The Importance of Digitally Transforming Your SME
‘Digital transformation’ has been a popular buzzword in the business world for quite some time now. But with the sweeping impact of the Covid-19 pandemic, and our increased reliance on all forms of technology, there is a growing need for small and medium-sized enterprises (SMEs) to digitise, modernise, and streamline their practices. With UK adults now spending more than a quarter of their waking days staring at screens, our personal and business interactions are increasingly taking place online. So, companies who move with the times and change their business models to adapt to this new market reality are much more likely to remain relevant; while giving themselves a competitive advantage.
Although the benefits of this shift are broad in scope, digitally transforming your company often requires more than a simple software update and adding a couple of tech guys to your team. Adapting your company to fit the growing needs of a digitally-mediated market requires much more of a holistic approach - and this often includes rethinking the whole culture of your business.
So, strap in while we help you understand how exactly to digitally transform your business strategies, before we outline the multiple benefits of doing so. But before we get carried away, let’s get to grips with what we mean by the term’ digital transformation’.
A digital transformation will undoubtedly look different to each company. However, it is commonly defined as ‘the integration of digital technology into all areas of business - resulting in fundamental changes to how businesses operate and how they deliver value to customers’. As this definition details, digital transformations typically feature a widespread adoption of technology into almost every area of the business. This normally includes replacing long-standing business practices with relatively new tech-centric approaches that may still be in the process of being defined.
This may entail: software changes, an increased focus on data analytics, automating operations, or hiring specialists. But at the heart of digital transformations is an overarching shift in attitude by a team of specialised staff who are ready and willing to adjust to this new landscape.
As this review from the Harvard Business School outlines, the success of a digital transformation relies on the coordination of just four interrelated domains: technology, data, process, and organisational change capability. But it points out that the backbone of all of these domains, and any subsequent success, depends on the staff; their outlook, and their level of talent. This is because assembling people who have experience in all four of these fields, along with a strong leader who can create effective change, aligns these four corners of digital transformation and gives businesses a better chance at succeeding.
And when we talk about succeeding, we believe that a digital transformation can spell success for SMEs in a variety of different ways. However, with nearly half of all organisations undergoing digital transformations citing customer experience as their leading influence, it’s clear that consumer satisfaction is a central motivation for this process. So, now we’ve nailed the definitions, let’s take a closer look at what steps you need to take to actually get there.
So often, human error, unnecessary repetition, and bureaucracy can slow down the speed and efficiency of a business. Therefore, finding ways to streamline these processes is a great way to minimise errors while saving precious staff time, giving workers more time to focus on other things. Previously only a luxury available to bigger companies, the automation of operations is now a tool that is being harnessed by a broad scope of small to medium-sized businesses. Here are a few ways automation can be achieved.
- Through the implementation of AI and machine learning
If you are looking to automate vital parts of your business while at the same time optimising them, it may be smart to get familiar with artificial intelligence (AI) and machine learning. And don’t worry - you don’t need a masters in computing under your belt to do this successfully. Google and Microsoft have great built-in tools that help you automate your business without the fuss of learning algorithms or needing to code.
These built-in tools can successfully convert your business metrics into data points, before feeding these data points into an artificial intelligence engine. Once they’re put into this engine, the AI can efficiently optimise things such as the price of a product or service, or the amount spent on marketing, amongst other things. The more familiar you get with these tools, the more you can streamline your business and the longer you can spend focusing on the finer details of your enterprise.
- By looking out for repetition
Humans repeat themselves more than they realise. From our daily rituals and deeply ingrained daily habits, to the repetitive tasks we undertake at the workplace, repetition is ultimately a large part of human nature. However, despite this, when it comes to business, identifying the ways that your company repeats itself may be a good starting point for finding automated solutions.
Changing the way you do things, by automating the processes of sorting and responding to emails, for example, may help you to save you time and your sanity at the same time. This allows your company to perform tasks at a higher standard, without sacrificing the level of service that makes customers stay loyal to your business.
Harness the power of data and analytics
Don’t be intimidated by data - if used correctly, it can be the most valuable asset of your company. It can help you understand critical patterns in sales, understand more about your demographic, and answer questions like: how is the weather impacting the sales? And, am I at risk if I trade with this company? However, before downloading masses of company data, it’s important to pinpoint specific areas you want to address, as this will make spotting trends much more straightforward.
To gain a more in-depth insight into your sales prospects, you can look at your own data or do some market research on your competitors. Suppose your business is using a modern system like Google Cloud. In that case, it’s likely to be consistently collecting and storing all of your company’s data, so this can be an efficient way to extract your companies’ own information. If you can’t access data this way, there are lots of free databases available - such as The Office of National Statistics for economic statistics, Ofcom for behavioural insights, or Data.gov.uk for government data sets.
