With economic uncertainty and tough market conditions taking their toll, SMEs are investigating a range of approaches to grow their revenue.
Research by American Express and Oxford Economics analysing the attitudes and plans of UK SMEs found that 91 per cent of respondents said revenue growth was important to their business as a long-term objective.
Some businesses may look at expanding into new geographical or vertical markets, while others may ramp up their marketing efforts to reach more potential customers in existing areas. While these are valid approaches, it’s crucial for small businesses to understand how the demands of customers are changing, and how they can respond to take advantage of these shifts.
The American Express/Oxford Economics research also found that 61 per cent of small businesses believe understanding changing customer demand is an important strategy for revenue growth. This was more than adopting new business models (47 per cent) or exploiting the advantages that come with being an SME (46 per cent).
So how can businesses understand and respond to changing customer demands?
Technology can certainly play a role. Online platforms like Google and Facebook can be cost-effective ways of gaining feedback and monitoring changing customer demands and priorities.
For example, feedback could show that customers want additional or improved product features. Or there may be signs of changing demand for certain products or services. Armed with this information, SMEs can respond by making changes to what they offer, developing new products and innovating.
Chow Mezger, managing director of Jude’s Ice Cream, told The Daily Telegraph that the likes of Google and Facebook “have done a huge amount to democratise access to information and the ability to reach consumers”, adding that this has huge value for SMEs, “who are able to act faster on this information than other brands”.
Information gained from social networks and online search platforms shouldn’t be the only method used to understand customer shifts, especially as large tech companies can also change the way they operate at short notice.
It’s therefore wise to invest in customer relationship management (CRM) tools that will enable your business to more effectively keep track of sales performance and interactions with customers to understand how demand is changing.
Implementing analytics technology to generate insights from data held in CRM systems – as well as from real-time interactions on various sales channels (online, mobile, in-store) – can also help small businesses keep tabs on what customers want.
Understanding wider market trends should also help your business identify areas it isn’t currently tapping into, potentially paving the way for whole new revenue opportunities. With the right data, small businesses can make informed choices about ways in which they can diversify.
More broadly, small businesses should continue to sharpen their key advantages, according to American Express and Oxford Economics. For example, by keeping close to customers and anticipating their shifting demands, responding quickly across multiple channels and continuously improving their product or service offerings.
SMEs have an inherent advantage over larger companies, as their smaller size means they can be more agile when it comes to taking a new direction or adding new areas of business. If they can effectively keep track of and respond to changing customer demand, extra revenue should be within their grasp.