Consumers increasingly spending with large businesses as SMEs lag behind in the tech stakes
Wed 15 November 2017 - 12:48 pmNews
Australia’s small businesses have been slow to leverage technology that would improve the customer service experience even though consumers are increasingly turning to large organisations to satisfy their spending needs, according to Katrina Konstas, Vice President Small Merchant JAPA, American Express.
Konstas spoke with Dynamic Business about findings from American Express’ Economy of Shopping Small: Keeping it in the Community report, released to support its month-long Shop Small campaign.
DB: What success has the Shop Small campaign enjoyed to date?
Konstas: Shop Small is a national movement founded by American Express to ignite passion for small businesses and encourage Australians to walk through their doors. Last year, more than one million American Express card members were inspired to shop small, spending more than $600 million at small businesses during November. And this year’s campaign is also proving successful, with a record number of small businesses across Australia taking part, and our card members signing up for the Shop Small offer faster than ever before. It’s encouraging to have so many people so enthusiastic about supporting their local communities.
DB: What does the report say about the barriers facing small businesses?
Konstas: While Australia’s small business community continues to thrive, representing 97% of all Australian businesses, the daily grind is taking its toll. Our report shows that almost one in ten can’t see how they’ll stay open beyond this time next year and 13% often think about giving up on their business.
Further, small businesses are being forced to focus on operating costs rather than business growth; namely, 55% of owners concerned about rising energy prices while 53% are worried about managing costs and overheads.
In a digital-era, small businesses should be thinking about the end-to-end customer experience and leveraging technologies. Consumers’ expectations of convenience, speed and service have heightened, yet some small businesses are failing to embrace technology fast enough compared with the bigger end of town. Funding, a lack of technical expertise and time were cited as key barriers for technology adoption.
DB: What steps should small businesses take to support their success?
Konstas: We encourage all small businesses to take a proactive approach to managing the overall health of their business. It’s important for them to stay close to the numbers; however, they must not lose sight of how they can keep their customers happy and loyal, which could include going surcharge free, and providing seamless payment options. Too often small business owners focus on their bottom line at the expense of the customer service experience.
There is huge opportunity for small businesses to capitalise on technology innovation to support their success. Consumers believe that technology offers greater convenience, with the majority telling us that a basic website is the most important tech investment for a small business. This is followed by online sales or booking functionality and social media channels.
However, some smaller businesses have been slow on the uptake; just 52% of small businesses have a website, with 24% saying they have no intention of ever getting one – and only around half of small businesses use social media marketing.
While there is still a significant opportunity for some small business owners who have taken longer to adopt, there are others who are responding to this trend positively: 27% of small businesses expect to incorporate more technology into daily operations and 24% are targeting increased online sales.
Opting to go surcharge free also brings both business and customer benefits. Seventy per cent of our small business survey respondents are currently surcharge free, with 46% seeing improved customer satisfaction upon removal of the fee and 13% experiencing boosted financial performance.
DB: What are some of the surprising findings from the research?
Konstas: We found that Australians are increasingly turning to large organisations to satisfy their buying needs at the expense of small business. Worryingly, 20% of people increased their shopping at big business compared to only 13% who increased shopping at small businesses. Despite this, 43% of small businesses have increased their financial turnover in the past year, and 41% are holding steady. This is good news for more than just the small business sector, because almost half of what we spend in small businesses is ploughed back into local economies.
Another surprising finding was that small businesses seem oblivious to larger and online businesses who threaten to take them out of business. Relevantly, only two in five owners felt under threat from either large online businesses (38%) or larger bricks and mortar rivals (37%).
DB: How can big business and government support small businesses?
Konstas: Throughout November, we’re asking big business, associations and government to throw their support behind their local communities by encouraging others to shop at small businesses. They can do so by sharing messages of support via their social media networks, using #ShopSmallAU and their influence to encourage others to support local businesses.
An emerging trend we’re seeing is collaboration – and we think it’s a great way for larger businesses to support small in a mutually beneficial way. Our research found there are considerable financial benefits in collaborating. Small businesses are aware of how the Boomerang Dollar can drive more local economic growth as four in five said they would consider greater collaboration with other small businesses in the area.