Businesses lack digital strategy

Despite Australian businesses continuing to take up new applications like social media marketing, very few have developed a digital business strategy to make the most of opportunities, according to findings from the Sensis e-business Report released today.

Report author Christena Singh said Australian small and medium businesses continued to adopt a range of digital applications during the year, including websites, social media marketing and e-commerce activities.

“While Australian small businesses are embracing new technology and gaining good results, most don’t have a digital strategy to align activities with the business's objectives and market plans.

“Without a plan, small businesses are possibly not getting the best return on their digital investment,”  Singh said.

Of those businesses that did have a digital plan, the report found that most have not integrated all the digital components. It was most likely to include online (80%) and internet (80%) strategies. Mobile and social media strategies were only incorporated in one third of digital plans.

The report, which explores how SMEs use and purchase digital technology, shows one in 10 businesses that are internet enabled use social media activities for business purposes. Female business operators are more likely to use social networking (13% compared to 9% for male), as are businesses in the cultural, recreational and personal services sector and the accommodation, cafes and restaurant sector (20% each).

A page on social networking sites is the most common social media activity, closely followed by having a blog and placing ads on social networks.

The main driver for undertaking social networking marketing activity, according to the report, includes a space to collaborate with customers, for sharing news from their business, building contacts, sharing tips and insights, advertising and posting photos and videos.

“One of the by-products of social network marketing appears to be that businesses are getting closer to their customers, listening and responding to client comments,”  Singh said.

Nine out of 10 businesses undertaking social networking marketing activity monitor online comments made about their business, and of those over six in 10 respond to online comments made about their business. Nearly half of those also monitored online comments about their competitors.

“It appears that undertaking social networking activity is a positive experience for the majority of businesses,” she continued.

Overall, six in 10 small businesses undertaking social networking activity believe it provided a positive impact to the business, while four in 10 said it had no impact. None rated the experience as negative.

The proportion of small businesses with a website increased during the year, up five percentage points to 61%. The cultural, recreation and personal services sector has the highest website penetration (76%). The building and construction sector has the lowest website take-up, although it grew strongly during the year (from 24 to 41%).

Having a website had benefits for the majority of businesses with one, with 73% believing it increased business effectiveness. Allowing customers to find the business, ability to promote products and services, receiving sales enquiries, providing market exposure and allowing 24/7 orders are seen as the strongest benefits.

In addition to standard website features such as contact details and product descriptions, small businesses are also uploading location maps (64%), special offers (35%), independent reviews (30%) and lifestyle information (14%).

The Sensis e-business Report indicates there has been a small growth in the proportion of small businesses selling online during the year. Six in 10 small businesses now take orders over the internet, while seven in 10 receive payments.

“The internet has opened opportunities for small businesses to sell to overseas customers, with three in 10 businesses making some of their sales to overseas customers. However, the majority of sales through the internet are still made to customers in the business's local area,” Singh noted.

Overall, the majority of small businesses take sales over the internet from local customers (86%), followed by customers elsewhere in the state (52%) and interstate customers (52%) and then overseas customers (27%).

With the global financial crisis impacting many international markets, overseas customers have declined as the main target customer group over the year (down from 4 to 2%).

The special report, now in its 15th year, is based on interviews with 1800 small and medium businesses (up to 199 employees) across Australia.