Once you’ve obtained your data, you can organise and analyse it in a variety of ways. There are lots of different web tools that can help you with this. However, Microsoft Excel always provides a foolproof way to track trends, build charts, and tables, and segment insights - so, luckily, your business doesn’t need to fork out to generate great results.
Build new sales channels
With potential customers spending an increasing amount of time on the internet, it’s been well-documented that buyers are cross-channel shopping more than ever before. Therefore, spreading your influence across multiple platforms is an efficient way to increase your company’s exposure, as well as the likelihood of attracting loyal and repeat buyers.
Customers are cross-channel shopping for a variety of reasons. From trying to obtain more information about a product, to searching for related alternatives, a better price, or a company that aligns better with their ethical beliefs; there are many incentives for a customer to scope out the field before making that final purchase. Therefore, as a merchant, a simple but effective way to appeal to these consumers is by branching out your business, so your products or services are available across different sites and platforms.
A simple example of this is a brick-and-mortar store deciding to expand into the world of eCommerce, or an eCommerce site listing their items on other third-party marketplaces (such as Amazon, Etsy, or Asos). Another way to get your company out there would be to advertise products on social media sites, such as Facebook and Instagram; as this has the potential to increase brand exposure considerably.
The cornerstone of effectively building new sales channels, however, is to thoroughly understand your audience. This is because knowing what channels they are likely to spend most of their time on is critical to increasing their exposure to your brand.
Getting knowledgeable about technology and fine-tuning your digital strategies are both essential tools that can help you to digitally transform your business. However, without the right staff to guide your company into a digital future, it’s unlikely your company will create a transformative and lasting change.
Sourcing people who not only possess relevant technical skills, but can also effectively implement the changes that your company requires, is the key to a successful digital transformation. And while this may sound simple, finding suitable talent is currently the largest obstacle to enterprise organisations, with 27% of smaller-scale businesses citing a talent shortage as the most critical challenge they’re facing.
While this may paint a sobering picture, there is an increasing number of ways that SMEs are able to source experienced workers; and many of these include taking advantage of outsourcing. Tapping into freelance communities is a practical and cost-effective way to access pools of staff that have specific areas of expertise. This makes outsourcing a great way to source workers who have transferable backgrounds in technology and data, as they have a focused skillset and can be hired on an as-needed basis.
As we alluded to earlier on, making changes to a company will only go so far if the company’s culture doesn’t change with it. Digitally transforming your business is about changing the mindset of the people that work within it, not just centralising the role of digital technology. As Jennifer McClure, CEO of Disrupt HR believes, it’s important to instil a workplace culture of lifelong learning throughout organisations, as this encourages workers to be curious and come up with creative, out-of-the-box solutions to problems that crop up in the workplace.
A classic example of a company that underwent a successful cultural shift is DBS Bank, in Singapore. Previously being amongst the lowest customer-rated banks in the city-state, DBS rose to the status of being the ‘world's best bank' after they instigated a start-up culture in the company that encouraged technological transformation and centralised customer experience. This is with start-up culture being defined as 'a workplace environment that values creative problem-solving and open communication'. Adopting this strategy helped DBS Bank to modernise their approaches and embrace more agile ways of doing business.
For example, instead of asking the innovation team to innovate, they taught the whole organisation how to innovate. They also put all of their leaders into 'hackathons' with other start-ups, to expose them to different tech-centred ways of operating. All in all, doing things like this is likely to be the most fruitful way to digitally transform your business, because it sews the ethos into the fabric of the company while laying down foundations for future innovation to take place.
Increases organisation and productivity
By harnessing the power of tech in your workplace, and moving towards digital problem-solving strategies, it largely eliminates the need for workers to spend unnecessary time fulfilling menial tasks. By making this switch, digital transformations have the potential to significantly streamline workflow, leading to an increase in productivity by giving staff more time to work on what really matters. In addition to automating tasks, integrating data throughout the organisation also helps members of the team work more efficiently, potentially resulting in higher output from the workforce.
By moving analogue materials to online platforms like Google Cloud, this also helps to improve the organisation of the enterprise. By keeping information together on slick and easy-to-use programmes, you eliminate the need for any unnecessary fuss and excessive amounts of paperwork, which is likely to help people work with a clearer mind and more focused vision. Improves customer insights
Harnessing data is a great way to shine a light on customer insights, helping you to understand a wealth of information about your potential and current consumers. The reason why this is so useful is that it can help you with critical marketing decisions, such as how to reach out to consumers, at what time, and what they might be interested in buying.
