Here’re the opportunities and challenges that SMEs may face in 2023
Business owners must stay one step ahead of the competition in a continuously changing business world.
Businesses may keep one step ahead of the competition by tracking trends and forecasting consumer expectations for 2023. But what can they anticipate? How do we maintain the edge so that we can succeed in the near future?
As the year draws to a conclusion, our experts have identified significant trends they think everyone should watch for.
Paul Hadida, General Manager, APAC at SevenRooms
“In 2023, businesses must find ways to incentivise loyalty. The new year will begin under the clouds of global economic headwinds, with rising inflation, interest rates and cost-of-living pressures making Aussies more cautious in their spending. However, for Australia’s vibrant and dynamic hospitality industry, there is plenty of reason to be optimistic – for those who can incentivise loyalty.
SevenRooms research revealed that 82 per cent of Australians feel the current cost-of-living crisis has impacted their spending habits already; however, they also said personalised, meaningful experiences would incentivise their loyalty.
“So in 2023, the businesses that recognise every customer has different habits and preferences – and cater to their individuality rather than target them with one-size-fits-all marketing and customer experiences – will find it easier to drive customer retention.
“After all, loyalty is what turns bad weeks into good weeks, good weeks into great weeks, and problems into possibilities, so it must be a big focus in 2023.”
Vijay Sundaram, Chief Strategy Officer at Zoho
“Very few SMEs haven’t embraced technology in the last few years. However, in 2023, the difference between possibilities and problems will boil down to how these businesses strategically consolidate their technology stack.
“Businesses that use integrated technology – whereby every platform and function, from finance and marketing to analytics and collaborative tools, work seamlessly together – will be better placed to succeed in 2023.
“Those using multiple apps and vendors will build silos, whereby functions and teams work independently rather than in sync. When silos form, it hurts business productivity, efficiency and bottom lines.
“The coming year will present many challenges – some industry-specific, some market-specific and some that many businesses will feel in many countries – but their ability to overcome challenges and seize opportunities will very often rely on how strategic, consolidated and integrated their technology stack is.”
Dave Scheine, Country Manager, Australia at Podium
“The biggest problem SMEs will face in 2023 is the cost to acquire customers. The financial impacts of the pandemic are taking hold, with interest rates and inflation putting pressure on both business budgets and consumer spending.
“Paid digital channels, for so long a go-to for local businesses, are expected to get more saturated, and performance will continue to drop.
“That means acquiring a customer becomes more expensive than once, so local businesses must find new, more cost-effective ways to drive leads and sales. Some easiest, most effective, and budget-friendly ways of driving acquisition are improving online reputation and website conversion.
“Google Reviews are today’s word of mouth, providing the relatable and influential feedback consumers desire and boosting local search ranking.
“Meanwhile, a webchat function can increase website conversion rates by 20 per cent because they lead customers to exactly what they need within seconds. Despite economic uncertainty, 2023 won’t be defined by problems but exciting possibilities for Australia’s innovative and essential local business community.”
Rob Hango-Zada, Co-founder and Co-CEO of Shippit
“Retailers have faced as many challenges as any industry in recent years, from lockdowns and natural disasters to crippling supply chain disruption. However, they have proven that they’re innovative and resilient, and retailers see possibilities where many see problems.
“One of the biggest possibilities in 2023 is improving customer retention. Technology has rapidly accelerated to meet customer expectations over the past two and a half years.
“As expectations continue to rise, capturing consumer retention becomes harder. For retailers, delivery is a large contributor to loyalty-based purchasing habits. By offering flexible delivery options, communicating cut-off times and diversifying their couriers should one be impacted, retailers can offer hugely convenient and transparent deliveries that can turn first-time shoppers into loyal customers.
“Whilst it may sound simple, dependability and certainty are essential to success and unlocking possibilities, especially in 2023.”
Jamie Hoey, Australian General Manager at Wunderkind
“Since the pandemic, digital has risen in power. However, 2023 arrives with enormous disruption, particularly in the digital ad space. Traditional acquisition channels are starting to deliver diminishing returns – it costs a lot more to achieve flat YoY growth. This is due to dramatic increases in cost-per-click (CPC) costs across paid media for the same volume of clicks and additional privacy measures, making it harder to retarget customers.
“2023 will see many businesses continue to throw a disproportionate amount of budget into third-party channels and not see them deliver the revenue growth they’re after – that’s why developing owned channels and having a clear first-party data strategy will become a key business priority to reduce waste and improve efficiencies.
“Working towards an extended deadline of 2024, Google is phasing out third-party cookies (3PCs) in its Chrome browser, and though many retailers and SMEs have understandable concerns, there’s a significant growth opportunity for those that intelligently evolve their approach well ahead of this deadline.
