital transformation. A lot of SME owners make the mistake of thinking of digital strategy as a “nice to have” as opposed to what it actually is- using technology to solve business problems in a cost-efficient manner. The central questions that digital strategy seeks to address are; what problems is your business facing, what technologies can solve these problems and how should your business evolve to survive and remain profitable in a world that is increasingly becoming more digital? Answering these questions requires deep market research to better understand the technologies and trends shaping your industry and opportunities that exist within your market that are not being fully utilized by your business. For example, according to Statista, the online delivery market has grown to an approximately R5.4 billion industry with projections indicating a 18.4% annual growth rate between 2018 and 2022. Although this only puts the present day online fast food delivery market at 1.8% of the total fast food market, for a restaurant this creates an opportunity to increase their revenues through the development of an online ordering system catering for online payments, order tracking and possibly schedule deliveries. Similar solutions can be implemented in other industries. For example small law firms can benefit from implementing an online booking calendar facilitating the process of booking a consultation with an attorney.
The importance for SMEs to develop a comprehensive digital strategy goes beyond just offering an incremental increase to business revenue, it is key to increasing customer satisfaction and engagement. Customer satisfaction is a key determinant of customer loyalty. Absent customer satisfaction, the loyalty a customer has to a business or brand dwindles, reducing her propensity to use your services again thereby increasing your customer churn rate. In this increasingly digital world it has become essential to build a digital-first customer retention strategy that includes the implementation of digital loyalty programs to incentivize repeat purchases or subscriptions, integrating mechanisms allowing for the retention of customer information and sending customer satisfaction surveys to build a feedback loop to better understand your customer’s pain points and the key drivers that make them buy or use your services or products. It has also become increasingly important to adopt an omni-channel approach to communicate and engage with your customers.
According to research published by Euromonitor International and the Statistic Brain Research Institute, approximately half of hotel bookings are made online, 65.4% of which are made through online reservation systems operated and managed by the hotel. Despite this, the Online Travel Agency Satisfaction released data showing that about 18% of people booking online experience some sort of problem in the booking process. In addition to this the 2017 Travel Website Behavior Study found that on average customers visit 4.4 unique hotel websites and spend 29.8 minutes on hotel websites before making a booking. When evaluated collectively this data presents two key points for hotels; Firstly, the customer journey envisioned by a hotel’s online reservation system must be stable, simple and intuitive. A chatbot that seamlessly integrates with a hotel’s Property Management System (PMS) can create a more intuitive booking process potentially reducing problems occuring in the booking experience and increasing customer satisfaction. Secondly, the hotel must develop a modern website with the understanding that their website represents the first interaction potential customers will have with their hotel. This is a vital opportunity for the hotel to present itself in a manner that instills confidence in the hotel and paints a good brand image.
With digital marketing, SMEs are presented with marketing opportunities that allow them to offer targeted and measurable marketing campaigns that reduce resource wastage. Analytics is a key component to digital marketing, creating real- time monitoring of the efficiency of different marketing campaigns allowing for the continuous optimization of marketing campaigns. Using the analogy of a bucket, you do not want to pour water into an opaque bucket with holes in the bottom because you are wasting water. This is exactly what happens when you develop a marketing strategy where you cannot measure the bottom-line impact of your marketing campaigns. With the right strategy we believe even offline marketing can be measured and optimized.
This briefly outlines a few of the basic business arguments of why SMEs should invest in a digital strategy and technologies that help them automate processes, improve efficiency and increase customer engagement.