Cost of Being Connected
Tuesday, October 4, 2016
Are Australian small and medium sized businesses (SMEs) spending enough time and money to stay connected to their business and their customers?
In an age of social media, innovation and digital disruption; 9am-5pm workdays are a thing of the past and industry change is no longer a possiblility, but a probablility. Business owners are being encouraged to not only think out of the box to stay relevant, but to move out of the box, to support the needs of customers anytime, anywhere.
The demand for business owners to adopt a digital mindset to remain competitive has certainly increased over the years. However, technology and digital channels aren’t only used to stay in touch with customers, but to also increase business to business and employer to employees engagement.
But what is all of this costing our SMEs?
According to Suncorp’s latest Cost of Living Series, Cost of Being Connected, Australian SMEs are spending an average of $17,000 to remain connected to their business. The report surveyed 700 SMEs across Australia about their businesses and the time and money they spend using technology-related products and services to maintain engagement with customers, partners and employees alike.
Looking at the average spend by business size, sole traders are spending almost $6,000, small businesses (up to 19 staff) spent just over $26,000 and medium-sized businesses (20-199 staff) are spending $175,000. Telecommunications/internet and hardware are the biggest expenditures for sole traders, whereas IT development, support and maintenance and digital marketing and monitoring are the biggest for medium-sized businesses.
Yet, the cost of being connected isn’t only taking from business owners’ pockets, but their time too. The report found that, on average, Australian SMEs are spending half their time using digital tools to connect, collaborate and conduct their business. This increased to two thirds for medium-sized businesses.
The internet never sleeps
As the global population continues to move online, customers are increasingly looking for businesses that offer fast, instantaneous service. Business owners are being required to adapt their business to digital, customer-centric models where they can be available for customers around the clock, otherwise they they may run the risk of loosing relationships and sales.
Two in three respondents of the Cost of Being Connected report stated that traditional business hours are a thing of the past, stating ‘we work whenever our clients and customers need us most’. More than 65% said customer and client expectations on speed and timeliness has continually increased over the past five years.
Nandi Preller owner of Soapy Moose, a small Brisbane business that sells handmade dog collars, leads and accessories, uses software for stock and inventory and has business profiles on Facebook and Instagram.
“I handle all of the Facebook and Instagram queries myself, I do it all day every day. I get enquiries at midnight and even 2am and if you don’t respond to those enquiries, you lose sales,” Nandi says.
“The cost of connecting isn’t so much financial for us, but time consuming. People want to you to respond to their enquiry night or day.”
A 2016 report by Sensis on social media usage by individuals and businesses reported that 89% of small businesses manage their social media internally. With these added business requirements, it’s becoming increasingly difficult for owners to balance both working on their business and working in their business.
What does the digital future look like?
As technology continues to evolve, and up and coming businesses claim be the next Uber or Facebook, SMEs must plan for the future and adopt digital profiles that reflect their business needs.
According to the Cost of Being Connected, Australian SMEs are doing well to ride the digital wave as 67% of all businesses are currently digitally ‘engaged’. Two thirds of all businesses are also using digital tools and 46% are using unpaid or paid social media advertising to reach new customers.
Although the pressure to keep up with the changing digital landscape is very real. A 2015 study by Pricewaterhouse Coopers, Small Business, Digital Growth found that businesses could open the doors to $49.2 billion of additional private sector output over the next 10 years by improving their use of mobile and internet technologies. Deloitte also found that small businesses with high digital engagement, taking full advantage of the internet, social media and digital marketing, enjoyed better business outcomes than those with lower engagement, with a $350,000 or 20% increase in annual revenue.
While each SME is different and not all require the services that social media and digital technology offer, many want to embrace them in some way or another . 40% of digitally enaged businesses, and 14% of digitally disengaged businesses are looking to expand their online presence over the next five years and 49% of both engaged and disengaged also aim to increase their social media presence.
So, is it worth it?
No industry or business type has been unaffected by the digital age and the shift towards online marketplaces. In order to keep up in changing business landscapes and reach their full potential, Australian SMEs should be encouraged to maintain an open mindset when exploring different technologies and digital solutions. While the cost of being connected isn’t small, in money and time, it’s a cost we believe is worth paying to ensure our SMEs get the success they deserve.