This helps business leaders to focus their campaigns or sales strategies on the needs of the consumer, potentially saving a lot of money on misdirected advertising. But, more importantly, it gives companies the power to tailor their marketing to provide potential buyers with specific information that is likely to be more relevant to them, which has been consistently proven to deliver considerably more profitable results.
However, it's crucial that the customer is made aware of their data being collected and harnessed by your company. Usually, the consumer is only interested if their data is being sold to a third party, so if your business is clear about its intentions, it's unlikely they will have a problem.
It improves the customer’s experience
As consumer choice has increased, and the market has grown more competitive, consumer expectations are only rising when it comes to fast delivery, low prices, and the efficiency of buying platforms. According to the research and advisory committee Gartner, more than two-thirds of companies admit they are competing mostly on customer experience - and this figure is only expected to rise to 81% in the near future. Therefore, due to companies' increased focus on customer-focus and consumers sky-high expectations, without updating and modernising your business, it's difficult to stay ahead of the curve and deliver a consistent, high-quality customer experience that has any chance of rivalling the competition.
Luckily, due to the customer-centric approach of digital transformations, the convenience of the consumer is the cornerstone of the whole process. These are a couple of ways digitally transforming your business can improve a customers buying experience.
- Improves speed
Nothing is more annoying and off-putting to a customer than being put on hold for ages, or waiting in a seemingly never-ending queue. Luckily, by using technology to facilitate customer service, it has the potential to significantly increase the speed of customer interactions. And aside from easing frustrations, this is much more likely to make the customer consider using your platform or service again.
With a few changes to the company, live-chat options can replace customer hotlines, SMS updates can replace email communications, and customers can fulfil their requests in far less time than if you rely on previous, more antiquated methods. This can help to bring your company into the 21st century, and align itself far better with the modern, time-conscious consumer.
- Provides greater relevance
Being shown adverts all day that bear no resemblance to your interests or desires is annoying for the consumer, and a waste of money for the business. Therefore, customer insights and targeted marketing doesn't only benefit companies; often, it also improves consumer satisfaction because it exposes people to much more relevant content. Showing the consumer advertisements that chime with their demographic, buying history, and background gives them the chance to view products and services they are actually interested in, reducing their exposure to irrelevant content.
Also, businesses can make sure their advertisements only go to people who have previously shown an interest in their products, giving customers a chance to reconsider, and sparing people who have shown no previous interest in items.
Creates highly-engaged customers
It's no secret that the goal of almost every business is to attract loyal and highly engaged customers. So, by digitally transforming your business to prioritise customer satisfaction, you're much more likely to create highly engaged customers who remain loyal to your brand. People are much more likely to return-buy from a company where they've had a positive experience before, whether it be a smooth, frictionless interface, personalised customer service, or a speedy service, all of these things directly contribute to the likelihood of a customer repeating a purchase.
You don't need to take our word for it, either. Studies have shown that highly engaged customers are six times more likely to try a new product or service from the brand, and two times more likely to make a purchase. Also, highly engaged customers typically generate three times the value of the average customer each year and spend 60% more per purchase, so developing customers who are loyal to your brand is clearly the recipe for long-term success.
In addition to generating value through customer loyalty, digitally transforming your SME can also increase your businesses profit in a variety of different ways, while also saving you any unnecessary expenditures. Due to improved organisation, the productivity of a workplace, and better customer insight and experience, among other things such as increased efficiency and penetration of the market, digitally transformed businesses stand a much better chance of increasing their annual profits.
As reported by the SAP Center for Business Insights and Oxford Economics, 80% of enterprises who successfully digitally transformed their business saw an increase in their profits within the first year of the transition. Furthermore, 85% of those enterprises increased their market share, which ultimately puts their business at a vantage point because it increases their competitive advantage.
- The Covid-19 pandemic is pushing thousands of SMEs across the country to digitally transform their core operations. So, to prevent your business from falling further behind, it's better to take action sooner rather than later.
- Most successful digital transformations place customer satisfaction at the heart of the transition.
- The most critical steps towards digitally transforming your SME include: automating everything, harnessing data and analytics, building new sales channels, finding the right talent, and changing the culture of your workforce.
- All of these steps are instrumental, but in order for lasting change to be achieved, it's essential to try and change the workplace culture to make space for more innovation.
- The main ways digitally transforming your business may be able to benefit your SME, is by potentially increasing organisation and productivity in the workplace, helping you to get a more in-depth insight into consumer behaviour, improving the customer experience, and subsequently helping your SME to turn a larger profit.