We’re living in an age of unprecedented change. We experience with Oculus Rift, invest with Acorns, consume video through Hyper, tune into Pandora and navigate with Waze.
Increasing globalisation, heavy competition, empowered customers in new markets, and fast-changing technologies means small and medium-sized enterprises (SMEs) are now no more immune to the marketing challenges traditionally faced by large multi-national organisations.
Even firms that do not seek geographic expansion must contend with increased competition at home from rivals based outside their domestic markets.
To prepare for this new fast-paced environment, SMEs are transforming themselves in fundamental ways. A recent report released by SAP in conjunction with Oxford Economics, How successful SMEs are reinventing global business, found SMEs are making major changes to their business models, products, and go-to-market strategies, and using technology to level the playing field with bigger companies.
The report also showed SMEs believe they not only are equipped to compete with larger firms when it comes to digital marketing, but actually have some advantages over them.
On top of the agenda for SMEs is digital transformation, or go-to-market strategy, which the report reveals is a major trend for all types of SMEs across the board. According to the survey, only one-third have not engaged in transformation and have no plans to do so, and more than one-third have already done it or are doing it now. The most profitable firms tend to be further along in the transformation process than their less-profitable peers.
SMEs are confident in their technology prowess, and highly focused on adopting enterprise-wide business management software (BMS) and business analytics software, which have become more accessible to smaller firms, the report showed.
They also look to mobile technology to transform their businesses, and are investing in social and cloud platforms as well—although their relatively tepid embrace of the cloud, which could make business management and analytics software easier and less expensive to implement, remains a significant opportunity yet to be realised.
HBT Agency's Digital Director, Luke Kelly, agrees smaller companies are more willing to embrace digital from the get-go.
“It’s a lower cost entry point and SME’s are able to gain market share through a cost effective means,” he explained. “Many boutique brands are ‘owning’ important digital real estate through by clever use of SEM and SEO strategies. For brands with a smaller budget, owning a keyword is more accessible than a TVC or outdoor campaign.”
In comparison, he notes the biggest challenge for bigger brands is challenging conventional thinking.
“It’s difficult to be confident to roll out an innovative marketing campaign when a brands history is so rich,” he said. “To be reactive into his space, brands have to have every part of their digital house in order. Often larger, more established brands have to start from ground zero and that’s the most difficult thing.
HBT Agency is currently working with a small FMGC brand on a new digital framework, integrating Facebook and Instagram to help it become more prominent through SEO and SEM and generate traffic to their product.
“Over time, the strategy will ensure they become an influencer in their category, while improve ranking in organic search to their site,” he added.
When it comes to using predictive analytics, Kelly believes the opportunity for SMEs lies around search and leveraging existing user databases.
“Rather than focusing on acquiring new subscribers, brands need to focus on local customers and identify ways to retain them through the analytics readily available in their database,” he said. “Online communication, email marketing, digital targeting are just some of the ways brands can make customers feel valued based on website analytics and tracking.”
Kelly finds while many brands have an extensive user database, few actually leverage it to its full potential.
“There are so many opportunities for brands to utilise consumer information found within their own databases to make intelligent decisions and campaigns,” he said.
“But smaller brands do this exceptionally well. They understand how valuable subscribers are, reaching out to converted customers as a priority. Because of this, they enjoy higher returns from digital spend – purely because they know more about their online customer purchasing habits, and target their communications accordingly.”
Leveraging new technology to build digital marketing campaigns is now integral to any SME, especially at startup level, according to CEO of Mpire Media, Luke Taylor.
“At the startup level, digital marketing is a key component and really, that is the only product that you have at that early stage of development,” he said. “You’re still trying to find what works and still trying to find your target market. Typically, everyone is going for that minimum viable product and so those initial marketing efforts of your business is key to be able to define that.
Taylor stresses there are so many creative and effective ways SMEs can now engage with their audience on an ongoing basis.
“Like technology that adds them to mailing lists where you can customise that, or adding them to your social network, it’s all a done thing now. It is no longer an uncomfortable thing to interact with your customers on social media, which perhaps a few years ago was not the case.
While it’s important for all SMEs to think about leveraging technology to really gain insights with your customers, Taylor believes you need to also look at the customers you already have and see how you can continue to provide them a good service or a good product.
“A large part of our business sits on the CRM and sales pipeline, both for our partners and our advertisers,” he added. “But I think something that is key in all of the tech is customer retention. And that, up until now has been a difficult job and needs to be an effective touch point.”
Switched on Media’s Business Director, Sam Powell, believes for SMEs, the market research needs to be done up front and there’s always a niche and always an opportunity to be explorative.
“The risk is you want to go out there and you want to be like the big guys, but you spread yourself too thin, whereas I suggest you build from the bottom up, find out where you niche is and find out why your customers use your products and then start targeting similar people,” he said. “Start going after them and finding out who they are, where they hang out, where they spend their time and how you can attract them in order to stand out.
Powell suggest SMEs have to always have a little space in their marketing budget to try new things and delve into new channels.
“For instance, LinkedIn has increasingly become effective to interact through B2B channels,” he said. “Just try to always add and re-evaluate your marketing arsenal.
“The key for smaller business is make sure you are tracking as much as you possibly can. There are a lot of free tools and free software out there so make sure you use them and use them correctly.”
One company getting it right from the start is Xero Accounting Software, Powell commends, who were a start up a few years ago in New Zealand and gained considerable market share there, before taking their offerings globally.
Xero is now one of the fastest growing software as a service companies globally. It leads the New Zealand, Australian, and United Kingdom cloud accounting markets and employs a team of more than 1,200 people in 20 offices worldwide.
“The way they run their business is very advanced compared to the other businesses we’ve seen,” he said. “They’ve use a mix of exceptionally talented and smart people and exceptionally smart and sophisticated software that allows them to make really informed decisions based on the analytics data that they collect – or they can do it in real time. This enables them to do really sophisticated digitally activated campaigns.”
Xero CMO Andrew Lark, believes there have been radical shifts in e-commerce business and digital behaviour, mainly as a result of the cloud.
“Those who have been smart enough to move to the cloud fast, have a natural predatory advantage,” he said. “And the proliferation of mobile has really impacted that.”
One of the ways Xero leveraged technology like a multi-national was leveraging the power of marketing automation. According to Lark, in order to make marketing automation work for your business, you need to be experts in driving change in your people, culture and in your entire environment.
“In our experiences, beautiful products plus great experiences build powerful brands,” he said. “Marketing automation is not just a vehicle for marketing, but a vehicle for enhancing and building product. And in this new world, the only way marketing works is if you invert it and have more makers, more content producers, more videographers, more designers and more writers. Otherwise, it’s largely for nothing.”
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