“I would encourage all Aussie businesses to use this time as an opportunity to rebuild and focus on what’s important: the customer. The dividends this will return into your businesses in revenue, customer loyalty, and lifetime value terms should not be underestimated.”
Christian Lund, Co-Founder at Templafy
“As we head into the New Year, it will be critical for SMEs to consider how automation can push their business forward in 2023. Over the past few years, new tools have been integrated into tech stacks across companies to “help” employees do their work. However, this has resulted in tech overload – in fact, at large organisations, an average of 175 applications are offered to employees. But that’s not necessarily a good thing. We’ve gotten to a point where those tools complicate workflows, and employees spend more time navigating platforms than actually doing impactful work.
“SMEs need to prioritise tools that let employees focus on doing the work they’re meant to do while the rest is automated. Document generation platforms are already doing this by automating the document creation process – allowing them to protect their internal documents and overcome common document governance challenges.
“Information security has never been more important, and implementing these tools will remove the burden of compliance from employees, instead placing this onto technology. By leveraging technology ahead of time, SMEs can resolve pain points before they hinder the business and instead set them up for a successful 2023 with many possibilities.”
Simon Le Grand, Senior Director of Global Marketing (Retail) at Lightspeed
“Inflation and increased market competition could pose significant hurdles for SMEs in Australia in 2023. Consequently, consumer loyalty has taken a back seat to the rising cost of essential materials. Though retail sales have remained relatively steady this year, according to the Australian Bureau of Statistics, customers seem to be more selective with where their disposable income goes.
“SMEs – especially retail stores – will need to streamline their business to operate more efficiently and combat inflation pressures. Instead of having multiple solutions in their tech stack, opting for a one-stop-shop commerce solution can decrease overheads and help them to make smarter business decisions.
“This gives businesses the gift of time and reliability. It allows them to focus on building rapport with their customers and creating a seamless customer experience that will build lasting loyalty and trust for their brand.”
Jamie MacLennan, Senior Vice-President and Managing Director, Asia-Pacific at LifeWorks
“One of the main issues SMEs will face next year is the declining mental health of employees and the increased responsibility regarding worker’s state of mind. The Australian Institute of Health and Welfare statistics show that more than 4 million people have experienced a mental health disorder in the past year. Rising inflation and economic uncertainty will likely make the situation worse in 2023.
“New codes from NSW Safe Work Australia (which will probably be copied by other States) have expanded the employers’ responsibilities over employees’ mental health and associated financial penalties.
“However, research shows that the upside for businesses that effectively manage their employees’ mental health and well-being is higher engagement and productivity.
“Businesses should use the new laws as an incentive to learn more about what they can do to ensure their teams have better mental health. Smaller businesses can find information online and look for training in the area. Companies can also reach out to EAP and Wellbeing specialists.”
Justin Dery, Chief Executive Officer, Asia Pacific at Doddle
“With inflation rising, many SMEs are understandably concerned that 2023 will slow consumer spending. ECommerce businesses need to focus more than ever on retaining existing customers (which is much more cost-effective than acquiring new ones) and converting site traffic into purchases more efficiently than ever.
“Having the right delivery and returns options greatly affects customer retention and checkout performance. Our research has shown that once they added out-of-home delivery options (such as Australia Post’s Collect & Return service, powered by Doddle), e-commerce merchants benefitted from increased NPS, conversion rate and average order value.
“We also know that a great returns experience encourages shoppers to purchase again in future, but SMEs often need more technical capacity to build their solutions for returns. Partnering with their delivery provider can give them access to a proven solution with a highly-refined UX, ensuring they’re not losing valuable customers to a dodgy returns process.”
Nicola Ayan, Director of Technology and Growth, APJ at Optimizely
“Moving into 2023, SMEs should expect another year filled with new and unexpected challenges. It’s no surprise that it’s been a difficult and uncertain year for SMEs; however, now is the perfect time to plan and look at ways to overcome these problems and prepare for a successful new year.
“Next year, it will be crucial that businesses let customer sentiment drive their decision-making. The digital landscape is constantly evolving. One way to keep pace is by putting the customer at the forefront and looking for ways to optimise and personalise their digital experience across multiple channels.
“To achieve this, businesses must recognise the value and possibilities of choosing the right technologies. For example, digital experience platforms (DXP) are crucial tools that help businesses optimise the end-to-end customer journey.
“A DXP needs to support the end-to-end process, which starts with understanding gaps and opportunities, to ideating solutions with a structured process, developing personalised experiences based on these solutions, testing these new experiences and learning from these. With this approach, digitally mature teams fail fast (in small ways) but learn fast and win big.
“Wherever customers go, and however they interact with you, they expect a consistent and seamless experience. Businesses that continuously identify gaps in their digital customer experience, and test new experiences, can overcome this hurdle, unlock their digital potential and stay ahead of the competition in 2023.”
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