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New Research: Resiliency, technology, and focus on customers lead small business trends

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Each year, Salesforce releases a research report outlining the trends that are shaping small and medium business (SMB). Like most everything else about 2020, this year’s fourth edition of the SMB Trends report is particularly unique.

Research for the report was done in two parts, in March 2020 with a follow-up study in August 2020. As such, the data shows how SMB owners and leaders are adapting to the COVID-19 pandemic — and subsequent, overlapping crises — six months in.

Small and medium business owners are resilient and optimistic, even in the midst of incredible challenges. They’re leaning into technology to better serve customers during the pandemic, and to prepare for the future. SMBs are also responding to global calls for racial justice, with Black business leaders in the United States leading the way both publicly and within their companies.

Let’s look at three key takeaways from the SMB Trends report:

SMBs remain resilient and optimistic

Many small and medium businesses don’t have deep pockets. The past six months certainly haven’t changed that: The top three constraints on SMBs continue to be money/access to capital, meeting customer expectations, and hiring the right talent.

But even in the face of these challenges, hope wins out. Half of SMBs surveyed say they are somewhat optimistic about the future of their business. And almost a full quarter (22%) say they’re very optimistic about what’s to come. As if it needed saying again, small and medium business owners are a resilient bunch!

This summer was also marked by mass movements against racial injustice. Likely in response, more than half of SMB leaders surveyed said they are taking action to address issues of racial injustice. Businesses are taking internal actions like holding employee trainings on more inclusive practices, and taking public stances on issues of race and diversity.

Growing SMBs focus on customers and relationship-building

We won’t sugarcoat it: Overlapping crises arising from the pandemic and racial injustices hit small and medium businesses hard. More than half of those surveyed said they’ve experienced reduced revenue and reduced customer demand as a result of COVID-19. And 57% of SMB owners and leaders said they’re struggling to keep their businesses afloat.

Those who’ve been able are focused on improving customer interactions and building long-term relationships. Growing SMBs put relationship building ahead of one-time sales with policies like payment plans and expanded return policies. They’re doubling down on communications, too: 55% of the businesses surveyed are more careful about how they communicate with customers, and almost half have expanded the ways customers can get in touch with them.

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Digital-forward SMBs are meeting customers online

Just like the customers they serve, small and medium businesses are using more technology than ever. Over half of growing SMBs say tech drives their customer interactions or customer base growth. Really, businesses are meeting customers where they’re most comfortable: 63% of millennial consumers — and 61% of Gen Z consumers —  surveyed in July 2020 say they’re more likely to support small businesses with a digital presence. The Trends report confirms small and medium businesses are listening.

SMBs are using customer-focused tech in all kinds of ways, from offering online ordering for curbside pickup or delivery, to putting more focus on email and social media messaging. We also see a continued embrace of business technologies like customer relationship management (CRM).

Leaning into tech and using fewer apps

More than half of SMBs surveyed say they use a customer relationship management system, up 24% from 2019. The technology (68%), consumer products (68%), and manufacturing (64%) industries are the biggest users of CRM systems. SMB leaders who use CRM cited delivering better and faster customer service as the technology’s biggest benefit. Business leaders are also using fewer apps to run their operations, and say they’d prefer to consolidate ever more. Sound counterintuitive? It’s not — CRM tools typically combine multiple business functions like sales, service, and marketing within one app.

Even during the pandemic, SMBs are continuing to adopt new technology, with at least 1 in 5 reporting they’ve implemented at least one of these solutions in the last six months: email marketing software, customer service software, project task collaboration tools, or e-commerce software. Around another 1 in 5 SMB leaders don’t currently use these solutions but have plans to in the next 12 months.

The pace of change is accelerating for smaller businesses

COVID-19 is changing the small and medium business landscape. Among other things, the pandemic is mashing the accelerator on trends that were already in place. Digital transformation is a prime example, and technologies like CRM are making it possible.

For full definitions and more trends, download the full Small & Medium Business Trends report from Salesforce. Learn how SMBs are navigating the present and preparing for the future, and find out how new technology reshaping the business world can help set up your business for growth.

 

Originally published on the Salesforce Essentials Resource Center.

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