In today’s global economy driven by empowered consumers with ever-changing demands, SMEs must find ways to stand out from the competition and forge bonds with their customers. And the competition SMEs face isn’t limited to domestic rivals; international rivals are proving to be formidable competitors. Is innovation key to getting noticed and keeping hold of customer loyalty?
A recent study by Oxford Economics, SMEs: Equipped to Compete, suggests that it is. More than half of the SMEs surveyed cite driving innovation as a top growth strategy, and 34% say creating a culture of innovation is a top priority. So how do they innovate? Technology seems to be the answer, with 59% of respondents seeing technology as a key differentiator for their firms while 57% put technology at the heart of their business efforts.
Kogan Technologies, an Australian retailer and manufacturer, is doing just that. “Technology is one of our core competencies,” says Kogan’s executive director, David Shafer, in the Oxford Economics white paper, Innovation and Differentiation. Kogan, which has US$185 million in annual revenue, uses different tools to satisfy its customers’ desires. The “lonely experience” of online shopping, as Shafer calls it, is improved with a feature that shows customers when and where other people are purchasing items like the ones they’re looking at online. This “social proofing,” encourages potential buyers by making internet commerce a shared experience. Kogan’s competitive edge doesn’t come from keeping an eye on the competition; it comes from watching what the customers are doing. By picking up on the herd mentality of customers, Kogan responded by turning online buying into a shared experience.
Ultimately, innovation is essential to business growth and longevity. And, the most profitable companies are most likely to expect innovation benefits from adoption of technologies than their less-profitable peers.
Another interesting finding reported in the study is that more than half of SMEs indicate that they are collaborating online more frequently with other companies to drive innovation and growth. This finding indicates that technology is enabling SMEs to access additional sources of innovation.
As mentioned throughout this blog series customers around the world are more empowered than ever before, presenting SMEs with a two-headed challenge — get closer to customers who have any number of other suitors, and be prepared to satisfy their ever-changing demands. For most SMEs, technology adoption is enabling them to provide better customer service and improved product and service development. This is especially true of social media and mobile technologies in delivering customer service benefits. Business analytics and the cloud are cited for improved product and service development.
Read the executive summary, How successful SMEs are reinventing global business, or visit our Community Experts website to follow our blog series or to download the Innovation and Differentiation think piece.