There Are Four Types of Digital Businesses—Which One Best Describes Yours?
“Basic” isn’t just a pejorative term for young women who wear Ugg boots and love pumpkin spice lattes. It also describes the 20% of U.S. small businesses that aren’t using digital tools to their full advantage. And if your business is “basic,” instead of a truly digital business, you could be leaving money on the table.
The Deloitte report Connected Small Businesses U.S. examined how digital tools help small businesses and, by implication, the U.S. economy.
4 types of digital businesses
The study classified small business owners into four digital engagement levels based on how they use online tools. Here's the breakdown:
1. Basic digital engagement level (20%)
Small businesses at this level have an undeveloped digital presence. They rely on traditional marketing methods, such as direct mail and print advertising. They have no website or social media presence. Essentially, the only digital tool they use is a business email address.
2. Intermediate digital engagement level (30%)
At this level, a small business uses digital tools such as a simple website (without e-commerce or mobile capabilities). It employs some basic online marketing tools, such as being listed in online directories or third-party marketplaces.
3. High digital engagement level (30%)
A high-level business has a more advanced website, such as one with mobile, online booking, or e-commerce capabilities. It engages with multiple social media and online marketing channels. It also uses internal digital tools, such as videoconferencing or cloud software, to enhance the businesses productivity and effectiveness.
4. Advanced digital engagement level (20%)
This truly digital company uses all of the digital tools above, but at a higher level. In addition, it uses more sophisticated digital tools, such as developing a mobile app or using data analytics to learn more about customer preferences or sales trends.
The higher your digital engagement, the greater the benefits for your business, the survey found. This holds true no matter how long you have been in business, where your business is located, or what industry you're in. In fact, the gap between the accomplishments of basic and advanced (truly digital) small businesses is huge.
More articles from AllBusiness.com:
- A Quick Guide to Digital Marketing for Newbies
- Customer Engagement: How to Keep Your Customers Thinking About Your Business
- The Third Step in Online Marketing: Customer Engagement
- Is Digital Marketing Really Worth It for Small Businesses?
- How Much Is Your Digital Marketing Budget This Year?
Traits of digital businesses
Job creators
They are nearly three times as likely as basic businesses to have created jobs over the previous year. In addition, their employees tend to be more productive, thanks to the internal digital tools the company
Reaching new markets
With a wider variety of marketing outlets, they are able to reach a more diverse customer base, and as a result are three times as likely as basic businesses to have exported a product or service in the last year. More than four in 10 (43%) of digital small businesses' customers are regional, national, or international customers, compared to 28% for basic businesses.
Innovators
High-level businesses are five times more likely, and advanced-level businesses almost 10 times more likely, to have introduced a new product or service in the past year as basic businesses.
Reaching more customers
In the last year, they are almost three times as likely as basic businesses to have seen increased sales inquiries. In fact, digital small businesses experience more customer activity throughout the sales funnel, from interest to inquiries to purchase.
With all these factors in their favor, it's no wonder that . . .
Digital companies grow faster
Compared to basic small businesses, in the previous year digital businesses earned twice as much revenues per employee, and experienced revenue growth nearly four times as high. Expanding markets, innovative new products and services, and a growing customer base naturally lead to business growth.
Is it time for your small business to go digital?
If you're still not digital, it's time to kick it into high gear.
I know the landscape of technology is constantly changing—at a rate that can sometimes be daunting. However, if you hope to grow—or even survive—you have to continuously improve the way you use digital tools in your business.
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