Staying afloat after COVID-19 will take a good strategy. Oxford and SAP find top performers are emphasising customers, workers, and data analytics.
Oxford Economics and SAP have issued a report saying that SMBs successful in the post-pandemic economy will need to be agile, people-centered, and data-driven.
The report gathered data in March and April during the peak of COVID-19-related economic shutdowns around the world, and it paints a picture of SMBs in flux due to disruptions from various sources: Supply chains, competition from larger companies, and customer retention are all cited as major issues caused or exacerbated by the pandemic.
SEE: Coronavirus: Critical IT policies and tools every business needs (TechRepublic Premium)
From the doom and gloom of a world-wide health crisis comes good news for SMBs, though: They have the potential to outmaneuver their larger rivals. SMBs “can forge close bonds with customers and employees, adapt readily to subtle shifts in market sentiment, develop innovative services and products at speed, and modify their business models to avoid disruption,” the report said.
Knowing how and what to transform are key parts of success, and the report speaks directly to that by dividing responses between SMBs and top-performing SMBs, defined as “those with reported revenue growth above 15% for the last fiscal year and profit margin change above 15% for the past three years.”
So what’s the difference, according to the study, between leading SMBs and the rest? It all comes down to three major factors.
Successful SMBs focus on people
Whether customers or employees, the study finds that top businesses put people first when considering their future plans. Large organizations, the report states, have the flexibility to be more cavalier in their customer retention efforts and how they build employee experiences, but that’s not so for SMBs.
SEE: The new SMB stack (free PDF) (TechRepublic)
What SMBs do have is the personal touch that large organizations lack: “These deep and personalized connections ultimately support resiliency and agility—critical for smaller organizations that may not have the financial reserves to weather hard times—as well as long-term growth.”
The average SMB respondent cited three top priorities for the next three years: Improving customer experience (38%), growing the business (35%), and attracting new customers (26%). Top performers, on the other hand, had different priorities: 53% said improved customer experiences were a top priority, 47% said the same for employee experiences, and growth came in a distant third at 36%.
Top performers, with their increased emphasis on good employee experiences, are likely to retain good talent longer, the report said, which “may ultimately support other goals as well, including both short-term agility and long-term growth.”
Top SMBs are already leading in digital transformation
Leading SMBs have made substantial progress on digital transformation initiatives, and are also more likely to say those initiatives have had a positive effect on both employees and customers–a key part of the positive experiences mentioned above.
Regardless of financial performance, the report found that most businesses plan to make progress on their digital transformation in the coming years. Leading SMBs are further along on average, with 42% having made at least “substantial progress,” as opposed to only 18% of average SMBs.
“New breakthroughs in fields like data analytics, automation, and artificial intelligence will become increasingly essential for small and midsize organizations that aim to develop both
personalized and economically efficient relationships with customers and employees,” The report said.
Business analytics is a key part of success
The report found that SMBs are largely underprepared to use data to make business decisions, with fewer than 40% saying they have the data needed to do so. Top performing SMBs are doing better in that regard, with 63% saying they have the ability to make analytics-based decisions, but the general state of SMB business analytics is lacking.
Most SMBs “cannot make informed decisions about the best way to boost growth, drive efficiency, or operate in a crisis. To solve the problem, small and midsize organizations must reevaluate the scope and scale of information collected from customers, internal sources, and third parties—and ensure they have the tools and skills they need to make proper use of it.”
How to chart a path forward
The economy is in crisis, and so is the business world. To recover from the current state of things will be difficult, and to avoid going into a tailspin the report concludes SMBs, top performing or not, need to do three things.
- Organize for agility: Coordinate across the business using rapid communication and data sharing technology in order to make decisions quickly;
- Be people-centered: All investments, digital or otherwise, should be centered on customer and employee engagement; and
- Be data-driven: Invest in analytics in order to predict and avoid business pitfalls.
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