Impact of COVID-19: Growing small and medium businesses are investing more in technology
The Small and Medium Business Trend Report by Salesforce Research analyzed the responses of more than 2,300 small and medium business (SMB) owners and leaders around the world to determine the impact of the COVID-19 pandemic and progress against digital transformation programs.
The Small and Medium Business Trend Report by Salesforce Research analyzed the responses of more than 2,300 small and medium business (SMB) owners and leaders around the world to determine the impact of the COVID-19 pandemic, role of digital transformation in terms of enhancing business resiliency, and how SMB leaders are planning for recovery and growth post pandemic.
McKinsey research shows unprecedented rate of adoption of digital technologies, like 10 years of e-commerce adoption in the past three years. In addition, there is a shock to brand loyalty, as 75% of Americans have switched brands in the pandemic. Small and medium businesses are fighting the most challenging conditions in the past hundred years -- a combination of health, economic, racial injustice, climate change and large scale spread of misinformation and absentee leadership. There is a clear deficit of trust which leads to consumers spending less of their discretionary income on non-essential goods and services.
The world of SMBs radically changed in early 2020 due to the COVID-19 pandemic. Here are some of the major trends outlined in the Salesforce SMB Trend Report.
SMBs prioritize customer safety and shift interactions
SMB optimism persists amid new challenges
Digital-forward SMBs are better equipped to handle market volatility
Customer safety is the top SMB priority. SMB leaders are particularly placing an emphasis on safety and sanitation policies and complying with local public health mandates that can shift depending on the volume of COVID-19 cases in their area.
Innovation, supply chain and personalized offerings challenge SMBs. Meeting customers' high expectations -- a tall order for SMB leaders facing time and budget constraints -- is difficult even without public health, economic, and social crises. 77% of customers say this year's crises should be a catalyst for business improvement. 66% of customers expect companies to understand their unique needs and expectations.
The customer experience and relationships matters more than ever. SMBs are more careful about customer communication, offer more expanded ways for customers to connect, offer more flexibility and place stronger emphasis on relationship building over one-time transactions.
Acquiring new customers is the biggest challenge for SMBs. Acquiring new customers was, by far, the biggest challenge SMB leaders faced in their day to day. It has only become more difficult.. Planning for the long-term and retaining existing customers make up the top three new challenges.
Most constraining factor for SMBs is lack of money or access to capital. Lack of cash is not a surprise. The other top challenges for SMBs include meeting customer expectations, hiring the right talent, and finding the right technology to meet their needs. Retention and motivation of existing employees is also a challenge.
The pandemic has significantly reduced revenue. In addition to revenue loss, 3 in 5 SMB leaders say local mandates to close or limit operations are threatening the viability of their business (65%) or that compliance with public health requirements creates an excessive burden (59%).
Majority of SMB leaders are struggling to keep their businesses going. 57% of SMB owners said they're struggling to keep their businesses afloat. 72% of SMBs leaders are optimistic about their future in August 2020. Medium-sized businesses are 12%* more likely than small businesses to say they are optimistic about what the future will hold. The highest level of optimism by industry are: healthcare provider (83%), technology (80%), consumer products (77%), retail (67%), manufacturing (66%) and hospitality/travel/transportation (60%).
Digital forward SMBs are better equipped to handle the pandemic. More than half of growing SMBs say technology drives their customer interactions (55%) or the growth of their customer base (51%), significantly higher than their stagnant/declining competition. More than 7 in 10 SMB leaders (72%) believe that one centralized application to manage business functions like sales, marketing, and support would be helpful. Only around 1 in 4 SMB leaders say the pandemic has accelerated their investments in technology, with growing SMBs and medium-sized businesses significantly more likely than their respective counterparts to report acceleration in technology investments. The overwhelming majority of consumers (88%) expect companies to accelerate digital initiatives due to COVID-19. 1 in 3 SMB leaders said that the pandemic has accelerated their digitization initiatives. Growing SMBs are investing more in technology.
SMB leaders are evaluating technology based on the impact on delivering value at the speed of need. The reports notes that 7 in 10 SMB leaders citing ease of use, trustworthiness of a vendor, and price as important considerations when evaluating new technology -- consistent with pre-COVID and early-COVID times.
SMB leaders are placing a stronger focus on CRM investments. More than half of SMB leaders say their company uses a CRM system, a 24% increase from 2019. SMB leaders in the technology (68%), consumer products (68%), and manufacturing (64%) industries are the biggest users of CRM systems.
Growing SMBs embrace various technologies more readily than their stagnant/declining counterparts. In addition to CRM, SMB leaders are also investing in email marketing software, customer service software, project or task collaboration tools, or e-commerce software.
SMB leaders are preparing for the Next Normal with focus on financial stability. Looking ahead, SMB leaders most commonly say they have considered applying for financial assistance, followed by adjusting their staff count (by either decreasing or rehiring employees), or even closing the business for a brief time.
SMB leaders are preparing for the Next Normal with technology and digital transformation as top priority. SMB leaders considering short-term changes, but they are preparing for future crises by adopting technology and digitizing operations.
The fourth edition of the "Small and Medium Business Trends Report" is very robust and it includes country profiles. To learn more about key trends and use cases, you can find the full report here.