Beyond survival: SMBs can ramp up business by harnessing the power of innovationBy Tim Fu
The fifth COVID wave in Hong Kong has brought unprecedented challenges to small-and-medium-sized businesses (SMBs) but signs of recovery are already starting to emerge. A recent survey conducted by CPA Australia found that 57% of SMB respondents expect their revenue to stay at a normal level or even grow in the next three months.
While the relaxing of social-distancing restrictions has undoubtedly eased some of the burdens SMBs are facing, there is another factor contributing to the optimistic outlook – investment in innovation. According to the aforementioned survey, the pandemic has pushed local SMBs to become more creative in their business models. Over half of the surveyed businesses said that they generated more than 10% of revenue through eCommerce in 2021 - the highest figure since 2017.
In other words, transforming the need to stay afloat during the pandemic into drivers of innovation can help SMBs not just survive but thrive.
Embracing innovation in times of crisis
Innovation has become synonymous with the tech industry in recent years but its central ideas are more relevant to SMBs than ever. At its core, the concept simply means using creativity to improve in three areas: products and services, business model and customer experience.
The effects of the pandemic will be felt for years to come. Nonetheless, there is no better time to innovate than in periods of crisis. According to a report by McKinsey, companies that prioritise innovation in times of crisis outperform their competitors by 30% during the recovery.
While radical shifts in consumer behaviours and market needs are pushing SMBs to the brink, these factors are also key dynamics that allow disruptive products, business models and customer experiences to emerge. For instance, the eCommerce boom spurred by the pandemic has offered an excellent gateway for SMBs to reach new markets and a wider consumer base by adopting digital technologies. It has also challenged businesses to create new customer experiences as they now need to cater to more diverse needs and preferences from all around the world.
Here are three tips for SMB owners who are looking to transform survival into innovation:
1. Listen to your customers
Starting the process of innovation can seem daunting, especially for SMB owners who are already strapped for time and resources. But it’s important to remember that investing huge sums into R&D is not the only way to kickstart the innovation journey.
Not all businesses need to come up with ground-breaking products and services to succeed. To ensure new offerings bring extra value to consumers, SMBs can turn to one resource they all have free access to – customer feedback. According to a survey, 90% of the consumers surveyed said that
“listening to customers” is the best way for companies to drive innovation. In addition, paying closer attention to peers and joining trade networks can help business owners find new sources of inspiration to improve their products and services.
2. Build a digital-first business model
Establishing an innovative business model does not require rebuilding your business from scratch. For traditionally brick-and-mortar stores, simply expanding sales channel into the digital world can create new revenue streams.
Setting up a social media account and building an online presence is a fast and low-cost way for SMBs to generate sales through eCommerce. In PayPal’s SMB survey, 41% of local SMB respondents said social media was their most important channel for stimulating growth during the pandemic.
Not only can eCommerce generate growth in the domestic market, but it can also help SMBs access overseas markets through cross-border trade. A recent survey in the U.S. found that 39% of SMBs with digital sales channels are confident that their exports will grow in 2022 compared to just 13% of those who only use offline channels.Going global is no longer an option but a driver of growth and a key priority for SMBs.
3. Create customer-centric experiences
Building trust with customers is the cornerstone of success for every SMB. When it comes to eCommerce, providing a seamless user experience can go a long way in enhancing brand loyalty and increase bottom line results. For example: two-thirds of consumers are willing to pay more for a great user experience when shopping online.
Optimising the payment process is one of the best ways to enhance the user experience. Innovation in this area means making the process more intuitive by reducing the number of steps involved, offering payment options consumers prefer and simply reducing load time. Research found that close to one in five consumers abandoned their shopping cart during checkout because the process was too complicated or taking too long. The good news is that even incremental improvements can lead to significant reduction in cart abandonment and increase conversion. For instance, speed improvement of as little as 0.1 seconds can increase conversion rates by an average of 8% and the order value by an average of 9%.
The past few months have been tough for SMBs in Hong Kong but there is no reason to lose hope. The pandemic provides fertile ground for breakthroughs in the market. Therefore, it’s critical that business owners use this time to explore new ideas and prepare for the future. By paying closer attention to consumers, investing in eCommerce channels and minimising friction in the user experience, SMBs can go beyond short-term survival and start building a solid foundation for long-term growth and success.
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